Expedition Therapeutics Secures $645M Deal for Chinese DPP-1 Inhibitor in Growing Cross-Border Biotech Trend
Key Insights
Expedition Therapeutics (search), a Delaware-based startup backed by Venrock (search), BVF (search) and Lake Bleu Capital (search), has agreed to pay Fosun Pharma up to $645 million for global rights to XH-S004, a DPP-1 (search) inhibitor targeting inflammatory respiratory diseases.
The deal includes $120 million in upfront payments and development milestones, plus up to $525 million in approval and sales-based payments, marking Expedition's first public transaction since its incorporation last year.
XH-S004 is currently in Phase 2 testing for bronchiectasis (search) in China and earlier-stage development for COPD (search), targeting the same DPP-1 (search) enzyme as AstraZeneca's recently approved Brinsupri (search).
Expedition Therapeutics (search), a secretive biotechnology startup, has struck a potentially $645 million licensing deal with Shanghai Fosun Pharmaceutical for an experimental respiratory drug, highlighting the accelerating trend of Western companies acquiring assets from China's rapidly advancing biotech sector.
The Delaware-incorporated company will pay Fosun up to $120 million in upfront cash and development milestones for global rights to XH-S004, excluding mainland China, Hong Kong and Macau. Additional milestone payments could reach $525 million if the drug achieves regulatory approval and meets sales targets, the companies announced Monday.
Strategic Focus on DPP-1 Inhibition
XH-S004 is a small molecule drug targeting DPP-1 (search), an enzyme linked to the development and progression of multiple inflammatory conditions. The compound specifically addresses neutrophilic inflammation, which serves as an underlying driver of chronic respiratory diseases.
"XH-S004 is an exciting compound that targets neutrophilic inflammation, an important underlying driver of a number of chronic respiratory diseases," said Yi Larson, Expedition's chief executive, in a statement. "We look forward to partnering with Fosun Pharma in the development of XH-S004 for COPD (search) and other neutrophilic inflammatory diseases (search) to address the significant unmet medical need."
The drug targets the same pathway as brensocatib (Brinsupri (search)), AstraZeneca's DPP-1 (search) inhibitor that was licensed to Insmed a decade ago. Brensocatib succeeded in Phase 3 testing for bronchiectasis (search) last year and received U.S. regulatory approval on Tuesday, becoming the first drug of its type to reach market.
Current Development Status
Fosun's XH-S004 is currently undergoing Phase 2 testing in China for bronchiectasis (search) and is in earlier-stage development for chronic obstructive pulmonary disease (search) (COPD (search)). The licensing agreement positions Expedition to advance the compound's development in Western markets while Fosun retains rights in Greater China.
Growing Cross-Border Biotech Trend
The transaction marks Expedition's first public deal since its incorporation last year. The startup, backed by prominent investors including Venrock (search), BVF (search) and Lake Bleu Capital (search), is led by Yi Larson, a former Goldman Sachs banker with executive or board experience at Turning Point Therapeutics, LianBio and RayzeBio.
Expedition represents part of a broader movement in biotech startup creation focused on China-originated assets. The company is among at least seven firms established since early 2023 that are built around drugs discovered in Chinese laboratories, according to BioPharma Dive data. Several of these companies, including Candid Therapeutics (search), Kailera Therapeutics (search) and Ouro Medicines (search), launched with funding rounds exceeding $100 million.
Market Dynamics and Industry Impact
This proliferation of China-focused licensing companies reflects the rapid advancement of China's biotech sector, which has attracted significant attention from large pharmaceutical firms. According to investment bank Jefferies, deals with China-based companies accounted for approximately one-fifth of the industry's licensing spending in 2024 and one-third in the first half of this year.
Expedition positions itself as having "strong visibility into [the] competitive landscape of both U.S. and China biotech ecosystems" along with "extensive knowledge and network of relationships with innovator companies across China," according to its LinkedIn profile.
The deal structure, with its substantial milestone-based payments, reflects the growing confidence in Chinese biotech innovations and the potential for successful cross-border pharmaceutical development partnerships.