First Wave of NewCo Companies Begins Delivering Results: Kailera Therapeutics Submits IPO Filing

It has been nearly two years since Hengrui Pharma fired the "first shot" of the NewCo model with that transaction. Two years is enough time for a model to transition from an initial trial phase and being scrutinized, to entering a different dimension of evaluation.

Today, NewCo has transformed from an industry buzzword into a tangible capital story, the first batch...NewCoNew progress has already begun.

In the fourth quarter of 2025, two NewCos in collaboration with Hengrui Pharma reach critical financing milestones: Kailera Therapeutics (formerly Hercules) completes a $600 million Series B financing round, while Braveheart raises $185 million in its Series A funding. On January 14 this year, Caldera Therapeutics, a partner of Quanxin Biologics, announced the completion of a cumulative $112.5 million financing. The Phase I clinical trial for healthy volunteers from its pipeline has completed the first dosing.

Hu Yanbao, Secretary of the Board of Quinn Bio, stated, "The ability to secure subsequent financing is one of the core concerns of the market regarding the NewCo model.A new round of funding coming in means that clinical development can continue, and there is a better chance for the licensing company to achieve milestone revenue.

No matter how large the amount is, the ability to continue financing indicates that things have been going well.

“Moving forward, Pre-IPO, direct listing, or being acquired are all possible exits. These actions themselves are a form of recognition."Whether it’s multinational pharmaceutical companies seeking acquisitions or large funds entering at the Pre-IPO stage, their decisions are often based on the latest macroeconomic trends and more comprehensive data analysis," said Peng Wei, partner at NewCo Hatchery.

Besides progress of the "financing" type, exit cases have begun to emerge. By the end of 2025, the NewCo in partnership with GenSightYarrow Bioscience, Inc. went public on NASDAQ via a backdoor listing just two days after its establishment.

In fact, NewCo, as an efficient path to going global, has already clearly demonstrated its strategic value before the final exit.It allows the domestically-focused Biotech to be seen by global giants, and the value of being "seen" is no less significant than the financial returns themselves.

The future may be full of uncertainties, but there will continue to be people coming to China to seek NewCo opportunities, and Chinese companies will also participate more confidently in this global R&D game through repeated collaborations.

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"Pioneering Stone" and "Fast Track"

In the overseas development path of Chinese Biotech, NewCo is often considered a "less preferred option." When the assets are strong enough, the opportunity window is clear, and there is a trust relationship with MNCs, reaching a BD deal directly with MNCs remains the most ideal outcome.And when these conditions are lacking, the NewCo model becomes highly useful.

For Biotech companies venturing overseas for the first time, collaborating with professional funds to establish a NewCo is often the most efficient path. Qybio adopted the NewCo model to complete its first overseas attempt by licensing a bispecific antibody, QX030N, to Caldera Therapeutics.

The Significance of the First NewCo Deal Goes Beyond a Simple Authorization, which can help Chinese biotech validate the potential of their assets in the international market, present a business card to the global biopharmaceutical industry, and also give Chinese biotech more confidence and options in their subsequent overseas strategies.

Quanxin's Second Overseas Plan Was Also Originally Intended to Quickly License Out the TSLP/IL-33 Bispecific Antibody Through a NewCo Structure.But this timeQuanxinHas already begun to attract the attention of MNCs.

At that time, there were few companies globally developing TSLP/IL-33 bispecific antibodies, and Quanxin was one of the frontrunners. In July 2025, Roche announced the Phase IIb and Phase III study results of its IL-33R monoclonal antibody for treating COPD. The Phase III clinical results fell short of expectations, indicating that Roche may need to seek new products to fill the gap in the autoimmune respiratory field. Quanxin realized that, "In the 2025 market environment, NewCo has started to experience some 'aesthetic fatigue.' If it can secure an endorsement from a large company, it is expected to significantly boost both market valuation and cash flow."

Thus, Quanxin and Roche reached an agreement quickly and efficiently, with a direct and streamlined negotiation process.The entire process took less than five months.". Ultimately, Quanxin granted QX031N to Roche for a $75 million upfront payment, up to $995 million in milestone payments, and subsequent sales royalties.

