In December 2023, a $4.1 billion all-cash acquisition once again thrust RayzeBio, a radiopharmaceutical startup that had just gone public less than four months earlier, and its helmsman Ken Song, into the spotlight.

As a serial entrepreneur, Ken Song had no intention of retiring on his laurels. In September 2024, he founded NewCo Candid Therapeutics, setting his sights on T-cell engager (TCE) assets, and brought in core assets from the booming Chinese innovative drug market.

On March 2, 2026, Candid reached a merger agreement with Nasdaq-listed Rallybio, entering the secondary market. By May 3, UCB announced its acquisition of Candid for up to $2.2 billion.

Not only is the playbook replicable, but with the added boost from Chinese assets and the NewCo model, the cycle from IPO to M&A can be even shorter.

Ken Song is not the only one to recognize this opportunity. In fact, innovation outcomes with Chinese elements are being pursued worldwide. The latest data from the National Medical Products Administration (NMPA) shows that in the first quarter of 2026, the total value of out-licensing deals for Chinese innovative drugs exceeded 60billion,nearlyhalfofthe60billion,nearlyhalfofthe135.655 billion recorded for the full year 2025 – undeniably strong growth.

The question, however, is how much of this will actually translate into realized gains.

More than one industry insider has pointed out to TONACEA that out-licensing, including the NewCo model, is not the endgame for Chinese innovative drugs. Looking at the MNC-dominated biopharmaceutical industry, as the patent cliff approaches, M&A may well become the next chapter in the globalization of Chinese assets.

To some extent, the Candid-UCB transaction is an emergence of this undercurrent.

TONACEA 01: What Is UCB After?

UCB CEO Jean-Christophe Tellier stated that the acquisition demonstrates its innovation strategy and marks a pivotal moment for UCB. With the addition of cizutamig, UCB is able to seize the significant opportunity presented by the TCE class of immunotherapies.

But Candid, which holds cizutamig, is not the true originator.

Candid's history can be traced back to two parallel Chinese NewCo transactions. TRC 2004, a NewCo incubated by Two River, obtained global rights to a BCMA/CD3 bispecific antibody from Epimab. Another NewCo, Vignette Bio, incubated by Vida Ventures, obtained a CD3/CD20 bispecific antibody from Genor Biopharma.

In September 2024, Candid simultaneously acquired TRC 2004 and Vignette Bio, thereby integrating two TCE pipelines, creating complementarity in the directions of plasma cells and B cells.

In December of the same year, Candid entered a collaboration with Nona Biosciences to co-develop next-generation TCE molecules for autoimmune diseases based on Nona's technology platform, with total upfront and milestone payments potentially reaching up to $320 million.

By January of this year, WuXi Biologics also appeared on Candid's collaboration list. Under the agreement, WuXi Biologics will leverage its proprietary bispecific antibody technology platform to help Candid develop trispecific TCEs, with deal consideration including potential upfront, R&D, and sales milestone payments of up to $925 million.

In this way, Candid completed an upgrade of its asset portfolio from a solo act to a multi-player ensemble.

Joshua Kazam, founding partner of Two River, which participated in Candid's creation, later explained the playbook: "Candid has focused on accumulating data across multiple programs and making decisions based on clinical evidence, all enabled by rapid and cost-effective execution in China."

Currently, Candid's two TCE assets have been dosed in nearly 200 patients, demonstrating deep B-cell depletion capabilities and an excellent safety profile, with significant efficacy in refractory patients.

Ken Song described 2025 as the year Candid's innovation concepts were clinically validated, and "entering 2026, our core strategy is to develop an optimal development plan to maximize TCE therapy's commercial potential and solidify Candid's industry leadership in TCE treatment of autoimmune diseases."

An IPO was clearly part of this advancement path.

In March, Candid signed a reverse merger agreement with Rallybio. Rallybio was originally focused on rare diseases and maternal-fetal medicines, with its asset pipeline nearly depleted and its market capitalization at rock bottom. The essence of the transaction was Candid absorbing Rallybio's shell.

After the merger, Candid's original shareholders held approximately 96.35% equity, while Rallybio's old shareholders retained only 3.65%. Simultaneously, Candid completed a 505millionprivateplacement,leavingthemergedcompanywithapproximately505millionprivateplacement,leavingthemergedcompanywithapproximately700 million in cash.

By May, UCB stepped in, paying 2billionupfrontandupto2billionupfrontandupto200 million in milestones, acquiring the aggregator Candid.

