Expedition Therapeutics Inks First Deal with Fosun Pharma, Signaling Growing Trend in China-Originated Drug Licensing

In a significant move that underscores the increasing importance of China's biotech sector, startup Expedition Therapeutics has announced its first major deal, agreeing to pay up to $645 million for the rights to a promising drug candidate from Chinese pharmaceutical giant Fosun Pharma.

Deal Details and Strategic Implications

Expedition Therapeutics, a Delaware-incorporated startup backed by venture capital firms Venrock, BVF, and Lake Bleu Capital, will pay Fosun Pharma up to $120 million in upfront cash and development milestones. The agreement grants Expedition rights to the drug XH-S004 outside of mainland China, Hong Kong, and Macau. An additional $525 million could be paid if the drug is approved and meets certain sales targets.

This deal marks Expedition's entry into the competitive landscape of biotechnology firms seeking to capitalize on innovations emerging from Chinese laboratories. The company, led by former Goldman Sachs banker Yi Larson, aims to leverage its "strong visibility into [the] competitive landscape of both U.S. and China biotech ecosystems" and its "extensive knowledge and network of relationships with innovator companies across China."

XH-S004: A Promising DPP-1 Inhibitor

The drug at the center of this deal, XH-S004, is a small molecule targeting DPP-1, an enzyme linked to various inflammatory conditions. Currently in Phase 2 testing in China for bronchiectasis and earlier-stage testing for chronic obstructive pulmonary disease (COPD), XH-S004 represents a significant opportunity in the treatment of neutrophilic inflammatory diseases.

Yi Larson, CEO of Expedition Therapeutics, emphasized the drug's potential, stating, "XH-S004 is an exciting compound that targets neutrophilic inflammation, an important underlying driver of a number of chronic respiratory diseases. We look forward to partnering with Fosun Pharma in the development of XH-S004 for COPD and other neutrophilic inflammatory diseases to address the significant unmet medical need."

China's Rising Influence in Global Pharma

The Expedition-Fosun deal is part of a larger trend in the pharmaceutical industry, with Chinese-originated drugs becoming increasingly attractive to global companies. According to data from investment bank Jefferies, deals involving China-based companies accounted for about one-fifth of the industry's licensing spending in 2024 and one-third in the first half of this year.

This trend is further evidenced by the recent proliferation of biotech startups built around China-originated drugs. Since the start of last year, at least seven such companies have been formed, with several, including Candid Therapeutics, Kailera Therapeutics, and Ouro Medicines, securing funding rounds exceeding $100 million.

As the global pharmaceutical landscape continues to evolve, deals like the one between Expedition Therapeutics and Fosun Pharma highlight the growing importance of cross-border collaborations and the increasing role of Chinese innovation in shaping the future of drug development.