In early Jan 2025 I posted on the rise of Chinese biotech - One quarter later, is it fair to say we have reached “peak China bio outlicensing”? My Jan post came right before a big boom in deals announced the week of JPM (9 out-licensing deals & 5 newco deals announced totaling ~$1bn in equity capital raised) However February was quieter (9 Chinese biotech outlicensing deals announced, down from 21 in Jan) and March even more so. Last week I was invited to a local investor conference in Suzhou, China where I met biotech CEOs biotechs from across the China ecosystem. See pic below - pres by a leading lung cancer KOL at the conference What I gleaned in discussions there leads me to believe the recent wave of China biotech outlicensing has crested … for now. Reasons why: 1. A lot of quality, differentiated assets with clinical data have already been bought There’s only so many quality assets and the splurge of deals in the last 2 years leaves few assets that are actually differentiated in terms of target product profile 2. A widening bid / ask spread on the remaining potentially differentiated & transactable assets There is waning interest from Chinese CEOs in doing newco deals; over and over I heard from CEOs – “we’re talking to MNCs only, newco’s are not a priority”. There is a prestige & monetary premium to doing an MNC outlicense deal - but how many assets can MNCs really buy? There are thousands of Chinese biotechs, and only so many MNC deals that can be done in a specific indication / target space 3. The newco model faces increased competition within Chinese biotechs themselves The early stage funding environment has improved in China (unlike in US) – Chinese CEOs are now not so desperate to do *any* BD / newco deal, many now have the resources to push the assets to what they believe would be even more valuable clinical value inflection points. This was not the case 9-12 months ago as many biotechs faced matters of life and death 4. The number of assets outlicensed and handed back / suffer clinical setbacks is going to grow, potentially giving buyside parties pause (see: Elevate Oncology’s recent disappointing Claudin 18.2 ADC data which was licensed from CSPC) Naturally over time there will be outlicensed assets handed back to Chinese biotechs from the last boom of deals – this is a related issue to not having differentiated assets however 5. Finally, Chinese ecosystem as a whole is still ill equipped to explore novel biology – which is a key path to differentiation Given the glut of assets, novelty and clinical differentiation is what buyers are now primarily interested in. An un differentiated second or third or fourth in class will not cut it. Chinese biotechs struggle to gain conviction on novel biology to invest in Generally speaking, Chinese biotech CEOs are now feeling relatively better financially positioned than previously, and thus are willing to hold out for better terms for BD / newco deals -- but often still do not hold highly differentiated assets in hand Undoubtedly there are certainly still newco deals in the pipeline yet to be announced, however, the unique mix of conditions from last year that resulted in a huge newco / outlicensing boom over the last several quarters has likely passed To be clear - what hasn’t changed is that structurally China’s ability to get to clinical data quicker and cheaper in a wide variety of modalities has significant downstream effects in the global biotech industry So what's next? China's rise in biotech continues to raise some wide ranging existential questions for our industry - from an operational perspective, an entrepreneur’s perspective, to venture funding, to where innovation is going to come going forward. I’ll share updated thoughts on these topics sparked by my most recent trip soon

$URGN (NP) Cheap down here at $320M EV (Jelmyto alone at $100M annual run rate)

China Biotech is Here to Stay, and How the US Can Continue to Lead. By @davidycli timmermanreport.com/2025/01/…

Biogen is pursuing more dealmaking this year, with plans to spend up to $8B. "My team is very actively monitoring the landscape." endpts.com/biogen-is-pursuin… $BIIB