Zhu Yi has been silent for ten years, and the new drug finally went to sea with a net worth of 43 billion, and Baili Tianheng made a big profit of 5 billion in the first quarter to make up for the three-year loss

Yangtze River Business Daily News ● Yangtze River Business Daily reporter Pan Ruidong

After a long season, Zhu Yi's innovative drug obsession has achieved a breakthrough from "0 to 1".

On the evening of April 26, Baili Tianheng (688506. From January to March 2024, the company achieved operating income of 5.462 billion yuan, a year-on-year increase of 4325.45%, and a net profit attributable to the parent company of 5.005 billion yuan, a year-on-year turnaround, shocking the market.

From 2021 to 2023, Baili Tianheng has lost money for three consecutive years, with a cumulative loss of 1.162 billion yuan, and the profit in the first quarter of this year made up for the losses in the previous three years in one fell swoop.

As the founder of the company, Zhu Yi intervened in innovative drugs early, and established a new drug research and development center overseas in 2014 to bet on the bispecific antibody ADC track. Ten years later, years of hard work have come to fruition, and the innovative biologic drug BL-B01D1 independently developed by Baili Tianheng has been favored by the global pharmaceutical giant Bristol-Myers Squibb, and has won a large order with a potential transaction volume of 8.4 billion US dollars. The profit in the first quarter of this year was due to the $800 million down payment for the order.

The harvest does not stop there, in the secondary market, Baili Tianheng's current share price is about 144 yuan / share, nearly 5 times higher than the issue price, and the market value is 57.9 billion yuan. In terms of shareholding ratio, Zhu Yi's shareholding market value is about 43 billion yuan.

Abandon religion and engage in business to deploy generic drugs

I worked as a medical school teacher and made a lot of money by stepping on the generic drug outlet...... But later, Zhu Yi still plunged headlong into the track of innovative drugs.

According to public information, Zhu Yi was born in Neijiang, Sichuan Province in 1963, and returned to Sichuan University to study for a doctorate in management after completing his bachelor's and master's studies in the Radio Department of Sichuan University and the Department of Biology of Fudan University. After graduation, Zhu Yi taught in the Department of Microbiology and Immunology of West China Medical University, and in January 1991, he was appointed as the director of the Sida Biochemical Plant of Chengdu Biomedical Engineering Center.

Zhu Yi's entrepreneurial journey began in an abandoned warehouse, where he and his sister founded a company called Xinbo Technology, which was not well run. It wasn't until 1996 that he founded Baili Pharmaceutical (the predecessor of Baili Tianheng) to make generic drugs, and Zhu Yi seemed to have begun to find the right direction in life.

In 1998, Baili Pharmaceutical was officially put into production, and the antiviral ribavirin granules (trade name Xinbolin) were its first generic drugs. The real rise of this drug was due to the SARS epidemic in 2003. That year, the sales of ribavirin granules reached hundreds of millions, and Baili Pharmaceutical took this opportunity to establish channel relationships with various pharmaceutical companies across the country. Zhu Yi also began to lay out chemical generics and Chinese patent medicines.

By 2010, the environment of generic drugs and innovative drugs in China was quietly changing, and Zhu Yi, who was in it, was the first to feel this change and began to take action. In 2010, he mentioned in an internal speech at the company: "There are only two drugs in the world: innovative drugs and others. In the future, the margins of other drugs will be as thin as a blade. ”

Since founding Baili Pharmaceutical in 1996, Zhu Yi has grown with China's generic drug industry, and now, he believes that it is time to make innovative drugs.

Innovative drugs have been sharpening their swords for ten years

Before the establishment of the front-end R&D center for innovative drugs, Zhu Yi was already beginning to consider which track to cut into innovative drugs.

In 2008, a multinational pharmaceutical company began to establish a research and development center in Zhangjiang, Shanghai, during which Zhu Yi did two national new drug projects, one was to develop drugs for the treatment of liver cancer, and the other was to study fusion proteins for the treatment of lymphoma. However, by 2013, these new drug projects had failed. During this period, Zhu Yi also looked for other innovative drug projects, but they were all unsatisfactory.

