A company set up to develop Hengrui Pharma's weight-loss drugs has made a strong debut on the U.S. equity market, building confidence in the &#34;NewCo&#34; business model



<figure class="wp-block-image size-large"><img src="https://imageproxy.pbkrs.com/https://contributor-assets.benzinga.com/wp-content/uploads/2026/04/23021447/%E5%B1%8F%E5%B9%95%E6%88%AA%E5%9B%BE_23-4-2026_101430_thebambooworks.com_-1024x583.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" width="1024" height="583" original-src="https://imageproxy.pbkrs.com/https://contributor-assets.benzinga.com/wp-content/uploads/2026/04/23021447/%E5%B1%8F%E5%B9%95%E6%88%AA%E5%9B%BE_23-4-2026_101430_thebambooworks.com_-1024x583.jpeg"/></figure>



image credit: Bamboo Works



<h4>Key Takeaways:</h4>



<ul>
<li>Hengrui's diluted stake in the hived-off company, Kailera Therapeutics, has reached a value of about $300 million after the stock's debut</li>



<li>The Kailera IPO comes a month after another NewCo success story – the lucrative sale of a firm hived off from drug developer Keymed</li>
</ul>



When Chinese drugmakers began spinning off promising pipelines into standalone companies, they faced market concern and skepticism. The strategy was considered an unproven and potentially risky way to monetize their clinical assets.



But the attitude towards these so-called NewCos – corporate vehicles housing specific drugs under development – has brightened this year after one of the Chinese spin-offs was bought out by a multinational, delivering a big payoff for the original developer.



And now another leading Chinese pharmaceutical firm, Jiangsu Hengrui Pharmaceuticals Co. Ltd. (1276.HK; 600276.SH), has provided further evidence to validate the NewCo model. A company with rights to a portfolio of weight-loss drugs incubated by Hengrui, Kailera Therapeutics (NASDAQ:KLRA) has just made a strong trading debut on the Nasdaq.



The newly listed firm was set up as a corporate wrapper for Hengrui Pharma's GLP-1 assets, with shareholders including Bain Capital Life Sciences, Atlas Venture, RTW Investments and Lyra Capital, along with other specialized investment institutions. The Kailera share price surged about 63% on its first U.S. trading day, offering a windfall opportunity for its stakeholders and backers.



It was the second NewCo success story in a matter of months, after a company set up by Keymed Biosciences (2162.HK) to fast-track an immunotherapy drug was acquired by Gilead Sciences (NASDAQ:GILD) in March, delivering a healthy investment return.



Hengrui's NewCo experiment began in 2024, when Kailera – originally named Hercules – was founded and acquired global rights outside Greater China for three Hengrui GLP-1 drug candidates. Those assets include ribupatide (HRS953), a GLP-1/GIP dual agonist, the oral small-molecule GLP-1 receptor agonist HRS-7535, and the triple agonist HRS-4729. Hengrui received an upfront payment and technology transfer fees totaling $110 million, as well as a stake of around 19.9% in the new entity, along with potential milestone income of up to $6 billion.



Through the deal, Hengrui Pharma enjoyed a swift injection of cash while retaining a link to the drugs' ongoing prospects through its Kailera stake. Even though Hengrui's shareholding was diluted to about 9.8%, the value of its stake has climbed to around $300 million based on Kailera's first-day closing price.



Backed by prominent names in venture capital, the newly formed Kailera moved swiftly into fund-raising mode, completing a $400 million Series A round in October 2024. In July 2025, Hengrui and Kailera jointly announced positive results from a Phase Three Chinese trial for the ribupatide anti-obesity injection. In October of the same year, Kailera completed another $600 million Series B financing. The company then went public in April, raising $625 million in a Nasdaq IPO — the largest listing to date by a Chinese pharmaceutical company using the NewCo model.



Kailera has achieved a relatively high valuation on the back of its weight-loss assets. Its core product, ribupatide, has entered Phase Three overseas trials for obesity, while two of its oral GLP-1 drugs are also due to enter global testing this year. Proceeds from the IPO will be used to advance those pipelines, positioning the company as a direct rival to global giants such as Eli Lilly and Novo Nordisk.



After Kailera's IPO, Morgan Stanley maintained an &#34;overweight&#34; rating on Hengrui Pharma, citing the potential to monetize the GLP-1 portfolio through rising equity value, milestone payments and royalties, generating reliable cash flow.



