Image source: Visual China
Blue Whale News, September 10 (Reporter Wang Xiaonan) Zhu Zhongyuan, a big man in the pharmaceutical investment circle, will lead his "built" innovative drug company Yingen Biotech to break through the Hong Kong Stock Exchange after just five years of cross-border crossing. With the support of Zhu Zhongyuan's strong "circle of friends", this innovative drug company with a loss of more than 800 million yuan in more than two years has completed four rounds of financing in a short period of time, with a total financing of up to US$138 million, and investors include well-known capital such as "WuXi Department", Lilly Asia Ventures, Sino-Singapore Venture Capital, Shenglian under Seven Wolves Group, and Tianlishi International Capital.
The founder's strong "circle of friends" raised $138 million in 5 years of establishment
On September 4, Duality Biotherapeutics, Inc. (hereinafter referred to as "Innova") proposed Hong Kong IPO was accepted by the Securities Regulatory Commission. Previously, on August 26, Yingen Biotech submitted a listing application to the main board of the Hong Kong Stock Exchange, with Morgan Stanley, Jefferies Financial, and CITIC Securities as joint sponsors.
Founded in 2019, this innovative drug company established only 5 years ago has attracted many star capital, which has to mention the company's founder Zhu Zhongyuan, whose extraordinary "circle of friends" has made Yingen Bio, which is still losing money, a sweet spot in the investment world.
According to the prospectus, Zhu Zhongyuan, 53, currently serves as the chairman of the board of directors, executive director and chief executive officer of Yingen Biotech. With more than 20 years of experience in pharmaceutical start-ups and investments, Zhu Zhongyuan has served as a partner in venture capital firms such as 6 Dimensions Capital and Wuxi Healthcare Ventures, where he invested in and incubated CStone Pharmaceuticals (2616.HK). HK), Remegen Biotech (9995.HK) HK), Gan & Lee Pharmaceutical (603087. SH) and BGI (300676.SH) and other innovative biotechnology companies.
Zhu Zhongyuan, who graduated from the Department of Biology of Nankai University, later received a Ph.D. from the University of Massachusetts at Vorster and a master's degree in business administration from the University of California, Berkeley.
In April 2020, the year after the establishment of Yingen Biotech, the company completed a seed round of financing, with investors including 6D Capital, 6D Affiliates, APHN, Kings Star Med and Zhu Zhongyuan Holdings, with a total investment of $5 million. In July and August of the same year, Yingen Biotech completed Series A-1 and Series A-2 financing, with investors including APHN, Golden Sword, Kings Star Med and WuXi Venture, respectively, with a total investment of $22.5 million.
In the following year, Yingen Biologics received investment from Zhu Zhongyuan's old club Tong and Yucheng, as well as WuXi Venture, a wholly-owned subsidiary of WuXi Biologics. In 2015, WuXi AppTec spun off its venture capital division and established Yucheng Capital. In 2017, Yucheng Capital merged with another investment firm, Tonghe Capital, and changed its name to Tonghe Yucheng, focusing on investments in the healthcare sector, including Innovent Biologics and BeiGene. CURRENTLY, WUXi AppTec's Chairman Ge Li remains a director of 6 DIMENSIONS CAPITAL GP, LLC and 6 DIMENSIONS CAPITAL LIMITED.
In addition, Kings Star Med, which has increased its capital twice, is also quite related to the "WuXi Department". The actual controller of Kings Star Med is Lin Xianghong, who is currently the chairman of Newerly Investment, and WuXi is also one of the shareholders of Newerly Investment.
In the following two years, Yingen Biotech has completed Series B and B+ rounds of financing, introducing LAV USD and Orchids under Eli Lilly Asia Ventures, Zhongxin Venture Capital, Qisheng Pharmaceutical, Shenglian under Seven Wolves Group and Tianlishi International Capital, with a total investment of 110 million US dollars.
After four rounds of financing, the total amount raised by Ingen Biotech reached US$138 million, and its post-investment valuation also continued to climb, from about US$14.5 million in April 2020 to about US$269 million in September 2022.
The latest shareholding structure shows that the founder holding company of Inn Biologics holds 9.54%, Eli Lilly LAV USD holds 16.55%, Kings Star Med holds 13.22%, Shanghai Yinglian holds 9.38%, WuXi holds 6.12% through its WuXi Venture, 6D Capital (Tong and Yucheng) holds 5.87%, and other investors hold 33.8%.
The founder Zhu Zhongyuan's powerful "circle of friends" continued to transfuse blood for Yingen Biotech, which was still losing money, but also paid the corresponding price. Many of the shares acquired by these investors are convertible preferred shares, which can be treated as financial liabilities measured at fair value through profit or loss, which means that the company needs to meet its repayment obligations. As of the end of March 2024, the financial liabilities of Ingen Biotech were 2.294 billion yuan.
In addition to frequent financing to shrink its shares and lose its position as the largest shareholder, Yingen Biotech also signed a VAM agreement with investors, stipulating that the right of redemption has been terminated immediately when it submits the statement, but if the company withdraws the IPO application, the IPO fails, and the expiration of 18 months after the submission of the statement, the right of redemption can be exercised again.
The loss of more than 800 million yuan in more than two years was over, and the founder received a high salary of 26.7 million
ADCs targeting autoimmune diseases are expected to further expand the ADC market with exploration in non-oncology indications, while the United States and China will remain the largest and fastest-growing ADC markets.
At present, the global ADC market has grown rapidly from US$2 billion in 2018 to US$10.4 billion in 2023, at a CAGR of 38.6%, and is expected to continue to grow strongly at a CAGR of 31.8% and 29.2% in 2023-2028 and 2028-2032, respectively, and reach US$115.1 billion in 2032.
According to the prospectus, Yingen Biotech mainly develops a new generation of ADC (antibody drug conjugate) innovative drugs for patients with cancer and autoimmune diseases, and has established 12 ADC pipelines, including 6 clinical-stage pipelines, but no products have been approved for marketing.
Although the industry is developing hotly and there is a frenzy of capital, Yingen Biotech, which has not obtained any marketing approval for drug candidates, has not yet received any revenue from product sales, and the company is still in the red as it continues to incur a large number of R&D costs and operating expenses.
One of the core products, DB-1311, is a monoclonal antibody imported from WuXi Biologics. According to the prospectus, on May 26, 2022, Ingen Biologics entered into a license agreement with WuXi Biologics, an indirect wholly-owned subsidiary of WuXi Biologics, and obtained B7-H3 monoclonal antibody. DB-1311 is the only B7-H3 ADC product under the WuXi Biologics agreement, as one of the core products and an ADC targeting B7-H3.
In the first quarter of 2022, 2023 and 2024, the operating income of Yingen Biotech will be 1.663 million yuan, 1.787 billion yuan and 641 million yuan respectively, all of which come from licensing cooperation, and the corresponding net loss will be 387 million yuan, 358 million yuan and 65.942 million yuan respectively, mainly due to R&D expenses and gains and losses on fair value changes in preferred shares, while R&D expenses during the period are 340 million yuan, 559 million yuan and 311 million yuan, respectively.
Although its own hematopoietic capacity is still to be unleashed, Ingen Biotech has entered into several out-licensing and collaboration agreements with leading global partners such as BioNTech, BeiGene and Adcendo, with a total value of more than US$4 billion.
As of the end of March 2024, the company's cash and cash equivalents on the books were RMB1.33 billion. At the same time, as the founder of the company, Zhu Zhongyuan has also continued to receive high salaries in recent years, and from 2022 to 2023, his salary will be 8.183 million yuan and 18.544 million yuan respectively, totaling 26.727 million yuan.