pokertablesforsalenearme| "Three No Companies" Huaxiong Biotech IPO: Annual R & D Expenditure is less than 40 million yuan, with a gambling agreement, it will go bankrupt if it does not go public

Special topicPokertablesforsalenearmeHuacheng biological port stock IPO: the products that specialize in wound healing have not been commercialized yet

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Product: research Institute of Sina Finance listed Company

Author: Tianli

Recently, Huatai Biotechnology (Qingdao) Co., Ltd. has submitted a prospectus to the HKEx for listing on the main board of the HKEx in accordance with Chapter 18A of the listing rules, with co-sponsors Huatai International and CITIC Securities. According to the prospectus, Huamai Biology was founded in 2012, focusing on the discovery, development and commercialization of multi-functional treatments for wound healing, and currently focuses on the development of PDGF gel drugs for external use.

PDGF, the abbreviation of platelet-derived growth factor, is one of the growth factors secreted by platelets after injury, which can promote the formation of new blood vessels, regulate inflammation, stimulate cell proliferation and migration, and finally accelerate wound healing. Huacheng's biological core products include PDGF gel drug Pro-101-1 for treating burns and PDGF gel drug Pro-101-2 for treating diabetic foot ulcers.

The core products have not yet entered the stage of commercialization and have not completed the Ⅱ phase of clinical practice.

At present, there are a total of ten candidate products. Among them, only Pro-101-1 and Pro-101-2 entered the clinical stage, and the rest of the pipelines were in the early stage of preclinical research. Therefore, although the company has been established for a long time, there are still no commercial products so far, and it belongs to the "three no companies" with no products, no revenue and no profits.

From the market expectation of the product, there are a variety of drug treatment schemes for scald and diabetic foot. Take diabetic foot as an example, common treatment schemes include the use of vasodilators to improve lower limb ischemia, such as alprostadil, beprost, antiplatelet drugs such as aspirin, clopidogrel and so on. After the appearance of foot wound, there are also hyperbaric oxygen therapy, stem cell therapy, external application of autologous platelet-rich plasma gel and so on.

Among them, autologous platelet-rich gel is rich in platelet-derived growth factor (PDGF), vascular endothelial growth factor (VEGF), epidermal growth factor (EGF), transforming growth factor (TGF), insulin-like growth factor-1 (IGF-1) and other growth factors, which is highly similar to the therapeutic effect of Pro-101-2.

In this context, the key to whether Huacheng biological PDGF gel drug products can obtain market share in the future lies in the effectiveness of the product itself and the company's own sales and channel capabilities. In terms of sales, as the company has not yet entered the commercialization stage, even if the products are successfully listed, it is still necessary to build a sales team and gradually open up the admission sales channel.

In terms of products, according to the drug clinical registration and information disclosure platform, the efficacy and safety of Huali biological recombinant human platelet-derived growth factor gel in patients with local (superficial / deep) Ⅱ degree burns. The multicenter, randomized, double-blind, placebo-controlled phase b clinical trial of Ⅱ is recruiting patients. The preliminary efficacy and safety of recombinant human platelet-derived growth factor gel in patients with diabetic foot ulcers the multicenter, randomized, double-blind, placebo-controlled phase Ⅱ clinical trial has not yet opened patient recruitment.

In all aspects of the new drug clinic, although each process has its own specific milestone, it is used to prove the effectiveness of the technology in the current link. The later, the more difficult it is, and the higher the return value of R & D investment is. Phase II clinic, for example, is of strong importance and high elimination rate in the whole R & D cycle, so it has always been known as the "valley of death" for new drug research and development. At present, the two core products of Huazheng Biology have not completed the phase Ⅱ clinical trial, and the clinical efficacy of the products and whether they can become drugs in the end are facing great uncertainty.

From the perspective of industry R & D, there are few domestic enterprises to layout this track, and there is no successful precedent at present. Tianshili Pharmaceutical PDGF topical gel products entered phase III clinical trials in 2014, but as of the last practical date, there is no up-to-date information on the status of Tianshili Pharmaceutical drug pipeline.

Is it bankrupt if you don't go public with a gambling agreement? The valuation level of the surprise investment of local state-owned assets is significantly on the high side.

