On Monday we set the week’s question: would the industry keep signing China deals into the teeth of the congressional probe, with the July 17 deadline bearing down? We have our answer, and it is emphatic.
AstraZeneca alone signed two China deals this week. Monday it was the CSPC kidney collaboration worth up to $1.77 billion. Today it licensed ex China rights to TQC3721, an inhaled PDE3/4 inhibitor for chronic respiratory diseases, from Hong Kong listed Sino Biopharmaceutical. Two deals, one week, from a company that watched the House Select Committee send letters to five of its peers. AstraZeneca is not among the five named, which is surely part of why it feels free to move. But the signal is unmistakable. Eight days before the deadline, with the political temperature rising, the pharmaceutical industry is treating Chinese science as too valuable to pause.
This is exactly the read we gave in June and reiterated throughout the week. The deals already signed are safe. The political risk applies to the future. And the friction gets priced and paid rather than avoided. The deal flow bends around the obstacle. It does not stop.
The other story worth closing the week on is KRAS. We watched this field reshuffle in real time over five days. Genentech’s divarasib beat the approved standard. Revolution showed three RAS drugs working in pancreatic cancer and won approval for daraxonrasib. And now BMS’s Krazati stumbled, with the drug plus cetuximab delivering shorter survival than chemotherapy in colorectal cancer. The first generation is fading. The next wave is pulling ahead.
AstraZeneca’s Second China Deal Answers the Question Everyone Was Asking
What Happened: AstraZeneca licensed ex China rights to TQC3721, an inhaled PDE3/4 inhibitor for chronic respiratory diseases, from Sino Biopharmaceutical. It is AstraZeneca’s second China deal this week and its third with a Chinese partner this year.
The Pattern Is Now Unmistakable
Three AstraZeneca deals with Chinese companies in 2026. An obesity partnership with CSPC in January. A chronic disease collaboration with CSPC in June. A kidney disease siRNA deal with CSPC worth up to $1.77 billion on Monday. And now an inhaled respiratory drug from Sino Biopharmaceutical on Friday. The cadence has not slowed despite the House Select Committee opening its investigation and the Biotech Investment National Security Act moving through Congress.
AstraZeneca was not among the five companies named in the probe—Merck, AbbVie, Lilly, Pfizer, and BMS were. That distinction matters operationally. A company under active congressional investigation has lawyers advising caution on deal announcements. A company watching from the sideline has no such constraint. AstraZeneca can move freely while its peers sit quietly through the July 17 deadline.
But the significance goes beyond AstraZeneca’s particular situation. BioNTech committed up to $1 billion to DualityBio for ADC candidates this week. Kailera, built on Hengrui assets licensed out of China, reported a positive Phase 3 for its oral obesity drug. Lilly signed its 14th deal of the year with Abbisko just two weeks ago. The entire industry is continuing its China engagement. The political environment has not changed the commercial calculus.
What Happens After July 17
The five named companies will respond to the committee by next Thursday. Those responses will be carefully drafted by legal and government affairs teams. They will emphasize data protection, ethical review boards, IP safeguards, and compliance with all applicable laws. They will not concede any wrongdoing, because the committee explicitly stated it found none. And they will frame their China clinical trial activity as part of a global research program that benefits American patients.
The question is what comes next. The Biotech Investment National Security Act, if it advances, would add Treasury review to new China licensing deals—not a ban, but a process that adds time, cost, and political exposure to every transaction. Whether that legislation gains momentum depends on whether the July 17 responses satisfy the committee or fuel further investigation. Our read remains: the base case is continued deal flow at a rising political cost. The science is too good, the pipeline needs too urgent, and the economics too compelling for the industry to walk away. But every China deal from here carries a political premium that would not have existed a year ago.
Krazati Stumbled, and a Single Week Just Rewrote the KRAS Leaderboard
What Happened: Bristol Myers Squibb’s Krazati (adagrasib) combined with cetuximab produced shorter median overall and progression free survival than chemotherapy in a colorectal cancer trial.
