In recent years, the prevalence of international ophthalmic diseases has risen markedly, while the diagnosis rate is lagging behind. Along with increasing public health awareness, the needs of a large number of patients need to be met urgently. Although the market opportunities are huge, the technical threshold in the field of ophthalmic medicine is high. In the global wave of new drug development and technological innovation, innovative ophthalmology drug and medical service companies are making active efforts, and related markets have shown strong growth potential and broad development prospects.

According to the Frost & Sullivan report, the global ophthalmic drug treatment market will maintain a compound annual growth rate of 8.1% between 2022 and 2027, while the Chinese market is far ahead with an astonishing 23.5% compound growth rate, showing extraordinary vitality that surpasses the global market. This trend has attracted many pharmaceutical giants, including Hengrui Pharmaceuticals, to compete in the field of innovative ophthalmology drugs. Among ophthalmology companies that have passed or intend to complete the Hong Kong stock listing through the 18A listing regulation, CLOUDBREAK PHARMA INC. (Chinese “Bokang Shiyun”) stands out for its outstanding ability to independently develop innovative ophthalmology drugs. This international biotech company, founded by Dr. Ni Jinsong in the US in 2015, has been deeply involved in independent R&D and differentiated innovation for 9 years, and is committed to bringing innovative hope to global ophthalmology treatments.

Baokang Vision Cloud has recently submitted a listing application to the Hong Kong stock market. At this critical moment, the company ushered in a major breakthrough in the commercialization process — it signed a licensing agreement with Japanese ophthalmic pharmaceutical giant Santen Pharmaceutical for its core product CBT-001 in the Southeast Asia region (hereinafter referred to as the “region”) including Japan, South Korea, Vietnam, Thailand, Malaysia, the Philippines, Singapore and Indonesia.

A major licensing agreement highlights the commercial value of the product

The commercialization of products has always been the biggest challenge for innovative pharmaceutical companies, none of them. On August 6, 2024, Baokang Shiyun announced the signing of an licensing agreement with Santen Pharmaceutical Co., Ltd. to grant Santian Pharmaceutical the right to develop, produce and commercialize CBT-001 in the region. CBT-001 is an innovative multikinase inhibitor for the treatment of pterygium. It is currently undergoing phase 3 clinical trials in many regions around the world. According to the prospectus, Baokang Vision Cloud is currently focusing on commercialization of its most mature product, CBT-001. The company expects to launch CBT-001 in the US market, while actively seeking support from the government and private insurance institutions to reduce the financial burden on patients. Bokang Vision Cloud is also considering cooperating with leading pharmaceutical companies to accelerate the production and commercialization of CBT-001.

According to the terms of the agreement with Santian, Bokangshiyun will receive up to 91 million dollars in down payment and milestone payments. In addition, Baokang Vision Cloud will also receive a two-digit percent license fee for the product's future net sales in the region. This agreement not only brought significant short-term cash flow to Baokangshiyun, but more importantly, verified the market potential and scientific research strength of its products. By prioritizing the development of the most promising products and seeking a foothold in the world's largest pharmaceutical market, Bokangshiyun hopes to quickly achieve revenue while further reducing commercialization risks by seeking insurance coverage and potential partners. It is prudent and targeted, injecting vitality into long-term development.

Meanwhile, in Greater China, Bokang Vision signed a commercial license agreement with Yuanda Pharmaceutical (512.HK) for CBT-001 in 2020. The agreement exclusively authorizes Yuanda Pharmaceutical to manufacture and commercialize CBT-001, the core product of Baokangshiyun in mainland China, Hong Kong, Macau and Taiwan, and allows sublicensing, and also includes patent royalties. This cooperation will also enable the company to use Yuanda Pharmaceutical's wide-ranging distribution network to accelerate the promotion and sale of CBT-001, greatly speeding up the commercialization process.

