Sustainability Drives Chinese Biotech to Secure Billion-Dollar BD Deals: VelaVigo Files for IPO

On December 31, VelaVigo Cayman Limited (“VelaVigo”), a company focused on the discovery and development of multispecific antibodies and antibody-drug conjugates (ADCs), announced the completion of a $50 million Pre-A financing round. This marks another significant fundraising achievement for VelaVigo in the Chinese biotech sector, following its earlier $50 million angel financing round.

Last November, OrangeSail Pharma entered into a global strategic cooperation agreement with Avenzo Therapeutics, granting it the rights to develop, manufacture, and commercialize [the product] worldwide (excluding Greater China).Preclinical Project: Nectin4/TROP2 Bispecific Antibody-Drug Conjugaterights and interests. As a preclinical business development deal, Avenzo offered a high price, paying up to USD 50 million in upfront and near-term milestone payments, with subsequent potential milestone payments expected to reach USD 750 million.

Behind the combined $100 million in financing across two rounds and Avenzo’s major business development deal lies an investment firm that has provided continuous support since the angel round: HLC. Over the past decade since its establishment, HLC has completed four fundraising cycles for both its U.S. dollar and RMB funds, investing in more than 100 high-quality enterprises. Its previous portfolio includes many leading innovators in the biopharmaceutical sector, such as Mindray Medical, United Imaging Healthcare, Tigermed, Pharmaron, Borui Medicine, Yuwell Medical, WuXi AppTec, Baiyang Pharmaceutical, Zhaowei Biology, ITM, IMAGO, and Bonti.

Recently, HLC’s Corporate Empowerment Center hosted a “Closed-Door CEO Sharing Session for Biopharmaceutical Companies,” inviting executives from Hybribio, Biotheus Inc., and Orange Sail Pharma—companies that had recently completed transactions—to share their experiences in mergers and acquisitions, restructuring, and other areas. During the session, He Xing, Senior Managing Director at HLC, stated,“In current BD transactions, biotech companies should place greater emphasis on the sustainability and extensibility of subsequent deals. Even small deals with lower upfront payments signify buyer recognition, serving as a global endorsement that lays the foundation for future BD efforts.”。

Just five days after the major business development deal with Orange Sail Pharma, Biotheus Inc. (“Biotheus”), whose angel round was also led by HLC, announced that it had entered into an agreement for BioNTech to acquire 100% of its equity. BioNTech will acquire 100% of Biotheus’s issued share capital for an upfront payment of $800 million, with additional milestone payments of up to $150 million payable upon the achievement of mutually agreed-upon milestones. In 2018, HLC led Biotheus’s RMB 180 million angel financing round, collaborated with Huafa Group to facilitate its establishment in Zhuhai, and continued to increase its investment in subsequent financing rounds.

From the perspective of early-stage venture capital, Biotheus and Orange Sail Pharma share significant similarities as both entered at the angel round: they focus on source innovation in large-molecule drugs, with pipeline layouts strategically aligned with the most prominent therapeutic modalities in recent years—bispecific antibodies, multispecific antibodies, and antibody-drug conjugates (ADCs). Both companies were founded by seasoned veterans with extensive experience in the biopharmaceutical industry, boasting solid expertise in R&D and industrialization.

Liu Xiaolin, Co-founder, Chairman, and CEO of Biotheus Inc., previously held senior R&D executive positions at companies such as Abbott and Bristol-Myers Squibb. In 2012, he served as Vice President of R&D at Innovent Biologics, where he built the R&D team from the ground up and led the development and launch of sintilimab, a domestically produced PD-1 monoclonal antibody drug. Dr. Li Jing, Founder and CEO of Orange Sail Pharma, previously held senior R&D executive roles at Wyeth and Novartis, bringing over 20 years of experience in innovative biopharmaceutical R&D at multinational corporations (MNCs). In 2013, he served as Senior Vice President at WuXi Biologics, where he established the company’s new drug discovery team.

Even so, the highly competitive path of biopharmaceutical entrepreneurship is fraught with challenges. For instance, it requires a mutually beneficial partnership with angel investors whose pace aligns with the startup’s and who possess prominent resource advantages.According to statistics, HLC has led the incubation of approximately one innovative drug project at the angel stage per year in recent years. On one hand, project incubation requires significant effort and diverse resources from the institution, with more cautious risk assessment and resource evaluation. On the other hand, the institution imposes higher requirements on targets selected for deep incubation, resulting in a limited pool of highly compatible candidates.

Compared to large investors entering in mid-to-late stages, such as Series B, incubation-stage investors often participate to a certain extent in setting the strategic direction for biotech companies. In the early stages of entrepreneurship, biotech firms have highly diverse resource needs, ranging from major aspects like funding, corporate structure, site selection and relocation, and overseas registration, to critical details such as production and R&D facilities, talent teams, executive equity incentives, and pipeline strategy.

