Hengrui Pharma’s Strategic Out-Licensing Model: A Pathway to Global Dominance in Cardiovascular Innovation

In the rapidly evolving pharmaceutical landscape, Hengrui Pharma has emerged as a trailblazer through its innovative NewCo-driven out-licensing strategy. By leveraging this model, the company has not only mitigated development risks but also unlocked access to global markets and capital, positioning itself as a formidable player in cardiovascular innovation. Recent transactions, such as the licensing of HRS-1893—a cardiac myosin inhibitor for obstructive hypertrophic cardiomyopathy (oHCM)—and the landmark $6 billion deal with Kailera Therapeutics, underscore Hengrui’s ability to transform its R&D pipeline into scalable, high-margin opportunities.

A NewCo Model That Balances Risk and Reward

Hengrui’s NewCo model is a masterclass in strategic risk management. In September 2025, the company secured $75 million upfront (comprising $32.5 million in cash and shares) for the global rights to HRS-1893, a Phase 3 asset for oHCM, while retaining potential milestone payments of up to $1.013 billion and royalties on net sales [1]. This structure mirrors the Hercules transaction in May 2024, where Hengrui spun off its GLP-1 portfolio into a U.S.-based NewCo backed by Bain Capital and Atlas Venture, securing $110 million upfront and retaining a 19.9% equity stake [2].

By partnering with specialized entities like Braveheart Bio and Kailera Therapeutics, Hengrui offloads commercialization burdens while maintaining upside potential. This approach aligns with broader industry trends, where Chinese biotechs increasingly seek global partnerships to navigate domestic regulatory challenges and access higher pricing in Western markets [3].

Market Opportunity: oHCM as a High-Value Niche

The oHCM therapeutics market, though niche, presents significant growth potential. According to Mordor Intelligence, the market is projected to expand from $572.81 million in 2025 to $683.31 million by 2030, driven by first-in-class cardiac myosin inhibitors like mavacamten and HRS-1893 [4]. Hengrui’s asset, currently in Phase 3 trials, could capture a substantial share of this market, particularly as generic beta-blockers face limitations in addressing the underlying pathophysiology of oHCM.

Moreover, the global cardiovascular drug market—valued at $140 billion in 2023—is expected to reach $210 billion by 2032, fueled by innovations in PCSK9 inhibitors, SGLT2 inhibitors, and digital health integration [5]. Hengrui’s focus on high-barrier, mechanism-driven therapies positions it to compete with industry giants like Pfizer and Novartis while capitalizing on orphan-drug incentives and premium pricing in the U.S.

Strategic Advantages and Long-Term Value Capture

The NewCo model’s sustainability lies in its ability to align Hengrui’s interests with global partners. For instance, Braveheart Bio’s exclusive rights to HRS-1893 outside Greater China ensure localized expertise in commercialization, while Hengrui retains control over its domestic market—a critical revenue stream. This dual-market strategy mirrors successful precedents in the industry, where companies like BeiGene have leveraged U.S. partnerships to accelerate global expansion [6].

Additionally, the model’s financial structure—combining upfront payments, milestones, and royalties—creates a multi-decade revenue stream. For HRS-1893 alone, the $1.013 billion in potential milestones represents a 13.5x return on the upfront payment, assuming full achievement. Such leverage is rare in traditional licensing deals, where upfront payments often constitute the bulk of value.

Risks and Mitigants

While the NewCo model offers compelling advantages, risks persist. Regulatory hurdles, particularly in the U.S. and EU, could delay approvals for HRS-1893. However, Hengrui’s collaboration with Braveheart Bio—a company with prior experience in cardiovascular therapeutics—mitigates this risk. Additionally, the company’s diversified pipeline, including the dual PDE3/4 inhibitor HRS-9821 licensed to GSK, ensures that setbacks in one asset do not derail its broader strategy [7].

Conclusion: A Compelling Investment Thesis

Hengrui Pharma’s NewCo-driven out-licensing strategy exemplifies a forward-thinking approach to globalizing innovation. By combining domestic R&D with international commercialization, the company is not only de-risking its portfolio but also capturing long-term value in high-growth therapeutic areas. As the cardiovascular market evolves toward mechanism-specific therapies and digital integration, Hengrui’s strategic agility and financial discipline position it as a prime candidate for sustained outperformance.

Source:
[1] Hengrui Pharma and Braveheart Bio Enter Exclusive License Agreement for Cardiac Myosin Inhibitor HRS-1893 [https://www.morningstar.com/news/pr-newswire/20250905dc66292/hengrui-pharma-and-braveheart-bio-enter-exclusive-license-agreement-for-cardiac-myosin-inhibitor-hrs-1893]
[2] The NewCo Model: A Trending Approach by Chinese Biotech [https://arc-group.com/newco-model-chinese-biotech/]
[3] UOB Kay Hian: Industry Enters New Phase of ... [http://www.aastocks.com/en/stocks/news/aafn-con/NOW.1447838/popular-news/AAFN]
[4] Hypertrophic Cardiomyopathy Therapeutics Market Size & ... [https://www.mordorintelligence.com/industry-reports/hypertrophic-cardiomyopathy-therapeutics-market]
[5] Global Cardiometabolic Diseases Drugs Market Trends & ... [https://www.ihealthcareanalyst.com/global-cardiometabolic-diseases-drugs-market-trends-outlook/]
[6] Top partnering deals in life sciences 2016 to 2024 [https://www.currentpartnering.com/insight/]
[7] United States Cardiovascular Drug Therapy Market [https://www.linkedin.com/pulse/united-states-cardiovascular-drug-therapy-market-qez2f]