The boost that BD deals with MNCs bring to Chinese pharmaceutical companies is undoubtedly greater than that of NewCo. But without the initial groundwork laid by NewCo, fledgling Chinese biotechs would hardly be noticed by MNCs.

For relatively competitive pipelines, NewCo can also help biotech companies stand out. Take Quanxin's another long-acting TSLP×IL-13 bispecific antibody as an example, "many companies are working on this target combination." In order to advance clinical trials overseas and obtain data as soon as possible, Quanxin once again chose a model similar to NewCo, cooperating with Windward Bio to quickly initiate overseas clinical trials by leveraging its operational capabilities."The core is to quickly obtain data overseas, rather than waiting for the data before proceeding with BD."

Quanxin Biotech's three overseas ventures epitomize the go-global strategies of many Chinese biotechs—there’s no one-size-fits-all model, only choices that align with timing, assets, and market conditions. Each step, though seemingly independent, is interconnected.

Even those NewCos that have not yet fully realized their value through an exit play an indispensable role in this process, not only reducing the trial-and-error costs of early overseas ventures but also paving the way for subsequent more complex and advanced collaborations.

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NewCo's "Landing" Countdown

It only took two days to complete a round of NewCo's "landing," which might be the fastest case in the industry so far.

In December last year, GenSci098, a TSH receptor antagonist developed by Jin Sai Pharmaceuticals, was licensed to the overseas NewCo — Yarrow Bioscience. Just two days later, this NewCo made its way to the Nasdaq table through a reverse merger with VYNE Therapeutics.

This lightning-fast operation has made all three parties winners:Kailera Therapeutics Receives $120 Million Upfront Payment and Up to $1.365 Billion in Milestone Payments.

VYNE, which was on the brink of delisting, has been reactivated.

Yarrow completed a backdoor listing, with the merged company retaining its name and stock code (YARW). At the same time, approximately $200 million in funding from institutions such as RTW and OrbiMed was injected, propelling NewCo to quickly "go public."

GenSci098 Demonstrates Potential as a Novel Therapy for Graves' Ophthalmopathy with Its Preclinical Data, Phase I Progress in Thyroid Eye Disease (TED), and Reference to Drugs Targeting the Same SiteThe premise of this efficient cooperation is the strong asset base and the differentiation in indications.

Such a smooth exit is rare. More NewCos are still moving forward in the regular rhythm of financing and clinical trials.As time progresses, more projects are expected to achieve phased results this year.

For some NewCos with assets nearing clinical stages and data soon to be released, positive results will likely lead to either an IPO on Nasdaq or an acquisition.

Peng Wei revealed that with the expected recovery of the US stock IPO window, a group of companies poised for action, including some NewCos based on high-quality Chinese assets, are expected to seize the opportunity to go public.When a biotech clearly demonstrates its capability to go public, MNCs will be more eager to lock in an acquisition before the IPO.Once it truly goes public and releases critical clinical data from the pipeline, its market value may rapidly increase, significantly raising acquisition costs. More MNCs will come to negotiate, intensifying competition.

As for those projects that are not proceeding smoothly, they may quietly adjust their strategies, such as introducing new assets or switching to advancing pipelines.

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NewCo Diversification: The Evolution of Chinese Pharmaceutical Companies and the Global Market

The initial form of the NewCo model was to match promising early-stage clinical assets with a strong overseas operational team and a VC with continuous incubation experience.

But over the past year, this model has been quietly changing.

The initial choice to lay out early clinical assets in NewCo was logically clear: on one hand, the assets already had preliminary safety and efficacy data support; on the other hand, their valuation was relatively low, allowing for the acquisition of potentially high returns at a lower cost and risk.But now, more assets entering the mid-to-late stages have also begun to join this game.

In September 2025, Hengrui Pharma licensed its Phase III cardiac myosin inhibitor HRS-1893 to Braveheart Bio, a company backed by Forbion, OrbiMed and other capital, in a "cash + equity" deal.

The clinical development cycle in the cardiac field is long, with high safety requirements. Choosing to proceed in the form of a NewCo transfers the subsequent large-scale clinical investment and R&D risks to Braveheart Bio. Braveheart Bio also needs to pay Hengrui Pharma a higher upfront payment than other deals.

