RMB 7.8 billion deal overseas! Innovative drug leader, Hengrui Pharmaceuticals, adopts NewCo model again

On September 5, Jiangsu Hengrui Pharmaceuticals Co., Ltd. announced that it would enter into an exclusive licensing agreement with U.S.-based Braveheart Bio company for its self-developed Myosin small molecule inhibitor HRS-1893 project.

According to the terms of the agreement, Hengrui has granted Braveheart Bio exclusive rights to develop, manufacture, and commercialize HRS-1893 outside of mainland China, Hong Kong Special Administrative Region, Macao Special Administrative Region, and Taiwan region in exchange for payment. Braveheart Bio will pay Hengrui an upfront fee of $65 million, including $32.5 million in cash and $32.5 million worth of Braveheart Bio company shares, along with a near-term milestone payment of $10 million after the completion of technology transfer, totaling $75 million.

In addition, Hengrui will receive milestone payments of up to 1.013 billion U.S. dollars related to clinical development and sales, as well as corresponding sales royalties. (The total transaction amount is approximately RMB 7.8 billion.)

Braveheart Bio is a company established in Delaware, USA, in 2024. Its primary investors include Forbion Capital, a well-known European life sciences venture capital firm, and OrbiMed, a top global healthcare investment institution, among others. These investors, along with Braveheart Bio's core senior management, will be responsible for the company’s establishment and operations. Braveheart Bio’s CEO, Travis Murdoch, has over a decade of experience in life science investment, operational management, and clinical medicine. Before joining Braveheart Bio in 2025, he founded HI-Bio and served as its CEO, leading the $1.8 billion acquisition deal between HI-Bio and Biogen in 2024.

This is not the first time that Hengrui has adopted the NewCo model for overseas licensing. In May 2024, Hengrui used the NewCo model to license its GLP-1 class innovative drug portfolio (HRS-7535, HRS9531, HRS-4729) to a new company established in the United States and formed by renowned investment institutions such as Bain Capital Life Sciences, Atlas Ventures, and RTW Capital, for an upfront payment plus potential milestone payments totaling up to $6 billion. As part of the transaction consideration, the company also acquired 19.9% equity.

Hengrui chooses to expand HRS-1893 overseas via the NewCo Model based on in-depth analysis and strategic positioning in the global cardiomyopathy treatment market.

The Myosin inhibitor precisely targets the underlying mechanism of hypertrophic cardiomyopathy, especially oHCM, demonstrating significant clinical efficacy and good safety. This brings a breakthrough in treating HCM, shifting from mere symptomatic treatment to intervention targeting the root cause of the disease.

In 2020, Bristol Myers Squibb spent approximately $13 billion to acquire MyoKardia, with the core asset being the Myosin inhibitor Mavacamten (brand name: Camzyos), which is currently the only approved myosin inhibitor on the market. This transaction undoubtedly demonstrates the strong optimism large pharmaceutical companies have for the market potential of such innovative therapies.

HRS-1893 is a highly selective Myosin small molecule inhibitor independently developed by Hengrui. It can specifically inhibit myocardial myosin ATPase activity, normalize myocardial contractility, reduce left ventricular hypertrophy, and improve diastolic compliance. The drug has been involved in multiple clinical trials, and its Phase 1 clinical trial data was recently presented at the 2025 European Society of Cardiology (ESC) Congress. Currently, a Phase 3 clinical trial for the treatment of obstructive hypertrophic cardiomyopathy has been initiated.

Travis Murdoch, CEO of Braveheart Bio, said, "we are thrilled to partner with Hengrui to advance HRS-1893 into later-stage clinical development. The Phase 1 study data for HRS-1893, recently presented at the 2025 ESC Congress, has further strengthened our confidence in this molecule, and we believe HRS-1893 has the potential to be the best-in-class as a cardiac myosin inhibitor."

Currently, there are very few Myosin inhibitors approved in the global market, representing a significant unmet clinical need. Against this backdrop, HRS-1893 from Hengrui, a cardiac myosin inhibitor with best-in-class potential, could capture a substantial share of the global market if successfully developed.

