After the listing of the Hong Kong stock market, Biocytogen (Beijing) Pharmaceutical Technology Co., Ltd. (hereinafter referred to as "Biocytogen"), a biopharmaceutical company, was not satisfied and planned to land on the Science and Technology Innovation Board, and at present, the IPO of Biocytogen Science and Technology Innovation Board is in a state of suspension. At present, Biocytogen has not yet achieved profitability, with a cumulative loss of nearly 2 billion yuan from 2020 to 2023. In addition, whether the transformation of the company's productive biological assets and consumable biological assets is reasonable, related party transactions, etc., may also become a "roadblock" on the company's IPO road.
Do business around rats
"Mouse" is Biocytogen's unavoidable keyword, and in recent years, Biocytogen's revenue from model animal sales has increased significantly, and it will be close to 40% in 2023.
According to the data, Biocytogen is a preclinical CRO and biopharmaceutical company. Based on its self-developed gene editing technology, the company provides various innovative model animals and preclinical stage pharmaceutical R&D services, and uses its self-developed RenMice fully human antibody mouse platform to conduct large-scale drug discovery and development for more than 1,000 potential drug targets in the human body, and transfers, licenses or co-develops potential antibody molecules.
From the perspective of business type, Biocytogen's business includes gene editing business, antibody development business, model animal sales, and preclinical pharmacology and efficacy evaluation. Among them, the sales of model animals are mainly mouse models, which can be divided into target humanized mice, severely immunodeficient mice, disease model mice, conventional strain mice, and others according to the model category.
During the reporting period, Biocytogen's operating income from the sale of model animals increased significantly. From 2020 to 2022, Biocytogen's sales from model animals were 65.9481 million yuan, 107.5542 million yuan, and 169.3283 million yuan, accounting for 26.24%, 30.48%, and 31.75%, respectively.
In 2023, Biocytogen's sales revenue from model animals will further increase, and according to Biocytogen's 2023 results announcement disclosed on the Hong Kong Stock Exchange, in 2023, Biocytogen's sales revenue from model animals will be 273 million yuan, accounting for about 38.1%, which has jumped to become the company's largest source of revenue.
In terms of sales volume, from 2020 to 2022, the sales volume of Biocytogen animal models will be 67,600, 110,900, and 122,300, respectively. Among them, the sales of target humanized rats accounted for the highest proportion, which were 38.85%, 36.11% and 44.07%, respectively. The target humanized mouse is also the mouse with the highest average sales unit price of Biocytogen, with an average sales unit price of 2339.48 yuan per mouse in 2022.
In the first round of inquiry, the Shanghai Stock Exchange also paid attention to the sales of Biocytogen model animals, for example, the Shanghai Stock Exchange asked Biocytogen to explain the application of different types of mice in the downstream field, and the company focused on the main considerations of target humanized mice and the future market prospects of target humanized mice. In addition, Biocytogen also needs to explain whether the company complies with animal welfare management and other requirements in the course of daily operations, and whether the relevant business is legal and compliant.
In response to the company's related situation, a reporter from Beijing Business Daily sent an interview letter to Biocytogen, but as of press time, no reply has been received from the company.
The transformation of biological assets has been questioned
Biocytogen biological assets are divided into two types: consumable biological assets and productive biological assets. Consumable biological assets refer to mice held for sale or experimentation and are included in the inventory presentation. Productive biological assets are those held for breeding purposes, for example, the breeding of mice.
Financial data show that from 2020 to 2022, the book value of Biocytogen's productive biological assets was 27.7882 million yuan, 28.648 million yuan, and 28.1966 million yuan, respectively, and the consumable biological assets were about 26.0573 million yuan, 39.4826 million yuan, and 48.3009 million yuan, respectively.
It is worth mentioning that during the reporting period, Biocytogen was converted between productive biological assets and consumable biological assets. From 2020 to 2022, the amount of Biocytogen's consumable biological assets transferred to productive biological assets was 7.1618 million yuan, 9.4313 million yuan, and 16.0814 million yuan, respectively.
In the first round of inquiry, the SSE questioned the above situation and asked Biocytogen to explain the basis and specific transformation of the conversion between the production biological assets, consumable biological assets and raw materials, and whether there was any adjustment of the conversion method and conversion time to adjust the inventory and profit.
Biocytogen said in its reply that the laboratory mice accounted for in the company's productive biological assets are severely immunodeficient mice, humanized mice and conventional strains of rats used for breeding populations. The laboratory rats accounted for by the company in the consumable biological assets are severely immunodeficient mice, humanized mice and conventional strains of rats used for experimental purposes or sales purposes. The life cycle of mice is generally divided into four stages: pre-weaning, saleable period, cage closing period and culling. Depending on the life cycle stage of the rat, the transformation takes place between productive and consumable biological assets.
It has not yet turned around
As a biotechnology platform company, Biocytogen did not achieve profitability during the reporting period. According to the company's 2023 performance forecast disclosed by the Hong Kong Stock Exchange, in 2023, the company's attributable net profit will be -383 million yuan, and it has not yet achieved a turnaround.
According to the financial data, in 2023, Biocytogen will achieve an operating income of about 717 million yuan, a year-on-year increase of 34.28%, and the corresponding attributable net profit will be about -383 million yuan, achieving a loss reduction.
Looking at the extended time, the prospectus shows that from 2020 to 2022, Biocytogen's operating income will be about 254 million yuan, 355 million yuan, and 534 million yuan respectively, and the corresponding attributable net profit will be about -428 million yuan, -546 million yuan, and -602 million yuan respectively. After calculation, from 2020 to 2023, the cumulative loss of Biocytogen's attributable net profit will be about 1.959 billion yuan.
Biocytogen said that after the company's cautious calculations, the company is expected to approach the breakeven point in 2024. Biocytogen predicts that in 2024, the company expects to generate revenue of 849 million to 964 million yuan, net profit of -20 million to 20 million yuan, and the company is expected to approach the breakeven point in 2024.
It is worth noting that on March 15, the China Securities Regulatory Commission issued the "Opinions on Strictly Controlling the Access to Issuance and Listing to Improve the Quality of Listed Companies from the Source (Trial)", which mentioned that it would further strictly review unprofitable enterprises, require unprofitable enterprises to fully demonstrate their ability to continue operations, disclose the expected profitability, and listen to the opinions of relevant departments of the industry on the attributes of science and technology innovation one by one.
Qu Fang, an investment consultant of Wanlian Securities, said that the particularity of the biomedical industry compared with others lies in its long product development cycle, large investment funds, and many uncontrollable factors in the middle. Therefore, the sustainability of biopharmaceutical companies is crucial. Zhang Yue, chairman of Aoyu International, believes that unprofitable companies, especially biotechnology companies, will face more challenges on the road to IPO, while biopharmaceutical companies need to enhance their core competitiveness through continuous innovation and strategic adjustment.
However, this does not mean that the regulator has closed the door to unprofitable IPO companies, but it is more conducive to screening out better listing targets. Xu Xiaoheng, an investment and financing expert, said.
Beijing Business Daily reporter Ding Ning