One Week, Three Data Points, a Completely Different Picture
We spent the past five days watching the KRAS field reshuffle in real time. Here is how the week unfolded:
Tuesday: Genentech’s divarasib beat approved therapy in a Phase 3 trial in G12C lung cancer. The first head to head win over the existing standard. Positions divarasib as potential best in class in G12C.
Wednesday: Revolution Medicines showed three RAS drugs working in pancreatic cancer. Zoldonrasib at 82% response rates in first line. Daraxonrasib plus zoldonrasib at 47 to 50% in previously treated patients. RM 055 doubling chemo response through a different mechanism.
Thursday: The FDA approved daraxonrasib under CNPV in under 60 days. The first targeted therapy for pancreatic cancer. The first pan RAS therapy for any solid tumor.
Friday: Krazati plus cetuximab underperformed chemotherapy in colorectal cancer. Shorter survival on both OS and PFS.
Put those together and the picture is stark. The first generation KRAS G12C drugs—Amgen’s Lumakras and BMS’s Krazati—launched to enormous expectations in 2021 and 2022. Both were genuine scientific milestones. Neither became the commercial blockbuster the early excitement suggested. Now the clinical evidence is widening the gap to the next generation. Divarasib beat the standard that Lumakras and Krazati set. Daraxonrasib proved pan RAS works in the hardest solid tumor. And Krazati just lost to chemotherapy in a tumor type where it was supposed to expand.
What This Means for BMS
BMS acquired Mirati for billions to get Krazati. The acquisition thesis was that Krazati, combined with pipeline programs, would build BMS a meaningful presence in the RAS targeted oncology space. The colorectal setback undercuts that thesis. When your drug plus a targeted antibody (cetuximab) produces shorter survival than standard chemotherapy—the very treatment paradigm that targeted drugs are supposed to replace—the competitive positioning becomes extremely difficult.
Krazati still has its approved indication in G12C lung cancer. But with divarasib now claiming superiority in the same setting, and with Revolution building a multi drug franchise in pancreatic cancer where RAS mutations are most prevalent, the room for Krazati to become a major franchise is narrowing. For BMS, which has multiple strategic priorities (Keytruda successor planning after the 2028 patent cliff, the Hengrui partnership, sac TMT with Kelun Biotech), the Krazati trajectory raises hard questions about capital allocation within the oncology portfolio.
GSK Walked Away from a $2.2B Neuro Bet After Both Drugs Failed
What Happened: GSK terminated its up to $2.2 billion neurodegeneration partnership with Alector after both drugs in the collaboration failed their clinical trials.
Neurodegeneration Remains the Graveyard
The GSK/Alector partnership centered on progranulin boosting antibodies aimed at frontotemporal dementia and related neurodegenerative conditions. The scientific thesis was compelling: progranulin is a protein that protects neurons, and patients with progranulin gene mutations develop frontotemporal dementia. Boosting progranulin levels should, in theory, slow or prevent neurodegeneration. Both drugs tested that thesis. Both failed.
This follows Merck killing its Phase 2 Alzheimer’s program for futility earlier this week. The alpha 7 nicotinic acetylcholine receptor modulator was another mechanism that looked promising in preclinical and early clinical work and failed to translate into patient benefit. Neurodegeneration keeps defeating the most logical therapeutic hypotheses. Clean biology, identified genetic drivers, well designed trials, and still no clinical effect.
The only recent bright spot in neurodegeneration has been UniQure’s Huntington’s gene therapy, where the FDA reversed its demand for additional data and accepted the filing for accelerated approval review. That program targets the genetic root cause of the disease directly through gene therapy rather than through pharmacological modulation. The contrast is instructive: in a field where every pharmacological approach seems to fail, the one approach that addresses the genetic cause directly is the one the FDA agreed to review.
