Oct 27, 2026 · 34 min
U.S. and China rules redraw biotech dealmaking
Ep. 394 - Security concerns in U.S., China reshaping biotech
Proposed investment and export controls could alter how biotech companies structure partnerships, finance innovation, and compete across borders.
- 1U.S. outbound investment rules could restrict biotechnology investments and complicate China-linked NewCos, joint ventures, and co-development deals.
- 2China’s narrower draft export controls may leave ordinary licensing intact while still reshaping platform transactions, milestone payments, and cross-border M&A.
- 3Gilead’s Pepstar deal and Merck-Moderna vaccine data show how regulatory exposure and commercial execution shape biotech value beyond scientific promise.
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Gilead’s $1.3 billion upfront commitment to Pepstar becomes a test of whether an oral IL-23 therapy can combine convenience with best-in-class efficacy.
The brief
Steve Usdin and Lauren Martz examine proposed U.S. outbound investment rules and China’s draft export controls, asking how policy could reshape biotech collaboration and dealmaking.
The U.S. proposal could reach China-originated NewCos, joint ventures, outsourced R&D, and co-development arrangements, while Treasury’s plain-English definitions leave companies uncertain about scope.
China’s draft appears narrower than feared, potentially preserving ordinary licensing while affecting platform deals, milestone payments, and transactions such as AstraZeneca’s acquisition of Gracell.
Gilead’s $1.3 billion upfront deal for Shanghai-based Pepstar highlights the commercial pull of an oral IL-23 therapy, despite limited public clinical data and regulatory uncertainty.
Positive melanoma vaccine data from Merck and Moderna face a harder test beyond efficacy: individualized manufacturing, cost, speed, adoption, and proof of value in broader cancers.
What was said on this episode
14 statements · 8 positive · 2 negative · 2 mixed · 2 neutral
Some China-originated NewCos would be permitted while others would be prohibited.
“some new co's would be allowed and some wouldn't”
Listen at 7:28
The proposed U.S. restrictions would create major advantages for European biotechnology companies.
“this does appear to create tremendous upside advantages for European companies”
Listen at 11:19
The proposed restrictions would incentivize Chinese companies to partner more closely with European companies.
“it creates incentives for Chinese companies to forge kind of partnerships with Europeans.”
Listen at 11:25
China’s proposed export controls would likely have limited effects on U.S.-China dealmaking if unchanged.
“If it goes into effect as it's been proposed, and if things stop there, it's not likely to have a really big effect on dealmaking between the United States and China.”
Listen at 14:16
Escalating reciprocal restrictions could sharply reduce Western access to Chinese innovation.
“there could be kind of escalating tit-for-tat restrictions on both sides that would have a dramatic impact on the ability of Western. companies to access Chinese innovation”
Listen at 15:11
Pepstar’s oral IL-23 inhibitor lacked efficacy data and was in phase one testing.
“this is in, as I said, a phase one trial in healthy volunteers. We don't have any efficacy data”
Listen at 20:06
Pepstar’s validated oral IL-23 mechanism could address a potentially large market.
“this is a potentially big market for something that's validated”
Listen at 22:24
Two injectable therapies in the category generated over $22 billion in combined annual sales.
“just the two of the injectables in the same category together brought in over $22 billion last year in sales”
Listen at 22:39
Merck and Moderna’s melanoma vaccine reduced recurrence-or-death risk by 42%.
“this personalized cancer vaccine for melanoma led to a 42% reduction in the risk of recurrence or death”
Listen at 24:19
The personalized melanoma vaccine may require substantial clinical benefit for adoption.
“there might need to be a really meaningful clinical benefit for this to be adopted”
Listen at 25:03
Moderna’s personalized vaccine currently takes about 42 days per dose to manufacture.
“it takes right now something like 42 days to make a dose”
Listen at 26:56
Renal-cell-carcinoma data for the vaccine strategy should arrive around early next year.
“around the beginning of next year should have some data from that program”
Listen at 29:00
Early safety data for the neoantigen vaccine were encouraging with little arm-to-arm difference.
“I think the safety data were at least encouraging. There wasn't a big difference in the safety between the arms.”
Listen at 29:59
Amgen’s M-Delta results are highly impressive after moving into earlier-line treatment.
“the results that we're seeing as this by specific in particular has been moved to an earlier line of treatment are incredibly impressive”
Listen at 32:09
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.
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