Looking back at the global licensing situation of Hong Kong stock 18A listed companies in the past few years, there are fewer overall authorizations than before 2021, especially in the field of ophthalmology. In terms of anti-cancer drugs, the licensing agreement between Cinda Biotech (1801.HK) and Lilly Pharmaceuticals for the PD-1 monoclonal antibody Daboshu in 2020 is remarkable. According to data, the agreement between Cinda and Eli Lilly covers all countries and regions of the world other than China, and down payments and milestone payments can reach up to 1 billion+ US dollar. According to reports, dabershu may be used to treat a variety of cancers. In the field of ophthalmology, looking back at the current licensing of Baokang Shiyun and Santian, considering that the regions involved account for only 5% to 10% of global demand, the future authorized transaction price (down payment and milestone payment only) of CBT-001, a product targeting a vertical pterygium track, will be between 0.1 and 0.2 billion US dollars, and the amount will be quite impressive. The potential transaction scale of Baokang Vision Cloud's global market is comparable to that of many mature companies, highlighting the high commercial value and market recognition of its products.

Baokang Vision Cloud is committed to deepening strategic cooperation with more major market players, with the aim of building a cost-effective global commercialization network. This strategic plan aims to ensure that existing and subsequent products can quickly reach the market after approval and have a first-mover advantage. Judging from past cases, this is indeed an efficient and effective way to commercialize innovative drugs globally.

Strategic pipeline layout with top scientific research capabilities

The career experience of Ni Jinsong, founder of Baokang Shiyun, perfectly illustrates the complete process from academic research to industrial application to entrepreneurship:

·Academic background:

Nanjing University: Received a bachelor's degree in chemistry

Brook University, Canada: Received a Master of Science in Chemistry

University of Toronto, Canada: Doctor of Philosophy degree

·Research experience:

1994-1996: Two years as a postdoctoral researcher in the Department of Medicinal Chemistry at the University of Utah School of Pharmacy

·Pharmaceutical experience:

1996-1997: Joined the American Health Foundation and began entering the pharmaceutical industry

1997-2000: Worked as a research scientist at Pfizer, responsible for research and support drug discovery and development, and had an in-depth understanding of the R&D processes of major pharmaceutical companies

·Industry experience:

2000-2010: Served as the scientific director of the Drug Safety Evaluation Department at United States Eye Health Pharmaceutical Co., Ltd., and his ten-year experience made him an expert in ophthalmic drug research and development, and accumulated rich industry knowledge and connections

·Entrepreneurial stage:

2015: Co-founded Baokang Shiyun with partners to focus on developing revolutionary eye disease treatments

From basic research, drug development for major pharmaceutical companies, to specialized ophthalmic drug research and development, these experiences not only provided Ni Jinsong with a comprehensive view of the industry, but also made him keenly aware of the huge potential of this market, pointing out a clear direction for the future development of Baokangshiyun.

The company's chief scientific officer, Dr. Rong Yang, and chief innovation officer W. Dr. Ken Fang also has a working background in top ophthalmology companies such as Allergan. To ensure that the R&D direction is in line with the industry's cutting edge, the company has also set up a special scientific advisory board headed by Dr. Scott Whitcup and Dr. John Hovanesian. Among them, Dr. Whitcup was the executive vice president of R&D and chief scientific officer of Allergan and clinical director of the National Institute of Ophthalmology at the US National Institutes of Health (NIH), and is an authority in the field of ophthalmology in the US.

This R&D structure not only has an experienced core team to carry out daily research and development, but also has top experts to control the general direction to ensure that the R&D direction is in line with market demand, fully reflecting Baokangshiyun's ambition and strength in the field of innovative ophthalmology drug research and development. In the innovative drug industry, R&D team allocation determines whether a company can maintain a competitive advantage in the medium to long term in the market, and competitiveness is often directly linked to investors' interests and confidence. Due to optimism about the team, pipeline and market, institutions such as Australian and American Pharmaceuticals, Dinghui Baifu, Gaotejia Investment, Huayi Capital, Yicun Capital, Yifeng Capital, Bank of China International, CCB International, and Gaotejia Investment have invested, further increasing the valuation of Baokangshiyun.