Meanwhile, the diversity of early-stage demands also means that investors need to invest more time and energy, supported by service teams with high professionalism, systematic approaches, and deep industry insights.HLC believes that post-investment services for biotech companies should “focus on the critical post-investment phase,” which typically refers to the first 12 months after investment.At this stage, the investor not only assists the founding team in completing foundational tasks such as company registration, organizational structure setup, equity incentive planning, outsourced production and R&D, and project initiation strategy, but also engages in deep discussions with the founders on team culture to help the enterprise establish core values and a corporate worldview. In addition to the lead partners overseeing the entire investment process, HLC assigns team members with diverse industrial backgrounds, scientific expertise, and investment experience to provide targeted support during the pre-investment, post-investment, business development (BD), and IPO stages. Furthermore, appointed directors and advisors serve as “observers” in heavily invested or key lead-investment projects, offering multi-dimensional support.

From overseas business development, Biotheus and Chengfan Pharma represent different stages of development in the biotech industry.

In July 2023, BioNTech entered into a strategic research collaboration, project option and global licensing agreement with Biotheus Inc., obtaining the rights to develop therapies for malignant tumors.APreclinical-stage bispecific antibodies and one clinical-stage monoclonal antibodyglobal exclusive option. In addition, Biotheus Inc. has granted BioNTech an exclusive license to multiple preclinical nanobody projects under development and will provide designated target-specific nanobody development services based on BioNTech’s needs.

Just four months later, BioNTech secured the global (excluding Greater China) rights to develop, manufacture, and commercialize Biotheus’s core asset, the anti-PD-L1/VEGF bispecific antibody PM8002/BNT327, through a deal comprising a $55 million upfront payment, over $1 billion in development, regulatory, and commercial milestone payments, as well as tiered sales royalties. The successful business development of this core asset proved pivotal for subsequent asset acquisition transactions.

From the perspectives of corporate growth and pipeline development stages, Biotheus is undoubtedly an “open-hand” seller in BD transactions—possessing fully validated efficacy data, platforms, and assets.。The highly sought-after PD-L1/VEGF bispecific antibody PM8002, in combination with chemotherapy, demonstrated superior efficacy in the treatment of triple-negative breast cancer.The confirmed ORR was 71.4%, and the overall disease control rate (DCR) was 95.2%; the median duration of response (DOR) was 7.2 months, and the median progression-free survival (PFS) was 9.2 months.

During the conference, Dr. Bao Jun, CBO of Biotheus Inc., recounted that during their initial business development (BD) discussions, the team managed to secure a 30-minute meeting with Ugur Sahin, co-founder of BioNTech, on his way to dinner. Coincidentally, interim data for PM8002 were released during this period. After reviewing the data, Mr. Sahin immediately scheduled a second discussion for after dinner.

Luck certainly plays a significant role.More critically, Biotheus’s overall R&D strength, technological platforms, and pipeline strategy—its “soft power” approach—align precisely with BioNTech’s pipeline expansion strategy.Since 2023, BioNTech has made nine strategic investments in China, including stakes in multiple ADC pipelines of Duality Biologics and the multi-target ADC technology platform of Yilian Biologics.BioNTech’s full equity acquisition of Biotheus Inc. precisely fills its gaps in a comprehensive antibody drug R&D platform and its production base in China, potentially laying the groundwork for future combination therapies involving its proprietary bispecific antibodies and ADC products.

Therefore, upon completion of this transaction, Biotheus Zhuhai will become BioNTech’s China R&D Center, retaining all rights to its pipeline and technology platforms; the Biotheus Nantong manufacturing base will contribute to the future global production and supply of BioNTech’s products; and over 300 Biotheus employees will join BioNTech, with retention requirements established for the core team.

He Xing, Senior Managing Director at HLC, pointed out in his analysis that in the context of cross-border business development (BD), multinational corporations (MNCs) and other overseas acquirers of assets look beyond R&D data; they also evaluate the strength of the biotech’s team, the backgrounds of its R&D personnel, and whether it has a rigorous R&D system aligned with international standards. These factors are critical to establishing a high level of trust in the product and its data. In contrast, domestic biotechs often focus excessively on product data while overlooking soft capabilities such as team quality, R&D infrastructure, corporate culture, and standardized processes.

“Some MNCs even examine shareholder background, the entrepreneurial journey, and board composition. Buyers believe that whether for asset transactions or subsequent collaborations, if a biotech lacks a well-structured shareholder base, management team, and R&D culture, the partnership may not be sustainable. Sustainability has become a key consideration in current business development (BD) practices.” In concrete global expansion efforts, soft power is often demonstrated through more nuanced aspects: benchmarking against mainstream overseas R&D standards, maintaining cultural alignment and effective cross-border communication capabilities, and fully showcasing competitiveness within a short timeframe.

