在全球新冠药物需求退潮背景下，两家公司逆势冲刺港股IPO，引发市场对原本大热的"疫情红利"药企后续融资路径的关注。In the past three months, nearly 20 pharmaceutical companies have submitted listing applications to the Hong Kong Stock Exchange, including Realbio and Wangshan Wangshui, two former star companies in COVID-19 drugs; The revenue of both companies is still largely concentrated in the authorization or commercialization of COVID-19 related products, which has significantly declined, providing limited cash flow.
According to the Star Daily on February 25 (Special Correspondent Gao Qing), as the investment boom in Hong Kong stocks rises, more and more pharmaceutical companies are starting to refocus on this former financing hotbed of biomedical development.
Recently, the former star company of COVID-19 miracle drugs, Realbio, and Suzhou Wangshan Wangshui Biotechnology Co., Ltd. (hereinafter referred to as "Wangshan Wangshui") successively initiated their plans for listing on the Hong Kong Stock Exchange.
Against the backdrop of waning global demand for COVID-19 drugs, the two companies are rushing to IPO in Hong Kong, attracting market attention towards the future financing paths of previously popular "epidemic bonus" pharmaceutical companies.
Du Fang, chief researcher of Medical at Gelonghui, told reporters from the Star Daily that many innovative drug companies in the research and development stage are going public in Hong Kong for financing, mostly to alleviate cash flow pressures needed for R&D. Listing in Hong Kong is relatively easier and faster than in A-shares.
▌The revenue pressure behind "going public in Hong Kong".
From the prospectuses released by the two pharmaceutical companies, there are many similarities. Although both have achieved commercialization, most of their revenue projects are still concentrated on the authorization or commercialization of COVID-19 related products, which have severely declined and provided limited cash flow.
Realbio's current revenue products still come from the core product Azvudine, which received conditional approval for listing in July 2022, becoming the first domestically produced oral antiviral drug for COVID-19. During the peak of the pandemic from the end of 2022 to early 2023, sales grew rapidly, and it was included in the temporary procurement and basic medical institution equipment list in many places.
At the time of its listing, Real Bio announced an exclusive commercial strategic cooperation agreement with FOSUN PHARMA, which will end in September 2024. From 2023 to 2024, Real Bio achieved revenues of approximately 0.344 billion yuan and 0.238 billion yuan respectively, with a 30.81% year-on-year decline in performance in 2024. However, due to a significant reduction in sales expenses, its net loss narrowed from 0.784 billion yuan to around 0.4 billion yuan.
The performance trajectory of Wangshan Wangshui also experienced a similar process of rising first and then falling. During the pandemic, the external authorization of its COVID-19 oral drug VV116 (brand name: Min De Wei) sustained most of Wangshan Wangshui's revenue.
However, compared to drugs like Azvudine, the market momentum for Min De Wei is slightly insufficient due to its later launch. According to the prospectus, Wangshan Wangshui achieved revenues of 0.2 billion yuan and 9.996 million yuan in 2023 and the first nine months of 2024 respectively, including external authorization revenues of 0.196 billion yuan and 5.382 million yuan, resulting in profits of approximately 6.43 million yuan and losses of 0.156 billion yuan.
As the COVID-19 pandemic gradually subsides, related pharmaceuticals and vaccines face a "precipitous decline" in development. Both companies heavily rely on revenue from COVID-related products, inevitably encountering challenges regarding the sustainability of their profits. Listing in Hong Kong might be their last resort to replenish their "ammunition."
Du Fang mentioned that from the perspective of corporate business development, listing in Hong Kong can broaden the company's financing channels. The capital raised can be more conveniently used for overseas investments and expansion, and it can also hedge against exchange rate fluctuation risks to a certain extent. From the perspective of the Capital Markets, the investor composition in Hong Kong stocks is relatively diversified, with a relatively high proportion of overseas investors, which helps deepen overseas capital's understanding of the company and benefits mainland enterprises in entering the international capital market to compete alongside large foreign enterprises.
▌Removing the "COVID Concept" label, where will the future lead?
Continuous cash flow is not only the production line for Innovative Drug companies' R&D but also the fundamental guarantee of their competitiveness. For Wangshan Wangshui and Real Bio, the two "COVID star pharmaceutical companies," how to prove their R&D capabilities once again in the post-pandemic era is the pressing challenge.
In this IPO funding plan, Wangshan Wangshui mentioned that they will use the raised funds for "core product R&D and the development of other candidate products." In addition to continuously developing multiple indications for VV116, Wangshan Wangshui has also approved products including a generic for treating PE (premature ejaculation) - dapoxetine, and a generic for treating various gastrointestinal diseases - rebaparatide. Among the pipeline products, the company's core product LV232 for treating depression is currently in Phase II clinical trials.
Apart from the research and development progress, these types of products are all facing increasingly fierce market competition, which tests the commercialization and marketing capabilities.
The fundraising needs of Real Bio are anchored in the combination therapy with Azvudine, and the company plans to continue developing its therapies for HIV infections and several cancer indications, as well as further building a research and development platform for operating capital, among other things. From the prospectus, it can be seen that currently, among the multiple research pipelines at Real Bio, most are in the preclinical or early stages.
In the past three months, the IPO frenzy in the Hong Kong stock market has not diminished, with nearly 20 pharmaceutical companies having submitted listing applications to the Hong Kong Stock Exchange.
Du Fang emphasized that in the future, the performance of pharmaceutical companies in the Capital Markets needs to be observed through several indicators. On one hand, the changes in global liquidity are crucial, including the short- and long-term interest rates in the USA and domestically, as most companies in the Hong Kong stock market follow a beta trend, and liquidity uplift is a very important factor. Secondly, it is important to observe whether there can be some new technological breakthroughs for individual stocks. In fact, among the innovative drug companies listed in the Hong Kong stock market, there are also some long-term bullish stocks, and companies with strong alpha fundamentals can emerge with independent trends, completely unaffected by the market.
The IPO journey of Real Bio and Wangshan Wangshui, in essence, is a transformation attempt of strategic restructuring for pharmaceutical companies in the post-pandemic era. The future direction remains to be continuously questioned regarding the 'innovation' strength of these two innovative drug companies.
Today, after hitting the high near 24,000 in the early session and entering bearish positions, the index fell sharply by nearly over 600 points, immediately recouping yesterday's losses significantly.
Moreover, today it broke the new high again, reaching a maximum of 24,076, but by the end of the market, it fell back by about 70 points, producing a bearish candle. The current trend has not yet been broken, but from the previous low until now, it has risen close to 6,000 points. It is believed that those with positions can continue to hold until there is a clear trend reversal for profit-taking. Those without positions can wait for a pullback to get in. Actually, it is hoped for a quick pullback, as it allows for entry and also provides a healthy breath.
Currently, the outlook remains the same as before. It is believed that even if there is a pullback, it shouldn't be too deep. However, if Futures fail to stabilize and close below 22,350, there may still be room for decline. The chance of Futures falling below 21,400 in the short term should be low, so it is considered that if a significant pullback occurs, it presents a good opportunity to incrementally go long. Recently, there has been a consistent approach to not hold positions overnight, only focusing on immediate trades, as there is no high chasing and no casual short selling.
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