The Candid Ratio: What One Biotech Deal Reveals About America's Biotech Advantage

When UCB acquired Candid Therapeutics for $2 billion in June, the deal made headlines as another major investment in immunology. But beyond the headline figure, the deal demonstrated how U.S. investors can build valuable American companies from promising discoveries made in China.

As the Treasury Department considers new restrictions on outbound investment in China's biotechnology sector, the Candid deal offers an important lesson about what's at stake.

How Candid Was Built

Candid is a San Diego-based biotech built around T-cell engager antibodies licensed from Chinese developers, including its lead drug, cizutamig, from Shanghai-based EpimAb Biotherapeutics. U.S. venture investors provided the capital to build the company and advance its clinical program, led by an American team developing new treatments for autoimmune diseases where patients across the country often struggle to find lasting relief.

When Candid was formed in 2024, its Chinese licensors received approximately $52 million in disclosed cash payments. Two years later, UCB acquired the company for $2 billion upfront, with up to $200 million more in milestones.

For every dollar of disclosed cash that went to China, the U.S. firm Candid generated roughly $38 in acquisition value. We call this the "Candid Ratio."

Candid Is Not an Outlier

Candid isn't the only example of this model.

In 2024, Jiangsu Hengrui licensed its obesity drug portfolio to a new U.S. company, now known as Kailera Therapeutics, for $110 million upfront and a minority stake. Kailera went public this year at a valuation of approximately $3 billion, representing a ratio of roughly 27 to 1.

These deals illustrate the important role that international licensing plays in American biotechnology. U.S. investors identify promising discoveries, finance their development, and build companies that can bring new treatments to patients. These deals also direct investment into American biotechnology, with the potential to generate economic activity and returns for U.S. companies and investors.

The Bigger Economic Picture

Some policymakers have raised concerns about the growing value of licensing agreements between Chinese developers and international pharmaceutical companies.

In 2025, Chinese drugmakers signed more than $130 billion in out-licensing agreements. But that headline figure doesn't represent money immediately flowing to China. Much of it consists of potential milestone payments that depend on whether a medicine successfully advances through development and reaches the market.

Actual upfront payments across those deals totaled a much lower figure, approximately $7.2 billion.

Applying the Candid Ratio to those upfront payments suggests that deals of this kind could generate approximately $275 billion in value for U.S.-built companies annually, or roughly $2.7 trillion over a decade. With deal volume in 2026 already exceeding last year's total, the potential economic opportunity could be even greater.

Of course, this is an illustrative, best-case estimate. Not every licensed medicine will succeed, and not every company will generate returns comparable to Candid's.

But the $130 billion figure frequently cited in discussions of Chinese licensing is also based on the assumption that every potential milestone will be paid.

For policymakers evaluating the economic implications of these partnerships, both sides of the equation deserve consideration. The value created by American investors and companies is an important part of the picture.

What's at Stake for American Biotech

Treasury's proposed outbound investment restrictions would make it harder for American investors to participate in this model.

That wouldn't necessarily stop promising medicines discovered in China from advancing. Large pharmaceutical companies could continue licensing directly from Chinese developers, while new companies could increasingly be established in Europe, Japan, and other markets. That means that the science, talent, jobs, and economic value created by advancing those medicines would build up somewhere else.

Patients also have a stake in the outcome. Companies like Candid and Kailera are advancing potential treatments for autoimmune diseases and obesity, conditions affecting millions of Americans. Building these companies in the United States can support domestic clinical research and create opportunities for American patients to participate in trials of promising new medicines.

The United States has long led the world in biotechnology because of its ability to attract capital and scientific talent, and turn promising discoveries into new medicines, regardless of where they originated. Preserving that advantage requires policies that protect legitimate national security interests without unnecessarily limiting the investment and partnerships that help American companies succeed.

Looking Ahead

Incubate plans to submit comments to Treasury ahead of the December 7 deadline and release a more comprehensive analysis of the Candid Ratio, including additional case studies and estimates of the long-term economic value these medicines could generate in the United States.

As Washington weighs new investment restrictions, policymakers should consider the full economic picture, including what American investors, companies, and patients stand to lose if these opportunities increasingly move overseas.