Over $2.1 billion rushes to gain a foothold in TCE, Gilead acquires Conoya NewCo partnership company

21st Century Economic Report Journalist Han Liming

On March 24, Kangnuo (02162.HK) announced that its NewCo partner Ouro Medicines has signed a merger agreement with Gilead Sciences (referred to as “Gilead”, NASDQ: GILD), in which Gilead will acquire Ouro Medicines through a merger. The total amount of the transaction can reach $2.175 billion, including an upfront payment of $1.675 billion (which can be adjusted as per usual practices) and up to $500 million in milestone payments.

According to the merger agreement, as a shareholder of Ouro Medicines, Kangnuo will receive approximately $250 million in upfront payments and up to about $70 million in milestone payments upon completion of the transaction, with total revenue potentially reaching about $320 million; at the same time, the licensing tier for CM336/OM336 will be fulfilled by Gilead. After the transaction is completed, Kangnuo will no longer hold equity in Ouro Medicines.

It is reported that Ouro Medicines’ core asset, the BCMA/CD3 bispecific antibody CM336, originates from Kangnuo. Backtracking to November 2024, Kangnuo granted Platina Medicines Ltd (PML) exclusive rights to research, develop, manufacture, register, and commercialize CM336 globally (excluding China), which allowed Kangnuo to receive a $16 million upfront payment and recent payments, while also obtaining a partial equity stake in PML’s parent company, Ouro Medicines (which owns 100% of PML).

Industry insiders believe that from the establishment of Ouro Medicines in 2024 to its premium acquisition by MNC (multinational pharmaceutical companies) today, Kangnuo has validated the commercial closed loop of the NewCo overseas model in less than two years. On one hand, this model has brought considerable cash flow to Kangnuo, including the initial $16 million upfront payment and recent payments obtained at the beginning of the NewCo collaboration, as well as the recovery of approximately $320 million in this merger; on the other hand, it also indirectly verifies the market’s recognition of its TCE bispecific antibody independent R&D platform’s innovation capability.

Image source: Kangnuo official WeChat

Kangnuo’s NewCo Layout

The NewCo model has emerged as a new path for Chinese innovative pharmaceutical companies going overseas in the past two years. Unlike the traditional BD (business development) model, NewCo is neither simply a product licensing agreement nor completely independent development; instead, it involves Chinese pharmaceutical companies granting overseas new companies (i.e., NewCo) the overseas rights to innovative drugs, thus obtaining a combination of cash and equity as compensation.

According to a research report by Southwest Securities, from 2023 to 2025, Chinese pharmaceutical companies’ drug transferees NewCo have cumulatively obtained $350 million in upfront payments and a potential total amount of $13.74 billion, including $110 million in upfront payments in 2025 and a potential total amount of $4.76 billion, highlighting the rapid development momentum of the NewCo model.

Since July 2024, Kangnuo has intensively disclosed four NewCo collaborations within half a year, with transaction targets including the bispecific antibodies CM512 and CM536, the BCMA/CD3 bispecific antibody CM336, the CD38 monoclonal antibody CM313, and the CD20×CD3 bispecific antibody CM355.

From the perspective of target layout, two of these transactions involve the CD3 target, focusing on the TCE bispecific antibody field. Based on preliminary statistics from public information, the upfront payments for these four transactions total $78.5 million, with a potential total transaction amount of $1.698 billion.

Industry experts generally believe that the NewCo model brings multiple advantages to innovative pharmaceutical companies. On one hand, companies can not only obtain upfront and milestone payments from licensing agreements but can also participate in decision-making to a certain extent by holding equity in NewCo, sharing in the asset appreciation and dividend income during its future development; on the other hand, compared to the traditional MNC-exclusive License-out model, the total licensing fees (especially the upfront payments) of the NewCo model are usually lower, making it easier for licensors to find suitable trading partners and accelerating the overseas layout process.

However, the NewCo model also has certain concerns. This model has specific requirements for licensing targets, which must be high-potential specific types of “assets,” making it more suitable for pharmaceutical companies with breakthrough potential early-stage technologies, innovative drug pipelines, or unique technology platforms.

In this regard, the market has raised doubts about whether innovative pharmaceutical companies are “cutting the seedlings.” Previously, Kangnuo’s chairman and CEO Chen Bo admitted in a media interview, “We are not going to abandon the product once NewCo is completed; we still need to spend more time learning from overseas R&D experiences to feed back into Chinese clinical trials. We hope to nurture our ‘seedling’ with overseas funds, experienced personnel, and overseas hospital resources.”

Some brokerage analysts have also pointed out to the 21st Century Economic Report journalist, “The core advantage of the NewCo model is that a single entity can focus all resources on the target pipeline, avoiding resource dispersion. Although high upfront payments cannot be obtained, Chinese pharmaceutical companies can gain equity and participate in decision-making to a certain extent. If NewCo achieves a merger or IPO, it is expected to capture a higher premium and maximize asset value.”