GSK’s Discipline in Cutting Losses
For GSK, walking away from $2.2 billion in potential milestone obligations on a failed program is disciplined capital allocation. Under Luke Miels, GSK has shown willingness to cut programs that are not working and reallocate resources toward programs that are. The Nuvalent acquisition ($10.6 billion for two late stage lung cancer drugs) and the Novartis/GSK competitive positioning in molecular glues and oncology demonstrate where the company’s strategic attention is focused. Spending more time and capital on failed progranulin antibodies in frontotemporal dementia would be throwing good money after bad. Cutting it quickly and cleanly is the right move, even though it means acknowledging that the investment produced no return.
For Alector, the loss is far more severe. GSK was the company’s marquee partnership, and losing it on failed clinical data leaves Alector without its most important revenue source and validation partner. The path forward for a neuroscience company that just lost its biggest partner on failed data is narrow: find another partner willing to take the risk, pivot to remaining internal programs, or become an acquisition target at a distressed valuation.
The Barbell: Booming at the Top, Starving at the Bottom
Two data points from this week describe the shape of biotech financing in mid-2026, and it is not a healthy distribution.
The Heavy End
Four M&A deals this year have each cleared $10 billion in guaranteed proceeds: GSK/Nuvalent, AbbVie/Apogee, Merck KGaA/Bio Techne, and Vertex/Crinetics. That already matches the full 2025 count. BridgeBio raised $1 billion in preferred equity without dilution. Definium raised $805 million within 48 hours of a Phase 3 win. Thirteen IPOs have raised $4.1 billion. Capital is flowing freely to de risked, late stage, or commercial assets.
The Light End
Early stage venture financing is on track for its lowest dollar total in years, according to BioSpace. Seed rounds, Series A raises, and the preclinical bets that feed the entire innovation pipeline are getting harder to fund. The investors who used to write those early checks are chasing the same de risked assets that everyone else wants, because the risk adjusted returns look better on a Phase 3 program than on a preclinical hypothesis.
Why This Matters
The flush headlines at the top and the drought at the bottom are two sides of the same risk aversion. Each individual funder is making a sensible decision: put money where the data are strongest and the uncertainty is lowest. But collectively, the industry is underinvesting in the early science that produces the next generation of drugs. The Phase 3 assets that large pharma is paying $10 billion to acquire today were early stage bets five to ten years ago. If the current early stage drought persists, the pipeline of de risked targets available for acquisition in the early 2030s thins out, and the M&A wave that looks so healthy today runs short of targets later.
It is great news if you have an approved drug or a late stage asset right now. It is a warning for the ecosystem as a whole.
Kailera’s Oral Obesity Data: A Caution on the China Win
One more thread from this week worth closing. After Kailera reported a positive Phase 3 for its oral obesity drug in a China trial on Thursday, analysts flagged high rates of nausea and vomiting in the Hengrui and Kailera data. This does not invalidate the result—GLP 1 drugs as a class cause gastrointestinal side effects, and every product in the market has nausea and vomiting in its label. But the severity and frequency matter for commercial positioning. Lilly’s Foundayo won attention partly because it had no food or water restrictions, a meaningful convenience advantage over earlier oral semaglutide. If Kailera’s oral obesity drug has a more difficult tolerability profile, it may struggle to differentiate in a market that already has multiple oral options and where patient experience is becoming the competitive battleground.
Strategic Themes
1. The China Deal Flow Is Not Stopping for the Probe, and This Week Proved It
AstraZeneca signed two deals. BioNTech committed $1 billion. Kailera read out positive Phase 3 data from Chinese licensed assets. Eight days before the July 17 deadline, the industry’s revealed preference is to keep going. The political friction is real and rising, but it is being treated as a cost to manage rather than a reason to pause. The science is too strong, the pipeline needs too urgent, and the clinical data keep reading out positive. Watch what happens after the deadline. If the deal flow continues at this pace through August and September, it means the probe changed nothing. If it visibly slows, it means the Biotech Investment National Security Act is being taken seriously at the board level.
2. The KRAS Field Just Had Its Most Consequential Week in History
Divarasib claimed best in class in G12C. Daraxonrasib was approved for pancreatic cancer under CNPV. Revolution showed three drugs with three mechanisms in one disease. And Krazati underperformed chemotherapy in colorectal cancer. In five days, the next generation of RAS targeting pulled definitively ahead of the first generation. For a target that was called undruggable for forty years, the speed of the field’s evolution is remarkable—and it is the first generation drugs that are now feeling the pressure.