Biotheus’s wholly-owned acquisition exemplifies the asset-sweeping strategy adopted by multinational corporations (MNCs) and pharmaceutical companies. In such deals, asset pricing is largely determined by the acquirer’s internal pipeline configuration needs, with the core determinant being the future commercial value generated through synergistic integration. In contrast, Orange Sail Pharma’s $800 million business development (BD) deal with Avenzo reflects a Biotech BD approach centered on a founding team of seasoned pharmaceutical executives. This strategy focuses on identifying specialized, high-potential products with blockbuster promise, which may include early-stage assets, with the expectation of achieving pipeline BD or bundled divestiture through subsequent development and operational efforts.

Avenzo is a typical star-manager-led biotech company, boasting extensive overseas healthcare investment resources and partnerships with multinational corporations (MNCs). Its founding team previously led Turning Point Therapeutics through its IPO in 2019, culminating in its $4.1 billion acquisition by Bristol Myers Squibb in 2022. The preclinical asset for which Avenzo has secured global rights (excluding Greater China) from Orange Sail Pharma will be jointly advanced by both parties toward an Investigational New Drug (IND) application worldwide, with completion targeted for 2025.

In essence, the criteria for asset recognition encompass an assessment of the seller’s soft power.He Xing noted in his sharing that, in the absence of human clinical data, the scale of business development (BD) deals for preclinical assets depends on how highly the buyer values the asset. Soft power factors such as the team and R&D capabilities have shifted from “bonus points” to “critical criteria.” Under the prerequisite of controllable risk, buyers need to have strong confidence in the team’s ability to advance preclinical projects to Investigational New Drug (IND) application stage, and they place greater emphasis on the feasibility of sustained progress.

In its efforts to expand globally, HLC encourages biotech companies in the biopharmaceutical sector to “go global first, regardless of deal size.”Given the current buyer’s market dynamics, business development (BD) remains a low-probability event. Before considering deal size, biotech companies should take the first step to build their reputation in the global healthcare community and leverage prestigious overseas partners to endorse their soft power. Furthermore, the earlier they engage in international exchanges, the better they can understand buyers’ mindsets: What will multinational corporations (MNCs) and pharmaceutical companies want this year, next year, or in three years? These insights will feed back into the adjustment of R&D strategies and the enhancement of soft power, thereby preparing biotech firms for future BD opportunities.

At its core, business development (BD) is a sales activity—a process of facilitating value exchange. In any business model, biotech companies, as sellers, must adopt a market-oriented and customer-needs-driven approach when formulating their R&D and strategic plans.

Dr. Bao Jun, CBO of Biotheus, statedBusiness development (BD) is an inevitable path for any growth-stage biotech company; it should not be a reactive measure but rather a proactive strategy. The aspirations of biotech firms extend beyond evolving into big pharmaceutical companies; they should also encompass BD activities, achieving short-term revenue targets, and ensuring successful product launches. This requires the team to possess rapid execution capabilities and decisive decision-making skills.

Dr. Wei Wang, Senior Vice President of Orange Sail Pharma, remarkedSeizing emerging opportunities by divesting certain early-stage assets not only provides capital to accelerate pipeline development but also delivers multiple advantages, including enhanced corporate visibility, promotional impact, and resource expansion. This approach aligns with OrangeSail’s global development strategy. Mergers, acquisitions, and restructuring in the overseas healthcare industry are dynamic; many models perceived as “first-of-their-kind” have, in fact, undergone extensive exploration and validation over time. We will gradually adopt and further optimize these models in the future. Biotech companies need to increase their visibility and begin fostering awareness and cultural alignment that are compatible with international standards.

He Xing, Senior Managing Director at HLC, believes that while investors’ empowerment and support are certainly important in business development (BD), it is ultimately the biotech company and its assets themselves that truly win over buyers. As source innovation advances to the international level, the landscape has shifted from US dollar funds shouldering the primary responsibility to dual-currency funds playing a pivotal role.What investors can do is to fully leverage their supportive role, unlock entrepreneurs’ potential, and propel them into the spotlight to better showcase their strengths to the world.

Furthermore, as an increasing number of Chinese biotech companies take center stage and integrate into the global healthcare innovation ecosystem, it signifies that China’s biomedical and innovative drug capabilities have gained global recognition. The subsequent inflow of business development (BD) capital, merger and acquisition exits, and investment returns will channel back into healthcare venture capital, thereby driving the sustainable development of both primary and secondary markets as well as the entire industry chain.

Next, the focus for innovative drugs will be on the realization of subsequent milestones—specifically, whether BD assets can successfully transition from the R&D funding stage to commercialization, thereby capturing global markets with greater paying capacity.“As long as a significant proportion of these drugs gain regulatory approval for market launch, the strength of China’s innovative pharmaceuticals will earn recognition from mainstream multinational corporations (MNCs). The scale of business development (BD) deals will continue to expand, and the ingenuity, diligence, and pragmatism of Chinese professionals will command genuine, sustainable respect backed by tangible financial returns,” He Xing concluded. Indeed, this trend is already unfolding.