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登陆A股仅一年余,百利天恒-U(688506.SH)又向港交所发起冲击。
Recently, Baili Tianheng submitted a form to the Hong Kong Stock Exchange, and the plan for the listing of "A+H" was officially launched. This pharmaceutical company, which quickly became one of the "upstarts" of domestic innovative drugs after landing on the Science and Technology Innovation Board, is like a rising star, not only reversing the financial dilemma with a bispecific antibody ADC product BL-B01D1, but also supporting the company to tell the story of innovative drugs and go to the Hong Kong stock IPO.
However, Titanium Media APP noticed that behind the "myth of wealth creation" staged by license-out of an innovative drug, Zhu Hai, the "second generation" of Baili Tianheng, has gradually come to the stage, although the innovative drug has broad prospects, but it can only be regarded as a phased victory, or even only the first step of the long march.
In front of Zhu Yi and Zhu Hai father and son, in addition to the shrinking of the chemical medicine and Chinese patent medicine sectors year by year, and the commercialization risk of BL-B01D1, the follow-up R&D funds of innovative drugs with multiple pipelines are also a real challenge.
The original source of income has shrunk rapidly
Zhu Yi, born in 1963, is a native of Sichuan, and was assigned to West China Medical University to engage in teaching and research after graduation. After serving the "iron rice bowl" for several years, Zhu Yi resigned and "went to the sea", and founded Baili Pharmaceutical in 1996, the predecessor of Baili Tianheng, after a toss of biomedical enterprises, real estate, building materials, etc.
According to the prospectus, the company initially started with chemical generics and Chinese patent medicines, and before the A-share listing, the company's revenue mainly came from these two sectors, and now it has more than 100 specifications of 29 approved drugs.
Around 2010, domestic innovative drugs were barren, but Zhu Yi, with his medical background and businessman's sense of smell, realized that the profits of generic drugs were shrinking, and immediately began to try to lay out the field of biological drugs and start the long transformation road of "creating with imitation". In 2014, the company also founded SystImmune in United States Seattle and invested heavily in the development of ADC drugs.
As expected, after Baili Tianheng's revenue reached its peak in 2019, it started a downward road. From 2019 to 2023, the company's revenue will be 1.207 billion yuan, 1.013 billion yuan, 797 million yuan, 703 million yuan and 562 million yuan respectively.
And with the acceleration of the speed of "burning money" of innovative drugs, the company has suffered continuous losses in recent years. From 2019 to 2023, the company's net profit attributable to the parent company will record 7.7309 million yuan, 37.9016 million yuan, -99.9913 million yuan, -282 million yuan and -780 million yuan respectively.
Of course, the continuous decline in revenue and gross profit of the company's traditional generic drugs and proprietary Chinese medicines has also exacerbated the decline in its performance. For example, from 2019 to 2023, the company's chemical drug preparation revenue will be 962 million yuan, 821 million yuan, 606 million yuan, 535 million yuan and 381 million yuan respectively, and last year's revenue is less than 40% of 2019, and the gross profit margin will drop from 87.31% in 2019 to 69.46% in 2023.
Coincidentally, the revenue of the Chinese patent medicine preparation segment, which was originally small, will drop from 243 million yuan in 2019 to 179 million yuan in 2023, and the gross profit margin will drop from 56.11% to 37.80%.
An ADC product staged a wealth myth
The R&D of innovative drugs is large and the cycle is long, and it is known as "ten years, one billion dollars, and a 10% success rate". Therefore, with the decline in the revenue of the above-mentioned chemical drugs and Chinese patent medicines, as well as the advancement of the company's multi-pipeline research and development of innovative drugs, Baili Tianheng's funds are gradually tightened, but fortunately, in January 2023, the company successfully achieved the listing of the Science and Technology Innovation Board, raising 990 million yuan (net amount of 884 million yuan), which solved the urgent need.
However, the fundraising of less than one billion yuan is still a drop in the bucket for innovative drug R&D companies. As a result, two months after listing, the company announced a change in the fund-raising project: the four-specific antibody drug was finally reduced from 544 million yuan to 34.0729 million yuan, the bispecific antibody drug was finally reduced from 536 million yuan to 207 million yuan, and the new ADC drug research project was planned to be invested in raising 342 million yuan.
In response to the exchange's inquiry, the company also said frankly: "The original fund-raising and investment projects have a long development cycle, and the reduction of funds supports the ADC projects that are progressing faster, so as to achieve commercialization and generate cash flow as soon as possible to support the smooth progress of other R&D pipeline products." Since then, the company has also applied for a 500 million yuan clinical research loan from the bank.
All the difficulties were reversed in December 2023.
In December last year, the company granted part of the commercialization rights of its self-developed product BL-B01D1 to Bristol-Myers Squibb (BMS), with a total transaction value of up to US$8.4 billion, which is the largest single-asset cooperative transaction in the history of the ADC field. In March this year, the company received an upfront payment of $800 million, and as of April 30, it recognized revenue of $751 million. In the first quarter, the company achieved revenue of 5.462 billion yuan and net profit attributable to the parent company of 5.005 billion yuan. The company also revealed that BMS may make up to $500 million in development milestone payments in the near future.
(Source: Baili Tianheng Hong Kong Prospectus)
The authorization of BL-B01D1 to go overseas is not only to reverse the financial dilemma, but also directly bring about the improvement of the company's valuation, and the myth of wealth creation has reached its peak.
The company's science and technology innovation board was listed at an issue price of 24.7 yuan, and it fluctuated upward after listing, especially after the announcement of the authorization of BL-B01D1 to go to sea, the stock price rose sharply, and it once reached 215.71 yuan on June 11 this year. Even if the stock price has rebounded after that, as of midday on July 25, there is still 160.06 yuan, and the current market value exceeds 64 billion yuan. In the same period, the innovative drug index (8841049. WI) fell 35.83%, and Remegen Biotech (688331. SH) and BeiGene-U (688235.SH) fell by 69.40% and 18.55% respectively.
