Chengdu's Innovation Engine: Kelun-Biotech and Harbour BioMed Strike $970M Global Licensing Deal for Anti-TSLP Antibody SKB378/HBM9378

On January 10, Kelun-Biotech and Harbour BioMed jointly announced the signing of a licensing agreement with Windward Bio for SKB378/HBM9378.

Under the agreement, Windward Bio has obtained an exclusive license for the research, development, manufacturing, and commercialization of SKB378/HBM9378 globally (excluding Greater China and certain countries in Southeast and West Asia). Kelun-Biotech and Harbour BioMed are eligible to receive upfront and milestone payments totaling up to $970 million (approximately RMB 7.11 billion), as well as tiered royalties ranging from single-digit to double-digit percentages based on net sales of SKB378/HBM9378. The upfront and near-term payments total $45 million, comprising cash consideration and equity in Windward Bio’s parent company. Furthermore, if Windward Bio undergoes a change of control or enters into a sublicense agreement with a third party in the near term, Harbour BioMed and Kelun-Biotech will be entitled to additional payments. All payments under this license agreement will be split equally between Harbour BioMed and Kelun-Biotech.

SKB378/HBM9378 is a co-development project between Kelun-Biotech and Harbour BioMed, with both parties sharing global rights equally. It is a novel recombinant fully human monoclonal antibody that effectively binds to the TSLP ligand, inhibiting TSLP-mediated signaling pathways by blocking the interaction between TSLP and its receptor. TSLP is a well-validated cytokine that plays a key role in the onset and progression of various immune diseases, including asthma and chronic obstructive pulmonary disease (COPD). Inhibition of TSLP has demonstrated benefits across multiple inflammatory phenotypes. SKB378/HBM9378 has been engineered to extend its half-life and enhance inhibitory efficacy, and is administered via subcutaneous injection.

In fact, this is already the second major overseas licensing deal in Chengdu’s new drug sector since the beginning of 2024.

The first transaction also took place on January 10, when Chengdu Conmeda entered into an exclusive license agreement with Timberlyne for CM313, a humanized monoclonal antibody targeting CD38. Under the agreement, Conmeda granted Timberlyne exclusive rights to develop, manufacture, and commercialize CM313 globally (excluding China). In return, Conmeda will receive a $30 million upfront and near-term payment, as well as equity in Timberlyne, becoming its largest shareholder. Upon achievement of certain sales and development milestones, Conmeda is eligible for up to $337.5 million in additional payments, along with tiered royalties on net sales.

In addition to these two blockbuster deals since the beginning of the year, Chengdu has seen several innovative drugs command sky-high prices in recent months. For instance: Keymed Biosciences entered into a collaboration with PML (Keymed will receive an upfront and near-term payment of $16 million, plus up to $610 million in additional payments); Enmab Therapeutics partnered with GSK (Enmab will receive a $300 million upfront payment and is eligible for total development and commercial milestone payments of $550 million); Baiyu Pharmaceutical collaborated with Novartis (Baiyu will receive a $70 million upfront payment, along with various milestone payments of up to $1.1 billion and corresponding royalties).

Overall, innovative drugs from Chengdu have demonstrated robust development and impressive achievements over the past two years: The first IL-4Rα antibody drug approved for marketing in China and the second globally was developed by Chengdu Conmed; Cogliptin tablets, the world’s first approved ultra-long-acting biweekly oral hypoglycemic agent, were developed by Haisco Pharmaceutical. In addition, numerous prominent radiopharmaceutical companies, such as Pientong Biotech, Fulian Technology, Abos, Tongrui Biopharma, and Newreat, have either originated from or established their presence in Chengdu in recent years.

The remarkable achievements these companies have attained so rapidly are attributable to Chengdu’s long-standing accumulation and collaborative innovation across its entire biopharmaceutical industry chain. In recent years, focusing on the biopharmaceutical sector, Chengdu has accelerated the development of precisely positioned, efficiently operated, multifunctional, and well-supported professional parks, including Chengdu Medical City, Chengdu Tianfu International Bio-Town, Tianfu Traditional Chinese Medicine City, West China Medical Aesthetics Health City, and Chengdu Future Medical City. Furthermore, in the capital-intensive field of innovative drug development, Chengdu has provided substantial financial incentives—“real money”—to encourage industrial innovation.

In August 2024, the first pharmaceutical M&A fund in central and western China, the Chengdu Rongchuang Pioneer Equity Investment Fund, was officially established in the Chengdu High-Tech Zone, focusing on buyout investments across the biopharmaceutical industry chain. As an M&A fund, it addresses a gap in Chengdu’s fund ecosystem by completing the investment-and-exit loop of “seed–angel–industrial fund–S fund–M&A fund,” thereby establishing a full-lifecycle fund system. This initiative provides capital and resource support to high-growth biopharmaceutical enterprises, accelerating technological innovation and industrial upgrading, promoting product development, market expansion, and scale growth, and comprehensively enhancing the innovation capacity and vitality of Chengdu’s biopharmaceutical industry.