From a business perspective, Hengrui's overseas expansion through the NewCo model is also a carefully designed strategic choice. By partnering with Braveheart Bio, Hengrui can not only leverage the resources and experience of top-tier investment institutions such as Forbion and OrbiMed to accelerate global clinical development and regulatory submissions but also enjoy long-term value growth through equity participation after the product's success.

This arrangement is particularly suitable for high-value, high-risk innovative drug projects like Myosin inhibitors. Hengrui has retained part of the downstream value while transferring some of the development risks and costs to professional investors, achieving a balance between risk and return.

Hengrui's decision to once again adopt the NewCo model is a strategic choice based on its own R&D capabilities, financial status, and assessment of the global market. This decision is supported by the various foundations it has laid for internationalization.

First, this is reflected in its rapidly expanding global clinical layout. The company has initiated more than 20 overseas clinical trials in countries such as the United States, Europe, Australia, Japan, and South Korea. By 2025, the company has completed three significant out-licensing deals, with upfront payments totaling $775 million and a potential total amount reaching $15.58 billion. In addition to the collaboration with Braveheart Bio, Hengrui also reached a licensing agreement for the lipoprotein project with Merck, receiving a $200 million upfront payment and up to $1.77 billion in milestone payments; it also entered into a licensing agreement with GSK, securing a $500 million upfront payment and a potential total amount of approximately $12 billion.

Outstanding financial performance and continuous R&D investment provide a core engine for internationalization. According to the 2025 half-year financial report, Hengrui achieved operating revenue of RMB 15.761 billion, representing a year-on-year increase of 15.88%; net profit attributable to shareholders of the listed company was 4.450 billion yuan, marking a year-on-year increase of 29.67%. Sales and licensing revenue from innovative drugs reached 9.561 billion yuan, accounting for 60.66% of total revenue. Among this, revenue from innovative drug sales was RMB 7.570 billion. Outward licensing of innovative drugs has become a regular business and an important component of Hengrui's revenue. During the reporting period, the company received upfront payments of 200 million US dollars from Merck Sharp & Dohme and 75 million US dollars from IDEAYA as part of its outward licensing deals.

Behind the impressive achievements lies continuous high-intensity R&D investment. The company's R&D investment in the first half of the year reached RMB 3.871 billion, with cumulative R&D investment exceeding RMB 48 billion. Supported by sustained high R&D investment, the company’s innovative achievements have entered an eruption period, with six Class 1 innovative drugs approved for marketing during the reporting period. However, the net cash flow from operating activities also declined year-on-year during the same period, partly due to the surge in R&D investment.

The upfront payment from the Braveheart Bio deal will boost the current financial performance, but its short-term direct financial impact is limited compared to the company's overall revenue. The more significant meaning of the deal lies in bringing potential cash flow in the future, which can support the company’s ongoing high-intensity R&D investment, forming a virtuous cycle of "R&D - licensing - further R&D."

A diversified pipeline layout provides Hengrui with a continuous foundation for external licensing and reduces the risk associated with any single project. For instance, in the cardiovascular field, Hengrui has more than 10 innovative products in clinical research or advanced stages. Apart from HRS-1893, other products such as SHR-6934, SHR-4658, and HRS-9057 are currently undergoing clinical studies related to heart failure.

Notably, while Hengrui has made significant progress in licensing deals, the proportion of overseas sales revenue from its self-innovated drugs remains relatively low. According to the 2024 annual report, overseas sales accounted for only 2.56% of Hengrui’s total sales. This also explains the company's strategy of balancing "internal growth with external collaboration." Given that the share of overseas sales still needs improvement, partnering with NewCo represents a relatively stable and risk-controllable approach to expanding internationally, avoiding the substantial investment and time costs associated with building a global R&D and sales network independently.

In summary, Hengrui Pharmaceuticals' transaction with Braveheart Bio this time is a smart strategic choice based on its current capabilities, market environment, and risk preferences. However, the inherent high risks of new drug development, the intensity of overseas market competition, and the uncertainty of the NewCo model itself all mean that the journey of HRS-1893 going abroad will still be full of both opportunities and challenges. The success of Hengrui's internationalization will ultimately depend on the continuous output of its overall R&D pipeline, the successful commercialization of multiple projects, and its comprehensive ability to deal with the complexity of the global market.