From UCB's perspective, this acquisition not only secured cizutamig, which received special mention, but also a series of subsequent synergistic pipeline assets, and the engine powering this pipeline. In other words, it was a target with tremendous growth potential – and growth is exactly what UCB is seeking to achieve.

Earlier, in August 2024, UCB announced a strategic divestiture in China. The company sold, divested, and licensed its established neurology and allergy business in China to CBC and Mubadala for $680 million. In 2023, net sales of these drugs in China totaled €131 million. But for a UCB in transformation, the focus needed to be on innovation and partnerships, making the acquisition of Candid a natural progression.

TONACEA 02: NewCos Come Ashore

UCB's offer is one thing, but Candid's willingness to sell is another.

For investors, an IPO is already a path to exit. Looking at recent trends, some NewCos spawned by Chinese assets are achieving liquidity through the secondary market.

In December 2025, GenSci licensed its SHR antagonist antibody to Yarrow Bioscience in a potential $1.365 billion transaction. Just days later, Yarrow reverse merged with VYNE Therapeutics, becoming a Nasdaq-listed company.

Although GenSci did not disclose its equity stake in the Yarrow transaction, some industry observers believe that Yarrow, launched by investment firm RTW Investments, with its rhythm of "importing assets, quickly packaging for listing, and operating overseas with an external professional team," closely aligns with the NewCo model – using a new company as a vehicle for asset hosting and financing.

In March of this year, Candid followed suit, successfully backdoor listing.

The following month, Kailera, a weight-loss drug NewCo supported by Hengrui Medicine assets, achieved an IPO overseas, pricing shares at 16andraising16andraising625 million, marking the largest IPO in the U.S. biotech industry since 2021.

On its first trading day, Kailera's stock surged 63%, with a market capitalization exceeding $3 billion, dominating the spotlight.

However, an IPO is not as glamorous as it appears on the surface. Since its listing, Candid's stock price has not risen but has fallen nearly 15%, reflecting the fickleness of the secondary market.

While an IPO provides R&D funding, increases public market visibility, and offers a traditional exit channel for early investors, it merely postpones uncertainty. It does not answer the ultimate question of what becomes of a pre-revenue biotech.

Even star Kailera reported a net loss of $149 million in 2025. Its IPO prospectus stated that as its pipeline advances through clinical development and ultimately seeks regulatory approval, Kailera expects to continue to incur substantial expenses and operate at a loss for at least the next several years.

In short, the risks of new drug development do not disappear with an IPO. Whether bispecific antibodies or GLP-1s, any candidate drug faces enormous uncertainty until pivotal registration trials are completed, and even after entering post-market development. If performance falls short of expectations, a program can collapse at any time.

Candid, which launched a global Phase II clinical trial in 2026, needed a more stable backing. Compared to an IPO, an acquisition locks in an exit before clinical data are fully revealed, transferring all subsequent risk to the buyer.

Based on this logic, Candid's backdoor listing appears more like a preparatory backstop for an acquisition, much like Ken Song's strategy before the RayzeBio-BMS deal. An IPO provides a clear pricing benchmark in the secondary market, offering a reference price floor for subsequent acquisition negotiations.

Ouro Medicines, another NewCo involving Chinese assets, provides a parallel example.

In March, Gilead acquired Ouro for 2.175billion.Thecoreassetofthiscompany,aBCMA/CD3bispecificTCEantibody,originatedfromChinesecompanyKeyMedBiosciences.Forthis,KeyMedreceivedapproximately2.175billion.Thecoreassetofthiscompany,aBCMA/CD3bispecificTCEantibody,originatedfromChinesecompanyKeyMedBiosciences.Forthis,KeyMedreceivedapproximately250 million upfront from the Gilead acquisition.

This marked the first time a NewCo established with Chinese participation was wholly acquired by an MNC – just over a year from KeyMed's licensing of CM336 to Ouro to the acquisition by Gilead.

TONACEA 03: "Second-Hand" Comes at a Higher Price

Unlike the depreciation effect seen in consumer electronics, UCB's acquisition of Candid further demonstrates that the value of Chinese innovative drugs unfurls through successive transactions.

The story of Hengrui Medicine's TSLP monoclonal antibody SHR-1905 is a representative example.

In August 2023, SHR-1905 was licensed to One Bio (later renamed Aiolos) for a modest 25millionupfront.Fivemonthslater,GSKacquiredtheexclusiverightstothisdrugfromAiolosfor25millionupfront.Fivemonthslater,GSKacquiredtheexclusiverightstothisdrugfromAiolosfor1 billion upfront. The difference from 25millionto25millionto1 billion represents a 40-fold increase.