In 2014, during the cold winter of biomedicine in the United States, Zhu Yi bucked the trend and officially established SystImmune, a biotech company, in Seattle. With the determination to succeed if he doesn't succeed, Zhu Yi built a technology platform including monoclonal antibodies, bispecific antibodies, multispecific antibodies, ADCs and fusion proteins in the next five years. Ten years later, one of Baili Tianheng's bispecific antibody ADC drugs was favored by Bristol-Myers Squibb.

During this period, huge pressure enveloped Zhu Yi.

At the beginning of the shift to innovative drugs, chemical generics can also provide stable cash flow for Baili Tianheng and "subsidize" the research and development of its innovative drugs. However, with the implementation of the consistency evaluation of generic drugs by the state, under the influence of various policies such as drug volume procurement and consistency evaluation, the revenue of Baili Tianheng's generic drug business declined, and the investment in innovative drugs continued, and finally fell into a loss.

Flush data shows that from 2018 to 2021, Baili Tianheng's operating income was 1.111 billion yuan, 1.207 billion yuan, 1.013 billion yuan and 797 million yuan respectively, and the net profit attributable to the parent company in the same period was 32.8289 million yuan, 7.7423 million yuan, 37.9229 million yuan and -99.9913 million yuan respectively. In 2022, the loss will further increase, and the company's operating income will only be 703 million yuan that year, and the net profit attributable to the parent company will be -282 million yuan.

Looking back on this journey, Zhu Yi said frankly in an interview: "It's really a bit reckless. Because it was not until 2020 that the drug entered the clinical stage, and the huge pressure of capital consumption was truly realized. ”

In January 2023, Baili Tianheng landed on the Science and Technology Innovation Board, and actually raised 884 million yuan, alleviating the tight cash flow problem. Zhu Yi later mentioned in an interview that thanks to the opening of the fundraising channel by listing on the Science and Technology Innovation Board, Baili Tianheng will be able to carry out high-intensity R&D investment in 2023 and accumulate rich clinical data.

In the year of listing, Baili Tianheng's operating income was 562 million yuan, down 20.11% year-on-year, and the net profit loss attributable to the parent company expanded to 780 million yuan. Roughly calculated, from 2021 to 2023, Baili Tianheng's cumulative loss will be as high as 1.162 billion yuan.

Although the performance in 2023 still recorded a loss, Baili Tianheng BL-B01D1 drug relied on solid and rich clinical data and signed an agreement with Bristol-Myers Squibb, a global multinational pharmaceutical company, on December 12 of that year, which also became the largest licensing transaction in the field of innovative drugs in China, and Zhu Yi insisted on achieving a breakthrough from 0 to 1 in the innovative drug path.

Specifically, the transaction value consists of an upfront payment of $800 million, with a total contract value of up to $8.4 billion. In February 2024, a down payment of US$800 million arrived, helping Baili Tianheng turn around its losses in one fell swoop.

On the evening of April 26, Baili Tianheng released a quarterly report showing that in the first quarter of 2024, the company's operating income was 5.462 billion yuan, a year-on-year increase of 4325.45%, and the net profit attributable to the parent company was 5.005 billion yuan, which made up for the losses in the previous three years in one fell swoop, and also provided a huge amount of liquidity for the company's future development of innovative drugs.

In the secondary market, since it was favored by Bristol-Myers Squibb at the American Society of Oncology in June 2023, the share price of Baili Tianheng has been rising, and it has climbed to a record high of 157.33 yuan per share after the signing of the agreement between the two parties.

As of the close of trading on April 26, 2024, Baili Tianheng's share price closed at 144.44 yuan per share, up nearly 5 times from the issue price, with a market value of 57.92 billion yuan. Zhu Yi holds 74.34% of Baili Tianheng's shares, and the value of the shares held by Zhu Yi is about 43 billion yuan.