image credit: Bamboo Works
Key Takeaways:
Hengrui's diluted stake in the hived-off company, Kailera Therapeutics, has reached a value of about $300 million after the stock's debut
The Kailera IPO comes a month after another NewCo success story, the lucrative sale of a firm hived off from drug developer Keymed
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 ...