BraveheartWillingness to take such risks implies full recognition and confidence in HRS-1893.HRS-1893For hypertrophic cardiomyopathy and related heart failure indications, the competitive landscape in this field is clear — currently, there is only one similar drug (BMS's Mavacamten) approved globally. As a late-stage clinical asset, its potential for value realization through BD or IPO is higher and faster in the future.

NewCo's "capital recipe" is also becoming more diverse. In addition to the traditional cross-border structure, a "fusion-style NewCo" led by Chinese funds with joint participation from cross-border capital is on the rise.

Julien Zhu, co-founder of Yarrow Bioscience, pointed out that the advantage of this model lies in its ability to efficiently complete early data validation by relying on a network of local clinical resources."Lower cost, faster progress""In his view, Chinese entrepreneurs are encountering a unique window of opportunity: 'All the essential elements such as funding, clinical execution capabilities, and the transaction environment are in place, making it entirely possible to complete the reorganization and circulation of resources within China.'"

This evolution, to some extent, is also an inevitable result of the industry's development.As Lei Fang, co-founder of Yarrow Bioscience, said: "After the first batch of 'low-hanging fruits' have been picked, the opportunity to build a NewCo based on information asymmetry has become very rare."US dollar funds and multinational pharmaceutical companies value clinical data and often only focus on pipelines at the PCC and IND stages. Many assets are still in the preclinical stage and have not yet reached transaction milestones, but they are equally worth advancing. However, their progress consumes substantial financial and energy resources from the company.At this point, a new team with execution capabilities takes over, generates data, and facilitates overseas transactions, which is actually an extension of the BD logic.”

Chinese pharmaceutical companies are attempting to secure larger and more long-term benefits from this innovative industrial chain through the continuously evolving NewCo model.

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How long is the window period for NewCo in China's biotech industry?

The R&D capabilities of Chinese pharmaceutical companies are improving, and the external environment is also constantly changing.Peng Wei noted that in the past, overseas buyers might have decisively acted upon spotting a high-quality Chinese asset; but now, with increasing transparency of information and a rise in similar projects, the aura of scarcity is fading.。

When they find that the data of similar assets are all good and the progress is about the same, many investors turn to look for more differentiated, less competitive tracks——"Since there are ten companies making Drug A, why shouldn't I choose Drug B, which only three companies are making?"Unless they are blockbuster foundational drugs like PD1/VEGF and oral GLP1, which are essential for MNCs, they will avoid introducing too many homogeneous assets to "crowd the competition" in overseas clinical stages.

On the other hand, Peng Wei found that after overseas pharmaceutical companies introduce external assets, they often adjust their internal R&D, and may even release some early-stage pipelines with significant potential to external parties, some of which are even priced lower than Chinese assets.

Thus, a new trend has emerged overseas where assets are picked from the "shelves" of MNCs and European and American biotech companies to restructure and establish NewCos. These circumstances have increased the number of available assets, but also raised the difficulty of forming a NewCo.

It can be foreseen that NewCo's "treasure hunt" will expand globally. In the future, some people will still come to China to seek NewCo opportunities, while others will promote new collaborations in Europe and the Americas.

The NewCo model has moved from the exploration phase into a normalized stage, and its future development is showing several clear trends:

Against the backdrop of a recovering Hong Kong stock market and an improved financing environment in China, NewCo may not be the only route, as some companies have reopened the path to exit through IPOs. Moreover, the international recognition previously gained through NewCo has expanded possibilities for business development (BD), which might reduce Chinese pharmaceutical companies' reliance on NewCo.

Companies that choose to continue on the NewCo path will, based on past experience, design the transaction structure more precisely to maximize asset value and strategic goals.

Attention in the capital market is gradually becoming scarce. Only stories with milestone significance, such as going overseas for the first time or transaction amounts exceeding expectations, can create a stir in the capital market. NASDAQ is expected to welcome a batch of IPO projects, among which there are no lack of high-quality assets originating from China.

In the coming year, a critical "moment of truth" is approaching, with more interim clinical data set to be unveiled.

In this process, Chinese pharmaceutical companies need to establish a balanced understanding:Neither underestimating its own asset strength, nor undervaluing NewCo's appreciation and future potential in the international market.In the face of a complex international landscape and increasingly fierce global competition, it has become an industry consensus to remain low-key and pragmatic, seek the most suitable partners, and jointly realize the value of pipelines.

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