A new flavor of company is shaking up how biotechs are built.
Instead of launching with eye-popping early-stage science or a new platform, there’s a surge of startups with small teams, large checks and one or two clinical-stage assets in-licensed from China.
The so-called NewCo model of value creation has been around for years, but its use with assets connected to China appears to be increasing, as the world’s second-most populous country experiences a renaissance in its drug development industry.
The model appears to be working for investors so far. Obesity-focused Kailera Therapeutics had the
biggest IPO on record
last month. Then, Candid Therapeutics announced a
$2 billion M&A exit
to UCB on Sunday. And on Monday, Windward Bio snagged a $165 million crossover to support two respiratory and dermatology drugs from China.
Endpoints News
identified at least 18 private biotechs that have followed this route since the beginning of 2025, as the architecture has become more formulaic and patternized. The cohort has announced at least $2.3 billion in collective funding, though some have yet to disclose their capital hauls.
“These days, [in] nine out of 10 of these management-team-plus-assets as a NewCo opportunity, the assets have been sourced from China,” Forbion general partner Nanna Lüneborg said in an interview.
Netherlands-based Forbion has backed a series of such companies, including
Aiolos Bio
,
Verdiva Bio
,
Solstice Oncology
,
Slate Medicines
and others.
This new model represents a fundamental shift in how biotechs are formed and grow.
The fluctuating dynamics are a reflection of a yearslong funding downturn, an explosion in target and modality crowding, a desire to get quicker returns, a flocking to diseases with large patient populations like obesity and autoimmune conditions, and a massive growth spurt in competition from R&D hubs like Shanghai, Endpoints’ reporting shows.
The surge in NewCos means investor dollars are going to different types of biotechs than before, and could divert resources away from riskier, more early-stage projects that flourished in the industry boom of 2020. Who starts biotech companies, and who gets to work at them, can also be swayed by these changes.
By the time a newly formed biotech gets Phase 1 or early Phase 2 data, the company’s valuation typically reaches triple-digit millions, but to get that stage of asset from China typically requires only a two-digit million upfront investment, Lüneborg said.
“It’s a little bit more backhanded, and therefore aligns a bit more with the capital at risk from the investors at the point of making the initial investment,” she said.
Previously, most biotechs started with a piece of fundamental science, and then worked for years to build a drug around it that could eventually be tested. With the explosion of trial-ready assets from China, many are now skipping those early steps.
Some of these companies, like Prolium Bioscience, are focusing on a single drug, hoping they can go into multiple indications with one asset.
Prolium CEO Scott Requadt told Endpoints via email that his company is “not pursuing additional R&D outside of our work to develop PRO-203.” China-based Keymed Biosciences originally developed the T cell engager for cancer, and Prolium is repurposing it for “up to eight B cell-driven, severe autoimmune diseases,” Requadt said.
Other NewCo outfits sourced a clinical-stage asset or two from China so they could kickstart their pipelines and build a foundation for additional discovery work. That discovery team also helps investors and NewCo management teams place more educated bets on the products they’re bringing in.
“The philosophy is that you’re not going to be able to be effective at sourcing products if you don’t have a strong discovery team. That’s why we have built one,” Windward Bio CEO Luca Santarelli said. His Swiss biotech did
two China deals
last year with Qyuns Therapeutics and Harbour-partnered Kelun, and has a “vibrant internal research organization” working on additional respiratory and dermatology treatments.
Tortugas Neuroscience is another example of a biotech seeking to pair external assets with in-house discovery of new medicines. The company broke cover last month with $106 million and a suite of Phase 2 brain health assets from China-based Hansoh Pharmaceutical and Japanese biopharma Eisai.
“We think the model we’re doing is the right one for the future,” Tortugas CEO Jeff Jonas said. Tortugas already has two discovery programs lined up in areas it believes its scientists could “do better ourselves,” president and head of R&D Al Robichaud said.
“We think that’s the way to build a really solid foundation if you want to build a company that’s moving earlier, because you create value in the later stages and that facilitates the early work,” Jonas said, adding you “don’t want to be one- or two-and-done.” Investors typically ascribe most of the value of a biotech to one or two main assets. “My view is they’re getting the discovery for free right now,” Jonas said.
Some of the other new NewCo biotechs declined to comment or didn’t respond to inquiries from Endpoints.
Alveus Therapeutics CEO Raj Kannan told Endpoints that his US and Danish obesity biotech began with a clinical asset from China, but it has a suite of in-house amylin prospects and other discovery work ongoing for next-generation weight loss treatments.
It’s those next-generation opportunities that Santarelli and others believe could come from internal work.
“There is still quite a bit of opportunity for European and American biotechs to innovate on the research side. We’re seeing a flourishing of deals with China because of the large numbers of assets that are available, but when you go to less-explored targets and novel pathways, there’s still quite a bit of opportunity to do that in-house,” Santarelli said. “We’re combining a little bit of that.”