“Whether choosing a license-out, NewCo, or Co-Co model, it is essential to anticipate the trading partner’s behavior strategies and potential future risks in advance. For example, if the partner is a NewCo or a small biotech company, it is essential to be vigilant about their ‘secondary transfer’ risk and to ensure through contractual design that Chinese pharmaceutical companies maintain control and voice in future asset transactions,” the analyst added.

What is the Value of TCE Assets?

The 21st Century Economic Report journalist noted that, thanks to factors such as convenience, accessibility, and production costs, the industry generally believes that TCE bispecific antibody therapy is expected to take over ADCs (antibody-drug conjugates) as a hot investment area for innovative drugs. Previous Newco transactions involving monoclonals from Anmai Bio, Jiahe Bio, and tri-specific TCEs from Wuzhizhibo also involved TCE pipeline areas.

Public information shows that TCE, or T cell engagers, are a type of artificially designed immune therapy molecules that bridge T cells and target cells, guiding the body’s immune system to attack tumor or infected cells, thus triggering a strong cytotoxic response. TCEs are typically engineered to target tumor-associated antigens (TAA) on cancer cells and CD3 receptors on T cells, forming immune synapses that drive targeted cytotoxicity.

With the rapid development of TCE therapies in oncology, Industrial Securities’ report published at the end of 2025 shows that there are currently 12 approved TCE therapies globally (10 approved in the United States and 6 approved in China), of which 9 are for hematological tumors and only 3 are for solid tumors.

The market’s high expectations for its prospects have also spawned a large number of R&D pipelines. According to statistics by scholars including Klein in 2024 on the R&D situation of multi-antibodies in clinical phases and those approved, TCE pipelines account for 75% of the multi-antibody pipelines for hematological tumors (which make up 27% of total multi-antibody R&D), while TCE pipeline numbers for solid tumors only account for 32.9% of solid tumor multi-antibody pipelines (which make up 73% of total multi-antibody R&D).

Thus, it can be seen that the currently listed and in-development TCE drugs and pipelines are mostly concentrated in the hematological oncology field, while exploration in the solid tumor field, which has greater clinical demand and higher R&D difficulty, is still ongoing. Furthermore, TCE applications in the direction of autoimmunity are even more cutting-edge, with no TCE drugs having been approved yet, making it a core focus for global pharmaceutical companies’ new round of layout.

In this acquisition, Gilead’s acquisition of Ouro Medicines, Kangnuo emphasized in its announcement that it will accelerate the global development of CM336/OM336 as a potential best-in-class TCE in various clinically needed autoimmune disease treatment areas.

According to disclosures, CM336/OM336 has received Fast Track Designation (FTD) and Orphan Drug Designation (ODD) from the U.S. Food and Drug Administration (FDA) for the treatment of autoimmune hemolytic anemia (AIHA) and primary immune thrombocytopenia (ITP), and is expected to enter registration studies by 2027; the research results for its treatment of autoimmune hemolytic anemia were published in the world-renowned medical journal The New England Journal of Medicine.

In fact, the ongoing global “bulk buying” competition for TCE assets is accelerating, and China’s quality TCE assets have become a “target of contention” for MNCs.

On February 3, WuXi Biologics announced that it has signed a licensing and research service agreement with Vertex for an innovative tri-specific TCE. Vertex plans to use it to treat B cell-mediated autoimmune diseases.

According to the agreement terms, Vertex will obtain global exclusive development and commercialization rights for the preclinical tri-specific TCE aimed at treating B cell-mediated autoimmune diseases. WuXi Biologics will receive an upfront payment and is eligible for milestone payments related to development, registration, and sales, as well as sales commissions after product launch. In addition, WuXi Biologics will provide integrated contract research and development services for its innovative TCE.

On March 4, Deki Pharmaceuticals and UCB also jointly announced the signing of an agreement, in which Deki Pharmaceuticals will grant UCB exclusive rights to advance the development, production, and commercialization of the CD19/CD3 bispecific T cell engager ATG-201 globally, including a technology license related to the production of ATG-201.

Based on this transaction, Deki Pharmaceuticals will receive a total of $80 million in upfront payments and recent milestone payments, including $60 million in upfront payments and an additional $20 million in recent milestone payments, and is expected to receive over $1.1 billion in future milestone payments based on development and commercialization progress, along with tiered royalties based on future net sales.

Currently, the global TCE track is still in a period of rapid growth, with the structural design around TCE continuously upgrading and iterating, and its commercialization space has not yet reached a ceiling. As more companies increase their layout efforts, the TCE track is expected to experience explosive development, and Chinese innovative pharmaceutical companies laying out in this field will also encounter more development opportunities.