The Rise of the “NewCo” Model in Chinese Biotech: Global Expansion via Spinouts (2024–2025)
Chinese biotechs are increasingly spinning assets into offshore NewCos, blending licensing, equity, and VC/PE backing. Deals like Mabwell→Kalexo and Hengrui→Braveheart accelerate global development, unlock capital, and position China as a key exporter of early- and mid-stage biotech assets.
Introduction: Mabwell → Kalexo and the NewCo Concept
On September 17, 2025, Mabwell Bioscience spun its dual-target siRNA candidate 2MW7141 (for dyslipidemia/ASCVD) into a newly formed U.S.-based entity, Kalexo Bio, backed by Aditum Bio. Mabwell licensed ex-China rights, receiving $12 million upfront, up to ~$1.0 billion in milestones, royalties, and an equity stake in Kalexo. This deal exemplifies the “NewCo” model: Chinese biotech companies carve out selected assets into offshore spinouts to streamline global development, secure capital, and retain long-term upside.
Unlike traditional out-licensing, where the originator receives upfront cash, milestones, and royalties without equity exposure, the NewCo model blends licensing with equity participation, often via Delaware or U.S.-based entities, and involves venture capital or private equity investment.
Why the NewCo Model is Gaining Popularity
Capital Access Amid Domestic Challenges
With funding shortages, IPO hurdles, and reimbursement constraints in China, NewCo structures provide a path to non-dilutive cash and strategic global investors.
Rapid Clinical Execution
China’s efficiency in clinical trials (e.g., over 8,000 investigator-initiated trials in 2024) allows NewCos to accelerate proof-of-concept data, making assets more attractive to global partners.
Retaining Long-Term Upside
Equity stakes in the NewCo allow Chinese originators to benefit from future exits (IPO, acquisition) beyond the upfront/milestone payments.
Regulatory Flexibility
Offshore incorporation circumvents China’s FDI and foreign-exchange restrictions while facilitating global partnerships.
Portfolio Focus
Spinning off non-core or early-stage assets lets the originator maintain pipeline focus while giving specialized teams agility to drive global development.
Comparison with Traditional Out-Licensing Deals
| Feature | Traditional Out-Licensing | NewCo / Spinout |
|---|---|---|
| Upfront Cash | Typically higher | Moderate; supplemented by equity |
| Milestones / Royalties | Similar | Similar, sometimes via NewCo equity valuation |
| Equity | Rarely included | Key component; originator retains ownership stake |
| Control | Partner often leads | Shared control; originator may advise board or retain veto rights |
| Regulatory / Legal Flexibility | Limited | Offshore incorporation eases global collaboration |
| Speed of Global Expansion | Moderate | Faster, especially when VC-backed for US/Europe trials |
Potential Cons of NewCo Deals
- Modest Immediate Returns: Lower upfront cash compared to classic licensing deals.
- Valuation Risk: Spinouts may undervalue high-potential assets.
- Execution Dependency: Success relies on the NewCo management and investors.
- Geopolitical/Regulatory Risks: U.S./EU scrutiny (CFIUS, export controls) may slow progress.
- Timeline Misalignment: VCs typically aim for fast exits, potentially limiting long-term upside.
Feature Case Study: Hengrui → Hercules
In May 2024, Hengrui Pharma licensed ex-China rights for its GLP-1 trio (HRS-7535, HRS-9531, HRS-4729) to a newly formed U.S.-based NewCo called Hercules, backed by Bain Capital, Atlas Ventures, and other investors. Hengrui retained ~20% equity. The deal structure included $100M upfront, $10M near-term payments, and up to $5.7B in clinical, regulatory, and sales milestones.
Key Takeaways:
- Mirrors the NewCo model used for Hengrui’s Kailera spinout in 2024 for GLP-1 assets.
- Allows Hengrui to participate in global growth without assuming all operational risk.
- Enhances investor confidence through clear governance and capital-backed execution.
