Alphamab seals $2.2 billion licensing deal with AI biotech

The Chinese drug firm has chosen to partner with an AI specialist rather than Big Pharma on a dual-target cancer therapy, netting an upfront payment of $125 million

Key Takeaways:

• Alphamab retains Chinese rights to the candidate drug while Pathos AI is responsible for developing the product in the rest of the world
• The deal promises to ease the financial strain for Alphamab after its R&D spending jumped last year, pushing the company into the red

By Molly Wen

Licensing deals have become commonplace in China’s biopharmaceutical industry, as rights to future sales of promising drugs are exchanged for much-needed cash. But the latest partnership does not follow the typical pattern.

Alphamab Oncology (9966.HK), a clinical-stage biotech specializing in targeted cancer treatments, announced on Aug. 4 it had struck a global licensing agreement with U.S.-based Pathos AI, a developer of oncology drugs, worth up to $2.22 billion. Alphamab’s shares shot higher, peaking with an intra-session gain of nearly 13%, as investors took a fresh look at the potential for dual-target therapies known as bispecific antibody-drug conjugates (ADCs).

The deal centers on a candidate drug – JSKN016 – that binds to two tumor-associated antigens, TROP2 and HER3, to deliver its payload. Alphamab will retain all rights to the asset in Greater China, while Pathos AI gains exclusive rights in the rest of the world and will bear all costs related to developing and launching the drug overseas.

The agreement grants Alphamab an upfront payment of $125 million, along with milestone payments of up to $2.09 billion and percentage-based royalties on annual net sales ranging from the high single digits to low double digits. Pathos AI has also given Alphamab an option to subscribe for $62.5 million of its preferred stock, enabling the Chinese company to participate in its partner’s future growth.

Most licensing deals are struck with major multinational drugmakers such as Merck and GSK, but the most distinctive feature of this deal is the buyer’s use of AI to reshape oncology therapies, although it currently lacks late-stage clinical experience. Pathos AI completed a $365 million Series D financing round in May that valued the company at about $1.6 billion. It uses AI to analyze huge volumes of clinical data, identify promising but undervalued assets, design trials and assign patients. JSKN016 is the fourth key asset selected using this system.

The appeal of the candidate drug JSKN016 lies in its potential to address resistance associated with current single-target ADCs. Its bispecific structure allows it to bind simultaneously to TROP2 and HER3, blocking cancer-promoting pathways and making drug delivery more efficient. A Phase Three study of JSKN016 is underway for an invasive form of breast cancer that does not respond to existing treatments, while multiple studies for the drug as a sole or combined therapy have been launched against lung and breast cancers. Meanwhile, versions designed to be delivered through subcutaneous injections are undergoing Phase One B trials in China and Phase One trials in Australia, covering a range of solid-tumor conditions.

Financial fillip

The money from Pathos AI offers a useful financial cushion, as Alphamab’s main revenue source comes under pressure.

Revenues fell 11.54% to 566 million yuan ($84 million) last year, sending the company to a net loss of 114 million yuan from a profit of 166 million yuan a year earlier, as its immunotherapy drug envafolimab faced a growing number of competing products. Meanwhile, Alphamab’s R&D expenses rose 41.57% to 572 million yuan in 2025 as it worked on advancing six bispecific ADC candidates.

The reliance on envafolimab is unlikely to ease in the near term. Alphamab scored China’s first marketing approval for an HER2 bispecific antibody, anbenitamab, in May, followed by nationwide shipments in June. However, rights to the drug in mainland China had already been licensed to JMT-Bio, a subsidiary of the CSPC Group, leaving Alphamab with a limited revenue stream of just milestone payments and a share of sales.

The business development deal with Pathos AI could deliver meaningful support for Alphamab’s finances. The non-refundable upfront payment of $125 million is equivalent to nearly 1.6 times the firm’s full-year R&D spending of 572 million yuan in 2025. Once received, it could lift cash reserves from 1.35 billion yuan at the end of 2025 to about 2.25 billion yuan, enough to fund roughly another 1.5 to two years of R&D at the current pace.

Before this overseas licensing deal, Alphamab had endured a prolonged series of setbacks. KN046, its closely watched PD-L1/CTLA-4 bispecific antibody, delivered disappointing results in pivotal Phase Three trials between 2023 and 2024, sending the company’s shares down more than 90% from their all-time peak at one point. A revised pipeline strategy helped Alphamab shares to recover somewhat, giving the firm a market capitalization of about HK$8.3 billion ($1.06 billion), compared with roughly HK$10.7 billion for Mabwell (2493.HK), which is also developing ADCs.

The potential for a further re-rating will largely depend on whether JSKN016 can realize the deal’s potential value of $2.22 billion. That rests in turn on the clinical abilities of Pathos AI, the competitive landscape for the drug, and Alphamab’s own commercial expertise.

To subscribe to Bamboo Works weekly free newsletter, click here