The ecosystem of China's innovative drugs has taken another step towards diversification.

 

Written by Zhang Yejing

On the afternoon of July 15, Sino Biopharm announced that it will acquire a 95.09% stake in Shanghai-based LaNova Medicines for a total price of approximately USD 500 million. Combined with the 4.91% stake previously acquired by Sino Biopharm through LaNova's Series C financing, LaNova Medicines will become a wholly-owned subsidiary of Sino Biopharm, 100% controlled by it, upon completion of this transaction.

 

 

LaNova Medicines is a Chinese biotech company that has been recognized and validated by top-tier global MNCs in the two golden tracks of bispecific antibodies and ADCs.

 

As early as 2023, LaNova Medicines entered into an exclusive licensing agreement with AstraZeneca, licensing the global research, development, and commercialization rights of LM-305 to AstraZeneca for a total transaction value of USD 600 million, with an upfront payment of USD 55 million. At the time the deal was made, LM-305 was still in the preclinical stage. By the end of 2023, LM-305 became the world's first GPRC5D-targeting ADC to enter the clinical development stage, and was a potential FIC candidate.

 

Just one year later, LaNova Medicines once again partnered with a top-10 global MNC – this time with MSD, shifting from ADCs to bispecific antibodies. In November 2024, the collaboration between LaNova Medicines and MSD set a record for the out-licensing amount in China's bispecific antibody space at the time. MSD secured exclusive global rights for the development, manufacturing, and commercialization of LaNova's PD-1/VEGF bispecific antibody, LM-299. The total transaction value is USD 3.288 billion, and to date, LaNova Medicines has received a total of USD 888 million, including upfront and technology transfer milestone payments. Notably, LM-299 had only just received clinical trial approval in China when MSD identified its potential.

 

It can be said that both AZ and MSD foresaw the huge potential in LaNova's pipeline. In terms of the core competencies of LaNova Medicines, its three proprietary R&D platforms—LM-AbsTM, LM-ADCTM, and LM-TCETM—have formed a complete technology chain from target discovery to clinical development. Currently, 2 projects are in the registrational clinical trials, 6 projects are in Phase I/II clinical trials, and more than 10 projects are in the preclinical stage, all of which are innovative drugs with global FIC or BIC potential.

 

 

 

LaNova Medicines Pipeline (Image source: LaNova Medicines website)

 

It is noteworthy that LaNova's collaborations with AstraZeneca and MSD resulted in cumulative out-licensing deals worth nearly USD 4 billion (approximately RMB 30 billion). Until the acquisition agreement with Sino Biopharm was reached, LaNova Medicines still had cash reserves of USD 450 million.

 

With such a bright future, why was LaNova Medicines acquired?

 

Some analysts believe that although the upfront and milestone payments are substantial, past experience shows that without a product being commercially launched, milestone payments ultimately cannot provide a continuous supply of funds. External financing is an inevitable choice for advancing development. Therefore, becoming a wholly-owned subsidiary of Sino Biopharm is a good choice, akin to "seeking shade under a large tree". Moreover, the collaboration between LaNova Medicines and Sino Biopharm has a long history, and Sino Biopharm's 100% holding makes it a "doubly close" relationship.

 

Judging from the announcements issued by both parties, LaNova Medicines values Sino Biopharm's strong commercialization capabilities and global influence, which can bring innovative drugs to market more quickly. From Sino Biopharm's perspective, the addition of LaNova Medicines will be a strong force in the company in the field of innovative cancer therapy, greatly enhancing its core competitiveness and international influence.

 

On a deeper level, for Sino Biopharm, expanding the scale of its innovative drug pipeline through "internal R&D + external BD" is a key engine driving its transformation from a "traditional generic drug giant" to an "innovative drug ecosystem enterprise". This is not Sino Biopharm's first acquisition in recent years.

 

As early as June 2022, Sino Biopharm's subsidiary, invoX Pharma, announced the acquisition of F-star, a UK-based pharmaceutical company listed in the US. Although the acquisition was fraught with twists and turns and took eight months, Sino Biopharm ultimately succeeded in acquiring F-star. Before being acquired by Sino Biopharm, F-star's technology platform had also been recognized by numerous MNCs, with collaborations with Johnson & Johnson, GSK, AbbVie, BMS, AZ, MSD, and others. At that time, some analyses suggested that by acquiring F-star, Sino Biopharm not only gained its bispecific antibody technology platform but also obtained an "entry ticket" to the European and American markets.

 

Of course, unlike the acquisition of LaNova Medicines, in June 2022, F-star's cash on hand was only sufficient for the next three quarters of expenses, and it also had nearly USD 30 million in debt.

 

In addition, last October, Sino Biopharm advanced its acquisition of HOB Biotech through a combination of "agreement transfer + tender offer" and achieved a controlling stake in the latter. Leveraging HOB Biotech's technological expertise in niche areas, Sino Biopharm entered the fields of allergy diagnostics, autoimmune diagnostics, and desensitization drug development, which became a key move in its layout of a "diagnostics + pharmaceuticals" ecosystem and broadening its capital channels.

 

One month after acquiring HOB Biotech, Sino Biopharm also completed its initial partnership with LaNova Medicines. Sino Biopharm "exchanged capital for technology", while LaNova Medicines "exchanged technology for resources". Sino Biopharm invested RMB 142 million to acquire a 4.91% stake in LaNova Medicines and reached a strategic cooperation in mainland China for LM-108 and potentially multiple innovative bispecific antibodies or ADCs.

 

From this perspective, the progressive model of "collaboration deal - equity investment - acquisition" has become an increasingly common sight in collaborations between big pharma and biotech companies in recent years. For example, after multiple BD deals for Biotheus's pipeline, BioNTech eventually acquired Biotheus.

 

In addition, Sino Biopharm has already used BD to enter areas of unmet need such as pediatric respiratory syncytial virus (RSV) and post-operative analgesia. It has also in-licensed CPX102, a Class 1 innovative drug and the first nebulized treatment for pediatric RSV infection, as well as QP001, a Class 2 new drug for long-acting post-operative analgesia, quickly supplementing its pipeline in niche tracks.

 

As of today's market close, Sino Biopharm's stock price has doubled since the beginning of the year. Although there is still some distance from its former market capitalization of 200 billion, some analysts believe that by acquiring star biotechs like LaNova Medicines and absorbing global FIC and BIC pipelines, its internationalization process will be greatly accelerated.

 

First Review | Huang Jia

Second Review | Li Fangchen

Third Review | Li Jingzhi