In October 2024, to further advance the development of Chengdu’s biomedical industry ecosystem and strengthen its supply chains, and to accelerate the formation of new quality productive forces in the fields of innovative drugs and high-end medical devices, the Chengdu Municipal Bureau of Economy and Information Technology released the “Several Policy Measures for Promoting the High-Quality Development of the Biomedical Industry in Chengdu (Draft for Comments).” The document stated that Chengdu will provide strong support for the research and development of innovative drugs, improved new drugs, and Class II and Class III medical devices, with annual rewards for individual enterprises reaching up to RMB 100 million.

With support from all sectors, Chengdu’s innovative drug industry has demonstrated its robust strength to the outside world. According to data from E-yao Jingliren (Pharma Manager), in terms of drug marketing applications, Chengdu recorded a total of 740 drug marketing applications (by variety) from 2016 to 2023, ranking second among major cities in China. In terms of approved drug listings, Chengdu had a total of 387 drugs approved for marketing (by variety) from 2016 to 2023, ranking third among major cities in China. Additionally, data from Zhiyaoju (Smart Pharma Bureau) shows that in 2023, the total scale of Chengdu’s pharmaceutical and health industry reached RMB 350 billion, with 133 drug marketing approvals obtained, ranking first among major cities in China.

In addition to one of the transacting companies hailing from the high-profile city of Chengdu, this collaboration also represents a NewCo deal that has recently garnered significant attention within China’s pharmaceutical business development (BD) community.Notably, SKB378/HBM9378 is Kelun-Biotech’s first product out-licensed under the NewCo model and Harbour BioMed’s second product out-licensed under this model.

As is common with most NewCo transactions, Windward Bio announced the completion of a $200 million Series A financing round concurrently with the announcement of its partnership. The round was led by OrbiMed, Novo Holdings, and Blue Owl Healthcare Opportunities, with participation from SR One, Omega Funds, RTW Investments, Qiming Venture Partners, Quan Capital, and Pivotal bioVenture Partners.

Undoubtedly, NewCo transactions have become one of the hottest topics in the pharmaceutical industry. According to incomplete statistics from VBInsight, a total of six NewCo deals occurred in China from January to November 2024, with a total transaction value of $8.23 billion and upfront payments amounting to approximately $200 million.

From the perspective of the clinical stages of assets involved in NewCo transactions, the mainstream deals range from pre-clinical Investigational New Drug (IND) applications to Phase I/IIa clinical trials. The SKB378/HBM9378 project included in this transaction is currently at the aforementioned stage. In November 2024, the IND application for SKB378/HBM9378 for the treatment of chronic obstructive pulmonary disease (COPD) was submitted to the Center for Drug Evaluation (CDE). Furthermore, Kelun-Biotech has completed a Phase I clinical trial evaluating the drug for the treatment of moderate-to-severe asthma in healthy subjects in China.

On the one hand, compared with traditional BD transactions, NewCo has many advantages.Through the NewCo transaction, domestic biotech firms secure upfront payments equivalent to those from asset business development (BD) deals to fund the continued development of their domestic pipelines. More importantly, by retaining partial equity in the NewCo, the licensor remains positioned to share in its future capital market appreciation, realizing value through a NASDAQ listing or eventual acquisition by a multinational corporation (MNC).

On the other hand, licensed-out pipelines still carry a degree of uncertainty within multinational corporations (MNCs), entailing risks such as reduced R&D investment or even termination of the license. For NewCos, however, most focus on a single pipeline, with no more than three in exceptional cases. This structure ensures that capital is prioritized for these assets and eliminates the risk of license termination, thereby offering the strongest protection for domestic biotech licensors.Meanwhile, NewCo’s clinical trials in the United States have objectively supplemented the overseas clinical data for its pipeline, thereby supporting the advancement of domestic clinical development.

Furthermore, in the US market, where venture capital investment in innovative drugs remains robust, NewCos can more readily secure tens of millions or even hundreds of millions of dollars to independently support subsequent clinical trials of their pipelines in the United States. This enables them to generate clinical data recognized by multinational corporations (MNCs), thereby creating substantial commercial returns. Finally, a point of significant interest to biotech companies is that spinning off overseas rights for relatively early-stage pipelines does not conflict with domestic listings in China. On the contrary, such spin-offs can greatly facilitate domestic listings, as NewCo transactions validate the business development (BD) potential and international recognition of the company’s innovative drug pipeline.

Therefore, the NewCo model is highly likely to become one of the dominant business development (BD) paradigms in the coming years. Currently, multinational corporations (MNCs), USD-denominated funds, domestic funds, and local pharmaceutical companies are all actively exploring opportunities for NewCo transactions. The NewCo model has also renewed hope for Chinese biotech firms that have been struggling to secure funding for R&D advancement. Innovative drug assets from China are playing an increasingly pivotal supporting role in the flourishing landscape of NewCo deals.

References:

“Breaking Out! $150 Billion in BD Deals Go Global! Why Have Chengdu’s Innovative Drugs Become a Hot Topic?”