Since early October, shares of China’s innovative drugmakers have trended downward. As investors quipped about the need for another major deal to restore confidence, one such event finally arrived.
On October 22, Innovent Biologics announced a licensing agreement with Takeda Pharmaceutical valued at USD 11.4 billion, comprising USD 1.2 billion in upfront payments and up to USD 10.2 billion in milestone payments. Of the upfront total, USD 100 million represents Takeda’s equity investment in Innovent at a 20% premium. The funds will be allocated 80% to global R&D and 20% to corporate operations. If the licensed products reach the market, Innovent will also receive sales-based royalties.
This structure—combining cash, equity, and profit-sharing in a single transaction—is rare among business development (BD) deals in China’s biotech sector.
The agreement covers three drug candidates: IBI363, IBI343, and IBI3001. Of these, only IBI3001, which remains in early-stage clinical trials, was sold under an option right. Most of the deal’s value is tied to IBI363 and IBI343.
Innovent said the deal marks the largest overseas licensing agreement by a Chinese innovative drugmaker. Globally, it ranks second only to Daiichi Sankyo’s USD 22 billion partnership announced in 2023.
Building international capabilities with Takeda’s help
Beyond its record value, the structure of the IBI363 partnership has drawn close industry attention. The asset is the deal’s core focus, and its lung cancer data created a stir at the American Society of Clinical Oncology (ASCO) annual meeting in June.
Rather than selling global rights outright, Innovent chose a co-development and co-commercialization (co-co) model with Takeda. The companies will share development costs and commercialization responsibilities on a 60-40 split, dividing profits or losses in the same ratio for the US market.
Such deep collaboration remains uncommon in China’s biotech sector. Co-co deals require substantial clinical development experience, regulatory expertise, and capital from the licensor, since much of the upfront payment must be reinvested into trials. Few Chinese firms have pursued this path.
To date, only two other co-co agreements from China are widely recognized: Legend Biotech’s CAR-T therapy Carvykti with Johnson & Johnson, and Biokin Pharmaceutical’s BL-B01D1 with Bristol Myers Squibb. Both involve high-potential drug candidates. Carvykti, for instance, generated USD 1.3 billion in sales in the first three quarters of this year, with peak annual sales projected at USD 5 billion. Under their agreement, Legend and Johnson & Johnson split profits 70–30 in China and equally in other markets.
This model, however, carries significant risk. If successful, the licensor gains higher returns and valuable hands-on experience in global development, regulatory submission, and commercialization. One founder told 36Kr that if Legend Biotech had sold its overseas rights to Carvykti outright instead of co-developing it, it would not have achieved the same level of commercial success or market capitalization leap.
That long-term capability building is precisely what Innovent values most.
Innovent has long made clear its ambition to become a global pharmaceutical company. At the October 22 press briefing, chairman Yu Dechao outlined a concrete goal: by 2030, Innovent aims to rank among the world’s leading biopharmaceutical firms, with at least five late-stage global Phase 3 trials and a fully built-out international infrastructure spanning R&D, regulatory, and sales functions.
Breaking into overseas markets independently is notoriously difficult for Chinese drugmakers. While Innovent has made several international moves, most have relied on partnerships. For example, it previously sold overseas rights to its PD-1 antibody sintilimab to Eli Lilly, taking a straightforward cash payout. This time, the company is betting on collaboration to serve as both a commercial partnership and a learning opportunity, effectively taking on an experienced “mentor” to open doors in the US market.
“We don’t just want business partnerships, we want to use them to build our own capabilities,” Yu said.
According to Innovent, during more than a year of negotiations, it received proposals from several larger and more oncology-focused companies but ultimately chose Takeda for its strategic alignment and commitment to co-development.
Takeda, though headquartered in Japan, has deep roots in the US and European markets. It operates in more than 80 countries and regions, with the US accounting for 52% of total revenue, followed by Europe and Canada at around 23%. Moreover, Teresa Bitetti, president of Takeda’s global oncology business, previously worked at Bristol Myers Squibb, where she led the US launch of Opdivo, the world’s first PD-1 inhibitor.
Betting on next-generation immunotherapies
At the press briefing, Innovent underscored its belief that IBI363 could become a foundational next-generation immunotherapy.
IBI363 is widely considered one of Innovent’s most promising assets. Mechanistically, it both blocks the PD-1 or PD-L1 pathway and activates the IL-2 pathway, meaning it could benefit patients who have developed resistance to existing PD-1 inhibitors, as well as those with low or no PD-L1 expression.
These groups represent vast commercial potential, with the PD-1 resistance market alone estimated to be worth tens of billions of USD globally.
The first indication prioritized by Innovent and Takeda is squamous non-small cell lung cancer, one of the most competitive and lucrative oncology segments, and the primary indication for Keytruda, the world’s bestselling cancer drug.
At ASCO, Innovent presented Phase 1 and 2 clinical data for IBI363 showing that at doses of 1–1.5 milligrams per kilogram, the objective response rate (ORR) was 25.9%, the disease control rate (DCR) was 66.7%, median progression-free survival (mPFS) was 5.5 months, and median overall survival (mOS) was 15.3 months. At a higher 3 mg/kg dose, the ORR, DCR, and mPFS reached 36.7%, 90.0%, and 9.3 months, respectively.
For comparison, Keytruda plus chemotherapy achieves an mPFS of 8 months and an mOS of 17.1 months in the same indication, suggesting that IBI363 may offer comparable or improved long-term survival potential.
Another key advantage of IBI363 is its broad therapeutic spectrum. According to ClinicalTrials.gov, the drug is also being tested for melanoma, colorectal cancer, gastric cancer, and esophageal squamous carcinoma. At ASCO, Innovent reported that IBI363 monotherapy achieved a median overall survival of 16.1 months in advanced colorectal cancer, surpassing current standard-of-care outcomes.
Innovent said it remains closely aligned with Takeda on IBI363’s development roadmap: starting with monotherapy for PD-1-resistant patients, then expanding into combination therapies, and eventually targeting first-line colorectal and non-small cell lung cancers.
Still, the company’s ambitious vision depends on one uncertain factor: Phase 3 success. If the data fail to meet expectations, the upfront payment will have effectively bought a share of high development risk. Combined with weakening investor enthusiasm for BD deals, that may explain why Innovent’s share price barely moved despite the blockbuster announcement.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Hu Xiangyun for 36Kr.