Another Chinese asset GSK bought at a premium is ozureprubart, a Phase IIb antibody new drug for preventing food allergies.

In December 2024, Genuine Biotech licensed overseas rights to ozureprubart to RAPT Therapeutics for a 35millionupfrontpayment.ByJanuary2026,GSKacquiredRAPTfor35millionupfrontpayment.ByJanuary2026,GSKacquiredRAPTfor2.2 billion.

The PD-L1/VEGF bispecific antibody PM8002 (BNT327) from Biotheus is a classic example of "one fish, multiple bites."

Initially, Biotheus chose to license overseas rights to this drug to BioNTech for a 55millionupfrontpayment,withtotalmilestonesexceeding55millionupfrontpayment,withtotalmilestonesexceeding1 billion. At that time, Biotheus was the "seller" and BioNTech the "buyer."

Just one year later, BioNTech wholly acquired Biotheus for just under 1billion(includingsubsequentmilestones).Sixmonthsafterthat,BioNTechbecamethe"seller,"sublicensingpartialrightstothebispecificantibodytoBMS–fora1billion(includingsubsequentmilestones).Sixmonthsafterthat,BioNTechbecamethe"seller,"sublicensingpartialrightstothebispecificantibodytoBMS–fora1.5 billion upfront payment, non-contingent anniversary payments totaling 2billionthrough2028,andupto2billionthrough2028,andupto7.6 billion in additional development, regulatory, and commercial milestones.

Based on this calculation, BioNTech stands to receive over $11.1 billion from the BMS transaction, far exceeding what it paid for Biotheus.

From Biotheus's 55millionupfrontbuyout,toBioNTech′sacquisitionoftheentirecompanyforunder55millionupfrontbuyout,toBioNTech′sacquisitionoftheentirecompanyforunder1 billion, to BMS's hundred-billion-dollar collaboration with BioNTech – the staggering spread in valuation across these trades is remarkable.

BMS, GSK, and these major spenders are certainly not naive. Taking BNT327 as an example, after securing the license, BioNTech advanced the new drug into Phase III clinical trials. Combined with the outstanding Phase III performance of Akeso's ivonescimab in the PD-(L)1/VEGF bispecific space, the potential of this competing asset was realized in its valuation.

This glimpse reveals a larger picture.

Chinese innovative drugs are increasingly being placed on the arbitrage chain of international capital markets. Nearly every time they change hands, the price rises to unprecedented heights.

Behind this lies a leap in value driven by accumulating clinical data: the collective eruption of the PD-(L)1/VEGF bispecific field, the initial validation of TCE bispecifics in autoimmune diseases, the rapid advancement of the GLP-1 field – domestic innovative drug companies have proven themselves qualified to stand at the international frontier.

The resulting challenge is: as innovators, how can China capture a larger share of the pie from these promising assets?

One path being practiced is Co-Co (co-development, shared benefits). In October 2025, Innovent Biologics and Takeda reached a total collaboration value of $11.4 billion, clearly reflecting this trend.

The collaboration is based on three core assets: IBI-363, a PD-1/IL-2 bispecific antibody fusion protein independently developed by Innovent; IBI-343, a CLDN18.2-targeting ADC; and IBI-3001, a B7-H3/EGFR bispecific ADC. The two parties share costs and profits on a 40/60 basis, demonstrating the greater ambition of Chinese innovative drug companies.

Returning to M&A possibilities, the first quarter of this year saw another highlight moment for Chinese assets.

Beyond Ouro, backed by KeyMed, Terns Pharmaceuticals, founded in 2017 by Chinese scientist Zhong Weidong and other industry figures, was also acquired by another giant, Merck & Co., for $6.7 billion in an all-cash deal.

From late 2023 to early 2024, a rare wave of cross-border acquisitions swept through Chinese biotechs: Gracell Biotechnologies, SanReno Therapeutics, AnHeart Therapeutics, ProfoundBio, and Biotheus – five biotechs were successively acquired by overseas pharmaceutical companies. The M&A moment for Chinese assets may be set to return in 2026.

References:

UCB to acquire Candid Therapeutics, building upon its existing immunology pipeline with novel T-cell engagers

Global TCE therapy breaks through in autoimmune diseases! Candid's dual-drug clinical data impressive; global Phase II study launches in 2026

RTW Biotech: New investment in Yarrow Bioscience

Chinese new drugs return to the M&A arena

NewCos enter monetization phase

$8 billion in M&A within two days: Chinese innovative drugs are becoming global "hard currency"