The Chinese biotech set up a separate &#34;NewCo&#34; company for its autoimmune drug, beating the likely proceeds from a conventional out-licensing deal



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<h4>Key Takeaways:</h4>



<ul>
<li>International drug rights were transferred to the new U.S.-based entity for an upfront fee and equity stake back in 2024</li>



<li>The independent firm is now being sold on to Gilead Sciences, delivering a windfall profit for Keymed on top of rising product revenues</li>
</ul>



Less than two years ago, a Chinese biotech hived off an experimental immunotherapy drug into a standalone company to fast-track the product's progress. That decision is now set to deliver a substantial payoff.



Keymed Biosciences Inc. (2162.HK) scored its success through a so-called NewCo, a firm set up overseas for the express purpose of monetizing a clinical asset. This approach has become a key but controversial route for globalizing China's promising drug pipelines, forming one strand of a wave of outbound deals that exceeded $60 billion in the first quarter of this year alone.



The drug at the center of this latest transaction is designed to reset the immune system to stop the body attacking healthy cells. Keymed had transferred rights to the asset into a separate entity, Ouro Medicines, in November 2024, retaining a 15% stake. In late March, pharmaceutical multinational Gilead Sciences (GILD.US) agreed to buy the U.S.-incorporated company, marking the first complete NewCo cycle from set-up to exit by a Chinese drugmaker.



Keymed said in a statement that Ouro Medicines would change hands for up to $2.175 billion, including an upfront payment of $1.675 billion and potential milestone payments of up to $500 million.



Based on its stake, the Chinese biotech is in line for about $250 million upfront and as much as $70 million in milestone payments, for maximum proceeds of roughly $320 million. Under the deal, Keymed will relinquish its equity interest in Ouro Medicines but will retain rights to royalties on sales of the candidate drug, CM336/OM336.



When Ouro Medicines was set up, Keymed granted the company exclusive rights to develop, produce and sell its immunotherapy drug outside Greater China, for $16 million upfront and additional near-term payments. From start to finish, Ouro Medicines will have existed for only about 16 months.



The NewCo method differs from standard licensing models in that overseas rights to drug pipelines are granted to a new company led by international capital and operating teams. The original developer of the assets gets an equity stake in return. The new vehicle can then concentrate its entire resources on developing a target drug, avoiding dilution of effort.



The originators rarely get big upfront sums, but they keep a stake in their discovery and can participate to some extent in decision-making. In the case of Ouro Medicines, Keymed got a cash payment from the initial transaction and ultimately exceeded the likely returns from a standard licensing deal after the Gilead acquisition boosted its equity value.



The core asset of Ouro Medicines is a bispecific T-cell engager (TCE) targeting BCMA and CD3 antigens that Keymed developed independently. It works by recruiting T cells to selectively kill diseased cells and is currently undergoing Phase One and Two clinical trials as a treatment for primary light-chain amyloidosis, a bone marrow disorder, and multiple myeloma. The U.S. Food and Drug Administration (FDA) has granted the therapy Fast Track and Orphan Drug status. Meanwhile, Gilead's Chief Medical Officer Dietmar Berger described the therapy as a differentiated approach with the potential to offer long-lasting control of autoimmune diseases.



<h4>Market inroads</h4>



Keymed marked its 10th anniversary in 2025 and made a leap forward commercially. Annual results issued on March 26 show that revenues rose 67% in 2025 to around 720 million yuan ($105 million), including about 315 million yuan in product sales and 402 million yuan from external licensing and collaboration arrangements.



Stapokibart, the company's monoclonal antibody to treat inflammatory conditions, hit the market in 2025 and has been fully included from this year in China's medical coverage scheme for sufferers of moderate-to-severe atopic dermatitis, chronic rhinosinusitis and seasonal allergic rhinitis. The product is China's first such drug to have been domestically developed and is now set for a sales push, having earned 315 million yuan even before it was accepted into the national drug reimbursement list.



Still, Keymed's net loss edged up 1% to 523 million yuan in 2025, mainly due to increased sales costs, while R&amp;D expenses fell 2% to approximately 720 million yuan. The company has more than 50 drug projects underway, with a fifth of those already in clinical stages, including five bispecific antibodies and two antibody-drug conjugates (ADCs).



The company held cash reserves of around 1.96 billion yuan by the end of last year, and proceeds from various licensing deals are now expected to swell its coffers. Aside from the Ouro proceeds, a Keymed ADC pipeline licensed to AstraZeneca earned a $45 million milestone payment in February this year after entering a Phase Three trial for use against gastric cancer.



Keymed's Hong Kong share price rose for four straight sessions after the earnings and acquisition news, achieving a cumulative rise of 20% that boosted its market value to HK$18 billion ($2.3 billion), even as the wider market was sliding on worries about the impact of Middle East tensions.



Keymed is currently trading at a price-to-sales ratio of about 22 times, above the 15 times for RemeGen (9995.HK), another drugmaker focused on autoimmune diseases. The premium suggests investors have greater confidence in the long-term prospects for Keymed's drug portfolio.



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Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.

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Keymed Biosciences Inc. has spun off its autoimmune drug into a new company, Ouro Medicines, which is being sold to Gilead Sciences for up to $2.175 billion. Keymed will receive approximately $320 million from this deal, including upfront payments and milestone payments. This marks a significant achievement for Keymed, as it is the first complete NewCo cycle from a Chinese drugmaker. The drug, currently in clinical trials, targets autoimmune diseases and has received FDA Fast Track and Orphan Drug status. Keymed's revenues rose 67% in 2025, despite a slight increase in net loss.

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A Healthy Return: Drug Spin-off Nets Keymed Up To $320M