Formation Bio secures US500 million licensing deal for autoimmune drug from Chinese Pharma partner

CHINA—Formation Bio, an artificial intelligence-powered biotechnology company, has secured its latest licensing agreement for a promising autoimmune disease treatment in a deal that could reach USD 500 million in total value.

The company announced the partnership on January 29, marking another significant step in its strategic expansion into novel therapeutic areas.

The agreement brings together Formation Bio’s newly established subsidiary, Kenmare Bio, and Jiangsu Chia Tai Feng Hai Pharmaceutical, a China-based pharmaceutical company.

Through this collaboration, Kenmare Bio will obtain worldwide development and commercialization rights to an experimental oral small molecule known as FHND5032, with the exception of Greater China, where Chia Tai Feng Hai will retain control.

FHND5032 represents a unique approach to treating autoimmune conditions by activating miR-124, an anti-inflammatory microRNA that plays a crucial role in regulating immune responses.

Researchers have observed that patients with various inflammatory diseases often have reduced levels of this important biological molecule.

The drug candidate aims to restore these levels by switching on miR-124 production, potentially offering patients a new pathway to manage chronic autoimmune conditions.

While the companies have not specified which specific autoimmune diseases they plan to target, preclinical studies have demonstrated the molecule’s potential to treat ulcerative colitis, a chronic inflammatory bowel disease that affects millions worldwide.

The oral formulation of FHND5032 offers a significant advantage in patient convenience compared with injectable treatments that currently dominate the autoimmune therapy landscape.

Deal structure and financial terms

Under the terms of the licensing agreement, Chia Tai Feng Hai will receive a minority equity stake in Kenmare Bio, Formation’s subsidiary created specifically to develop this asset.

The Chinese pharmaceutical company will also collect an upfront payment, though the specific amount has not been publicly disclosed.

Beyond these initial terms, Chia Tai Feng Hai stands to earn milestone payments as the drug progresses through clinical development and regulatory approval processes, with the total deal value potentially reaching USD500 million.

The agreement also includes royalty payments on future sales if the drug successfully reaches the market.

Accelerating development through AI technology

Formation Bio plans to advance FHND5032 into human clinical trials within this year, leveraging its proprietary artificial intelligence platform called Forge to streamline the development process.

The company has built its reputation on using AI to identify inefficiencies in clinical trials and reduce both the time and cost associated with bringing new medicines to patients.

David Steinberg, Formation Bio’s Chief Business Officer, expressed enthusiasm about the acquisition, noting that FHND5032 perfectly aligns with the types of programs the company was built to accelerate.

Steinberg noted that the miR-124 mechanism has been validated in phase 3 clinical data in inflammatory bowel disease, reducing the risk of complications when pursuing this therapeutic approach.

He emphasized that with relatively few miR-124 activators currently in development worldwide, this represents an opportunity to deliver a differentiated treatment option to patients who currently have limited choices for managing their chronic inflammatory conditions.

Formation Bio’s strategic growth trajectory

Formation Bio earned recognition as a member of the Fierce 15 class of 2025, an honor awarded to companies demonstrating innovative approaches to pharmaceutical development.

The company’s business model focuses on licensing drug candidates ranging from those ready for clinical testing to those that have already generated proof-of-concept data in early human trials.

Following a substantial USD 372 million Series D funding round led by Sanofi in 2024, Formation Bio has actively pursued licensing opportunities and established multiple subsidiaries to develop its growing pipeline.

Just one month before the Kenmare Bio announcement, Formation Bio completed a similar transaction valued at more than USD 600 million.

That deal secured rights to a next-generation immunology asset from Lynk Pharmaceuticals, excluding China, and established another subsidiary, Bleecker Bio, to advance development.

Similar to the current agreement, Lynk Pharmaceuticals received a minority equity stake in the Formation subsidiary managing the licensed asset.

The partner’s background and recent activities

Jiangsu Chia Tai Feng Hai Pharmaceutical operates under the ownership of Sino Biopharmaceutical, a major pharmaceutical company headquartered in Hong Kong.

Sino Biopharmaceutical has been actively expanding its portfolio through strategic acquisitions and partnerships.

In July of the previous year, Sino entered into an agreement valued at up to USD951 million to acquire LaNova Medicines, another Chinese biopharmaceutical company, to strengthen its position in developing combination therapies targeting both PD-1 and VEGF pathways for cancer treatment.