Bokang Shiyun currently has a comprehensive and cutting-edge R&D pipeline covering eight drug candidates, all of which are first-in-class or best-in-class. Among them, four drugs have already entered the clinical stage, and the other four are in the pre-clinical stage. The fastest ones have been simultaneously advanced to phase 3 clinical trials in China and the US. Among them, CBT-001, CBT-004, and CBT-006 are core drugs that are pioneers of their kind and are expected to fill gaps in the market. CBT-009 is potentially the best-in-class drug.

CBT-004: For the treatment of vascularized blepharoid fissures, it is currently the only drug that has entered the clinical stage for this indication.

CBT-009: An innovative non-aqueous atropine ophthalmic preparation for the treatment of myopia in adolescents. As the only non-aqueous atropine preparation that has entered the clinical stage in the world, CBT-009 solves the problems of easy decomposition and poor stability of water-based atropine.

CBT-006: A potential first-of-its-kind drug candidate for dry eye associated with abnormal meibomian gland function. Phase 2 clinical trials have been completed in the US.

(Excerpt from the prospectus)

First-mover competition meets broad market prospects

The rapid growth of the ophthalmic drug market has provided Bokangshiyun with broad development space. Taking CBT-001 as an example, the global population of pterygium patients is huge and continues to grow. It is estimated that the world will exceed 1 billion by 2032, and China will increase to 0.16 billion. Currently, there are no drugs that specialize in pterygium worldwide. Although surgical resection is a routine treatment, its high cost and high recurrence rate discourage many patients. CBT-001 is expected to fill this gap in the market.

In terms of the competitive landscape, CBT-001 is currently an absolute global leader. According to the prospectus, CBT-001 is the only drug in the world to treat pterygium that has entered clinical phase 3. AG-86893, which has the same mechanism of action, and RMP-A03, which has an unannounced active ingredient, are both in phase 2 clinical phase. This also means that Baokangshiyun's CBT-001 takes the lead in the global competitive landscape.

(Excerpt from the prospectus)

As we all know, there are two key determinants of the commercial prospects of an innovative drug. One is the size of the patient population whose needs are not being met, and the second is the order in which the drug is marketed. These two major elements have been perfectly integrated in CBT-001, which indicates strong and promising future market performance.

This licensing agreement with Santian Pharmaceutical not only brought considerable revenue to Bokangshi Cloud, but more importantly, paved the way for the global commercialization of CBT-001. As a leading global enterprise in the field of ophthalmology, Santen Pharmaceutical has strong marketing capabilities and a global sales network, which will greatly accelerate the market penetration of CBT-001.

At the same time, the deal also provided development capital for BaokangShiyun's other product pipelines, helping the company speed up the R&D process and push more innovative drugs into the clinical stage. For Baokangshi Cloud, which is about to be listed, this is certainly a strong positive sign. It is expected to boost investor confidence and help the company's Hong Kong stock listing.

CBT-004, which also has these two major elements in the pipeline, targets another ophthalmologic challenge, and also uses a multi-kinase inhibitor strategy to accurately act on key targets such as vascular endothelial growth factor receptors. Although cleft eyelid is common, the effects of vascularization and inflammatory lesions on patients' quality of life cannot be ignored. Currently, there are no approved treatments for this indication worldwide, so the development of CBT-004 is particularly critical.

Facing the continuous rise in the number of patients with vascularized blepharoid fissures worldwide — 1.15 billion in 2022, more than 0.2 billion in China, and is expected to continue to grow to 1.22 billion in 2027 and 1.28 billion in 2032 in the next few years, CBT-004 has great potential as the only drug in this field to enter the clinical stage. Once implemented, it will fill the treatment gap and meet the huge demand in the medical market.

Overall, Baokang Shiyun's R&D team has a complete structure, and pipeline products cover various diseases of the front and back of the eye. Most importantly, the company has a mature and steady commercialization layout for its core products, and this cooperation with Santen Pharmaceutical further confirms this. However, for innovative drug companies, huge R&D costs and time pressure mean that Baokangshiyun's current Hong Kong stock listing plan is critical. Once it successfully enters the Hong Kong stock market, it is believed that the company's development will also enter a new stage, further unlocking its corporate value.