On the financial side, due to the lack of commercial products, Huamao did not generate any main business revenue in the past and fell into persistent losses, with losses of 8592 in 2022 and 2023 respectively.Pokertablesforsalenearme.60,000 yuan, 1Pokertablesforsalenearme0500 million yuan.

It is worth noting that Huacheng Biology itself is oriented to the research and development of innovative drugs, but its administrative expenditure is already higher than that of R & D. In 2023, the company's R & D expenditure and administrative expenses are 39.915 million yuan and 42.117 million yuan respectively. In the prospectus, Huazheng Bio said that due to the high barriers to the research and development and production of PDGF drugs, there is no commercial PDGF drugs in China, resulting in a large number of medical needs that have not been met. However, a small amount of R & D spending does not seem to match its high-tech image.

Under the continuous loss of blood, the company has not carried out large-scale external financing. Since its establishment in 2012, it has only introduced external financing between 2021 and 2023. Among them, Pre-A round financing and round A financing were completed in 2021, with a cumulative financing amount of 80 million yuan. After round A financing, the company's cost per share is 22.23 yuan, with a post-investment valuation of 2.021 billion yuan.

On May 24, 2023, Qingdao Hi-Tech participated in the B round of subscription, which was indirectly wholly owned by the Finance Bureau of Laoshan District of Qingdao City, subscribing for 9.0908 million shares of the company at a cost of 300 million yuan, at a cost of 33 yuan per share, the largest financing in the history of the company. At this time, it is less than a year before the company submitted its application form for IPO. After the completion of round B financing, the company's post-investment valuation rose to 3.3 billion yuan.

Due to the particularity of the innovative drug industry, some enterprises are still in the early stage of development and have not yet achieved profitability. the core value logic is often the good expectation of their future development rather than the current performance. Therefore, the commonly used price-to-earnings ratio valuation method is distorted. The market research rate is a key quantitative valuation index introduced under this background, which emphasizes R & D investment and scientific and technological innovation ability. can get rid of the "price-to-earnings ratio, free cash flow discounted model" and other traditional valuation indicators to compare the limitations and inadaptability of innovation and enterprises. Therefore, among the valuation indicators, the market research rate index is sometimes selected as the company valuation reference.

In addition, the State-owned assets Supervision and Administration Commission of the Shanghai Municipal people's Government pointed out in the Circular on issuing the guidelines for examination and approval of valuation reports (for trial implementation) that for the valuation of biomedical enterprises, valuation methods such as pipeline valuation method, transaction case comparison method and listed company comparison method are more suitable.

From the above two angles, the biological valuation of Huacheng is significantly higher than the industry level. According to Wind data, in terms of current market capitalization and annual R & D expenses in 2023, the arithmetic average market research ratio of 18A Hong Kong stocks listed since 2022 is 13.96, the weighted average is 11.64, and the median is 10.55. Among the comparable enterprises in the same industry, Shutaishen and Haite Biology are the representative companies of the growth factor track, which can be used as reference targets. The market research rates of the two companies are 25.19 and 7.63 respectively, while the corresponding market research rate of Huacheng Biology is as high as 82.5.

In fact, it is common for Hong Kong stocks to be overvalued when they are listed on the stock market, but they all return to a reasonable range shortly after listing. According to statistics, all 18A companies listed since 2022 have been broken, with a weighted average decline of 63.18%. So, if Huacheng biology can successfully appear on the market, will it also usher in the fate of breakout? We'll see.

In addition, it is worth mentioning that most of the company's previous financing included foreclosure. Among them, round A financing and round B financing require the company to complete its initial public offering by December 31, 2026, otherwise the company needs to purchase all or part of its shares, the redemption price per share is the original issue price plus the annual interest rate of 8% and 6% calculated on a simple basis from the date of payment of the consideration to the date of redemption, plus the sum of all dividends declared but not yet paid.

Therefore, the relevant financing is included in other financial liabilities. After the completion of round B financing in 2023, the company's other financial liabilities increased significantly from 77.946 million yuan in the same period in 2022 to 380 million yuan. At present, the company is insolvent, and the company's net debt has increased from 54.938 million yuan in 2022 to 132 million yuan. If the company fails to complete the listing within the specified time limit, it may be difficult for the company to fulfill its redemption obligations.