<h4>Steady income stream</h4>



Hengrui has deployed the NewCo structure more than once. A similar model was used in September 2025 for overseas rights to a medication to treat a heart muscle condition. The cardiac myosin inhibitor HRS-1893 was licensed to Braveheart Bio, a company backed by venture capital firms Forbion and OrbiMed. The deal included an upfront payment and equity consideration totaling $65 million, with a potential total value of up to $1.09 billion.



Hengrui struck five overseas licensing deals last year worth 3.39 billion yuan ($500 million), a year-on-year rise of nearly 26%, establishing a new growth engine as it shifts from supplying generic drugs to pioneering new treatments. The company's revenues rose 13% in 2025 to 31.63 billion yuan, while net profit increased almost 22% to a post-listing high of 7.71 billion yuan. Revenue from innovative drugs jumped 26% to 16.34 billion yuan, accounting for around 58% of total pharmaceutical sales and surpassing income from generics.



However, the NewCo model takes Hengrui only part of the way to international status and commercial success. While such tactics have helped to unlock pipeline value ahead of product delivery, the portfolio still lacks drugs with blockbuster sales, capping Hengrui's equity market value.



The firm trades at a price-to-earnings ratio of around 53 times, while fellow drug developer BeiGene, now BeOne Medicines (NASDAQ:ONC) (6160.HK; 688235.SH) commands an elevated multiple of 132 times, despite only pulling out of the red last year with a profit just one fifth the size of Hengrui's bottom line.



For now, investors are granting a bigger premium to BeiGene's business potential. Converting its strong R&amp;D pipeline into commercially successful and globally competitive products will be a key challenge for Hengrui going forward.



To subscribe to Bamboo Works weekly free newsletter, click here



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.

KLRA

01276

600276

Kailera Therapeutics, a spin-off of Hengrui Pharma focused on weight-loss drugs, had a successful IPO on Nasdaq, validating the NewCo business model. Hengrui's stake in Kailera is valued at approximately $300 million after the stock surged 63% on its debut. This follows a trend of successful spin-offs in the Chinese pharmaceutical sector, enhancing investor confidence. The IPO raised $625 million, which will be used to advance Kailera's drug pipelines, positioning it against major competitors like Eli Lilly and Novo Nordisk. Morgan Stanley maintains an "overweight" rating on Hengrui, citing potential revenue growth from its GLP-1 portfolio.

benzinga_article

Kailera Therapeutics

Eli Lilly

HENGRUI PHARMA

Hengrui Pharma

KEYMED BIO-B

Gilead Sciences

Bain Capital Specialty Finance

Wave Life Sciences

Endra Life Sciences

Nano Labs

Atlas Growth Acquisition Ltd

Gallant Venture

Northern Venture Trust PLC

Western Asset High Inc II-RT

TWELVE SEAS INVESTMENT COMPANY III ORD USD0.0001 CL A (SUB/RTS)21/11/2030

Russell Investment Management LLC

Lyra Therapeutics

ORA Capital Partners Limited

Tyra Biosciences

Harvard Bioscience

Mustang Bio

Sonnet BioTherapeutic CVR

Forian

Forte Biosciences

FORTIOR

Oramed Pharma

OncoMed Pharmaceuticals, Inc.

ORIC Pharmaceuticals

Novo Nordisk AS

Morgan Stanley

ENDRA LIFE SCIENCES INC

FORTE BIOSCIENCES INC

MORGAN STANLEY DEP SHS EA REP 1/1000 SHS NON CUM PFD O

MORGAN STANLEY DEP SHS REPSTG 1/1000TH PFD SER Q

MORGAN STANLEY DEP SHS REPS 1/1000 7.125% PFD E

MORGAN STANLEY NON-CUM DEP SH REP 1/1000 PFD SER I

MORGAN STANLEY 4.875 DEP SHS REP 1/1000 NCUM PFD SR L

MORGAN STANLEY 6.5%DEP SHS REPSTG 1/1000 NON CUM SER P

MORGAN STANLEY DEP SHS REPS 1/1000 PFD SER 'A'

MORGAN STANLEY DEP SHS REPR 1/1000TH INT PFD SER 'F' FX

MORGAN STANLEY DEP SHS REP 1/1000 NON-CUM PFD STK SER K

Kailera Therapeutics' Strong IPO Validates "NewCo" Strategy