Full List of Verified NewCo Deals (2024–2025)
| Chinese Originator | NewCo / Partner | Key Asset(s) / Therapy Area | Deal Economics | Date of Deal | Source |
|---|---|---|---|---|---|
| Mabwell Bioscience | Kalexo Bio (Aditum-backed) | 2MW7141 dual-target siRNA (PCSK9 + Lp(a)) | $12M upfront; up to ~$1B milestones; royalties + equity | 17 Sep 2025 | Mabwell PR, Synapse |
| Hengrui Pharma | Braveheart Bio | HRS-1893 cardiac myosin inhibitor (oHCM) | $65M upfront (cash + shares), $10M near-term, up to $1.013B milestones + royalties | 05 Sep 2025 | Hengrui PR, PRNewswire |
| VelaVigo Bio | Ollin Biosciences | VBS-102 ophthalmology bispecific | $100M Series A; up to $440M milestones; royalties | 17 Apr 2025 | VelaVigo/Ollin PR |
| Sciwind Biosciences | Verdiva Bio | Oral GLP-1 / oral & SC amylin (obesity/metabolic) | $411M Series A; milestones partly disclosed | 09 Jan 2025 | Verdiva PR |
| EpimAb Biotherapeutics | Juri | Bispecific / multispecific assets | $210M total (cash, milestones, equity) | Jun 2025 | EpimAb PR |
| Leads Biolabs | Oblenio Bio (Aditum-backed) | Autoimmune trispecific/TCE | ~$35M upfront + ~$579M milestones (~$614M total) + equity | 07 Nov 2024 | Aditum/Leads PR |
| Hengrui Pharma | Kailera Therapeutics | GLP-1 obesity/diabetes portfolio | $400M Series A; $110M upfront; up to $5.9B milestones; 19.9% equity | 01 Oct 2024 | Kailera PR |
| Hengrui Pharma | Hercules | GLP-1 trio (HRS-7535/HRS-9531/HRS-4729) | $100M upfront; $10M near-term; up to $5.7B milestones + ~20% equity | 16 May 2024 | Hengrui PR, Medscape |
| Genor Biopharma | TRC 2004, Inc. | GB-261 CD20×CD3 bispecific | Double-digit $M upfront; equity; up to $440M milestones; royalties | 05 Aug 2024 | Genor PR |
| Keymed Biosciences | Belenos Biosciences Inc. | CM512, CM536 bispecifics | $15M upfront; up to $170M milestones; royalties + equity | 09 Jul 2024 | Keymed PR |
| EpimAb Biotherapeutics | Vignette Bio | EMB-06 BCMA×CD3 bispecific | $60M upfront + equity; up to $575M milestones + royalties | 03 Sep 2024 | EpimAb PR |
| Hengrui spin-out (Aiolos Bio) | GSK | Asthma asset | $1.4B acquisition | Jan 2024 | GSK PR |
| Conua / Keymed | Platina / Timberlyne / Prolium | BCMAxCD3, CD38, CD20×CD3 bispecifics | $16M–$30M upfront; up to $610M in milestones; partial equity | 2024–2025 | Conua PR |
| Harbou / HBM / Windward | Windward Bio | TSLP antibody HBM9378/SKB378 | $45M upfront + equity; up to $970M milestones + royalties | Jan 2025 | Harbour PR |
Observations:
- Therapeutic Focus: Oncology, cardiometabolic disorders (GLP-1, siRNA), ophthalmology, immunology dominate NewCo spinouts.
- Financial Scale: Upfronts range $12–$100M; total milestones often reach hundreds of millions to >$5B.
- Investor Involvement: Most NewCos are VC/PE-backed (e.g., Aditum, Bain, Atlas), underscoring the hybrid licensing + equity approach.
- Pipeline Stage: Deals span preclinical (Mabwell/Kalexo) to Phase 3 (HRS-1893).
- The model favors mid-to-large Chinese biotechs with diversified pipelines, enabling global expansion without draining domestic cash.
Outlook (Late 2025 – 2026)
Expect 20–30% more NewCo deals by late 2026, especially in obesity (GLP-1/GIP combos), ADCs/bispecifics, and siRNA/gene therapy platforms. Increasing U.S./EU investor participation may continue to accelerate spinout formation. Geopolitical and regulatory scrutiny (CFIUS, BioSecure Act) may slow some approvals but is unlikely to halt the model. If successful, the NewCo strategy could position China as a major global exporter of early- and mid-stage biotech assets, complementing domestic R&D.
Sources:
- Mabwell Bioscience PR, Sep 17, 2025
- Hengrui Pharma PR, Sep 5, 2025
- VelaVigo Bio / Ollin PR, Apr–Sep 2025
- Sciwind Biosciences / Verdiva PR, Jan 2025
- EpimAb Biotherapeutics PR, Jun & Sep 2025
- Leads Biolabs / Oblenio PR, Nov 2024
- Hengrui Pharma / Kailera PR, Oct 2024
- Hengrui Pharma / Hercules PR, May 2024
- Genor Biopharma / TRC 2004 PR, Aug 2024
- Keymed / Belenos PR, Jul 2024
- EpimAb / Vignette PR, Sep 2024
- Hengrui / Aiolos / GSK PR, Jan 2024
Disclaimer: This post is for informational purposes only and does not constitute investment, financial, or legal advice. Deal terms, valuations, and milestones are based on publicly available sources and may change over time. Readers should conduct their own research or consult professionals before making business or investment decisions.