Baili Tianheng's equity is relatively concentrated, after the completion of the latest shareholding increase plan, Zhu Yi still holds 74.35% of the shares, as the actual controller, and his brother Zhu Xi and sister Zhu Ying also hold a small amount of equity. The rise in stock prices also pushed Zhu Yi onto the rich list, not only once topped the richest man on the Science and Technology Innovation Board, but also ranked 63rd on the 2024 New Fortune 500 Wealth Creation List with a value of 41.7 billion yuan.
It is worth mentioning that Zhu Yi's son Zhu Haizi inherited his father's business and gradually came to the stage. According to the data, Zhu Hai was born in 1988, a doctoral degree in biostatistics from the University of Texas Health Science Center in Houston, United States, and has been working in SystImmune since 2019, successively serving as a biostatistician in the clinical development department, a senior biostatistician, a chief biostatistician and head of the bioassay department, a vice president of the biostatistics department and a special assistant to the CEO, and is also recognized as the core technical personnel of Baili Tianheng.
In February this year, after Zhu Xi resigned as the company's director and deputy general manager, he was replaced by Zhu Hai; In April, Hai Zhu became the Chief Technology and Data Officer of SystImmune. The Hong Kong prospectus disclosed that Zhu Hai's salary in the first four months of this year reached 2.091 million yuan, including a performance-related bonus of 1.421 million yuan, which is determined based on the percentage of milestone payments collected from certain customers, that is, as a result of the BL-B01D1 project.
There is a long way to go in commercialization
Titanium media APP noticed that the sudden rise of Baili Tianheng is not only the strategic fulfillment of the layout for many years, but also the dividends of the outbreak of the ADC track.
ADC (antibody-drug conjugates) are composed of antibodies, linkers, and cytotoxic payloads, which can selectively deliver toxic drugs to antigen-expressing tumor cells, known as "magic bullets", and are undoubtedly the hottest branch of the pharmaceutical industry in recent years. In 2022, the global sales scale exceeded 7.7 billion US dollars, and in 2023, it will break the "10 billion US dollar mark".
However, the license-out of the BL-B01D1 project can only be regarded as a phased victory, after all, there is still a long way to go before the product is truly commercialized, and the R&D of "nine deaths and one life" is still facing the risk of "refund". And as the competition in the ADC field becomes more and more fierce, it is still unknown whether the BL-B01D1 project can be proud of the last.
Let's take a look at the risk of chargebacks first, as early as in the previous article "Innovative Drugs "Going Overseas" Huge Transactions Are Questioned, Baili Tianheng Eats Regulatory Letter", Titanium Media APP mentioned that although compared with monoclonal antibody drugs, bispecific antibody ADC drugs have the advantages of "targeting tumor cells more specifically, overcoming drug resistance, and reducing side effects", but this series of drugs, like other innovative drugs, has a very high "miscarriage rate".
For example, AstraZeneca's (AZN.US) HER2 ADC project, which MEDI4276 biepitope tetravalent, was terminated due to toxicity issues.
Focusing on the HER3 therapy of Baili Tianheng's overseas project, it is more difficult to develop it. Up to now, there have been a number of HER3 projects in the world, among which Duligotuzumab, which is the same EGFR×HER3 bispecific antibody as the Baili Tianheng project, finally failed due to the high incidence of serious adverse reactions and insufficient efficacy.
The risk of "returns" due to project failure should not be underestimated. In recent years, due to the failure of the FDA, the failure of clinical trial data and the adjustment of R&D pipelines, many Chinese pharmaceutical companies have encountered "returns" from overseas pharmaceutical giants for their license-out projects. From BeiGene (688235. SH) PD-1 monoclonal antibody parted ways with Novartis and went to Junshi Biosciences (688180. SH) terminated the cooperation with Coherus BioSciences on the recombinant humanized anti-TIGIT monoclonal antibody project, and according to incomplete statistics, more than 10 innovative drug license-out projects have been "returned" in the past three years.
Even in the end, BL-B01D1 is still a long time away from commercialization. "It is expected that BL-B01D1 will submit its first indication NDA application to the China Food and Drug Administration in 2026 or before, and the first BLA application to the FDA as early as 2028, and in the next three to five years, BL-B01D1 will submit regulatory approval applications for more indications in China, Europe, the United States and other markets." ”
At the same time, Baili Tianheng has many competitors in the field of ADC. For example, Remegen, China's earliest ADC player, reached a $2.6 billion cooperation with Seagen as early as 2021, and the latter obtained overseas rights and interests in decitumab. Decetumab has been on the market in China for more than 3 years and is the only ADC product approved for marketing in China.
In 2022, it reached a licensing cooperation with Merck & Co., Ltd. for more than $10 billion, and SKB264 is expected to become the first domestically marketed TROP2 ADC. Other pharmaceutical companies such as Hengrui Pharmaceutical, Hansoh Pharmaceutical, and CSPC Pharmaceutical Group are also making their own efforts.
According to the statistics of open source securities research report, as of early June 2024, more than 370 ADC drugs have entered the clinical stage around the world, and 15 drugs have been approved for marketing.
In addition, for Baili Tianheng, which has 28 key innovative biological drug research pipelines and 14 in the clinical research stage, follow-up R&D funds are in massive demand. Zhu Yi, chairman of the company, said in a recent interview that the real most expensive place for Biotech is the clinical stage. This can also be understood that after being listed for one year and having the income of BL-B01D1, the company also quickly launched the motivation of Hong Kong stock IPO fundraising. (This article was first published in Titanium Media APP, author|Su Qitao)