3. GSK Cutting a $2.2B Neuro Bet Is Disciplined, and Neurodegeneration Remains the Hardest Problem in Drug Development
Two failed drugs. One terminated partnership. $2.2 billion in potential milestones released. Neurodegeneration has defeated progranulin boosting, alpha 7 receptor modulation, amyloid clearing (except Lecanemab, which works modestly), tau targeting, and dozens of other approaches. The only program gaining regulatory traction is UniQure’s Huntington’s gene therapy, which attacks the genetic cause directly. The pattern suggests that pharmacological approaches to neurodegeneration may be structurally insufficient, and that genetic and cellular interventions may be the only path to meaningful progress.
4. The Barbell Shape of Biotech Financing Is Good News Today and a Warning for Tomorrow
Four $10B deals. $4.1B in IPOs. $1B in non dilutive raises. The top end is flush. Early stage venture at its lowest in years. The bottom end is starving. This shape works for the investors making rational individual choices. It does not work for an industry that needs a continuous supply of early stage innovation to feed the pipeline of future acquisitions. The bill for today’s early stage underinvestment comes due in the early 2030s when the acquirers look for the next generation of targets and find fewer de risked options available.
Frequently Asked Questions
How many China deals did AstraZeneca sign this week?
Two. The CSPC kidney disease siRNA collaboration (up to $1.77B) on Monday and the Sino Biopharmaceutical inhaled respiratory drug license on Friday. It is AstraZeneca’s third Chinese partnership of 2026.
What happened with Krazati?
Krazati plus cetuximab produced shorter overall and progression free survival than chemotherapy in a colorectal cancer trial. A setback for BMS’s first generation KRAS G12C drug, compounding a week where divarasib beat the approved standard and daraxonrasib won pancreatic cancer approval.
Why did GSK walk from Alector?
Both drugs in the $2.2B neurodegeneration partnership (progranulin boosting antibodies for frontotemporal dementia) failed their clinical trials. GSK terminated the collaboration rather than continue investing in failed programs.
What is the barbell financing problem?
Capital is booming at the top (four $10B+ M&A deals, $4.1B in IPOs) but early stage venture is at its lowest in years. The industry is funding de risked assets heavily while underinvesting in the early science that produces tomorrow’s pipeline.
What is the concern about Kailera’s oral obesity data?
Analysts flagged high nausea and vomiting rates, which could limit the drug’s commercial differentiation in a market where patient experience is the competitive battleground.
When is the China probe deadline?
July 17. Eight days from today. Merck, AbbVie, Lilly, Pfizer, and BMS must respond to the House Select Committee on China.
BioMed Nexus Pro — What Institutional Subscribers Are Reading Today
After July 17. We lay out three scenarios for what happens after the pharma companies respond to the House probe, assess which is most likely, and identify the tells that will signal whether the Biotech Investment National Security Act gains real momentum or fades.
The KRAS Leaderboard. We rank the six major KRAS programs after the most consequential week in the field’s history, identify which companies are positioned to lead and which face strategic questions, and assess how the daraxonrasib approval and divarasib superiority data change the competitive landscape.
The Barbell Problem. We analyze why early stage venture is drying up, what it means for the pipeline five to ten years from now, and whether the booming top end masks a structural underinvestment that the industry will regret.
Plus: AstraZeneca China deal cadence analysis, Kailera tolerability caution, GSK/Alector neurodegeneration failure patterns, Section 232 tariff countdown (21 days), and the full H2 catalyst calendar.
About BioMed Nexus
BioMed Nexus delivers institutional grade intelligence to biotech and pharma executives, investors, and clinicians. Our daily briefings and deep dive analyses cut through the noise to deliver the strategic insights that drive better decision making in the life sciences.
Subscribe to receive daily updates and gain access to BioMed Nexus Pro institutional intelligence briefs.
