Although the market has been very volatile recently, it has not affected the comrades' desire for Hong Kong stocks to hit the new market at all. The overpurchase multiple has soared, and the pinnacle of the new mood is, of course, the unlimited imagination of Class B companies.

After all, what is the most valuable in the 21 century? Dream!

Looking back at the wave of listing of Class B companies after the reform of the Hong Kong stock issuance system, there have been a total of 13 Class B companies listed so far, and the 14th is the halo of academicians: Nuocheng Jianhua-B, listed on March 11, sponsored by Morgan Stanley and Goldman Sachs Group; proposed to issue 250 million shares at an issue price of HK $8.18-8.95 per share The amount raised is HK $19.5-2.34 billion and the market capitalization is expected to be about HK $102.38-11.201 billion.

Recently, this market, you know, has brought in 12 cornerstone investors, totaling $164 million, in order to protect the offering, accounting for about 59.66% of the offering size at median pricing, of which four cornerstones are early-stage venture investors.

Academicians sit down, big banks are blessed, institutions are surrounded, and new drugs are waiting for approval. How can onlookers say with tears in their eyes: Yes, I do?

After the passion of the new shares, calm down or get along with the market day and night, it is worth a good look at the company's materials.

I. Historical context

Since the reform of the Hong Kong stock issuance system in April 2018, the new Chapter 18A "Biotechnology companies" has been understood by the market for such a long time, how to "trick" under the existing rules is actually very clear, and some companies have successfully been listed on the stock market. To see clearly how the cards are played, we still have to go back and look at the historical evolution, find out the context of the team, variety and capital, and know ourselves and the enemy.

In 2005, ou Leiqiang founded CRO Company Beijing Baono Technology Co., Ltd. (Baonuo Technology).

In early 2010, American CRO giant PPD completed the acquisition of Baono Technology for $77 million in cash.

In 2011, BeiGene, Ltd. was founded in the Zhongguancun Life Science Park in Changping, Beijing. Most of the early teams were Baoluo technology personnel from ou Lei Qiang and students from Wang Xiaodong.

In August 2011, Dr. Cui Jiansong was invited by PDD to return home to join Baono Technology. According to previous news reports, during her four years as General Manager, Baono Technology has established several business models for new drug research and development, with cumulative sales revenue of more than 800 million yuan and cumulative payment of taxes of more than 20 million yuan. During his tenure, Shanghai Runnuo Biotechnology Co., Ltd. (Shanghai Runnuo), a subsidiary company in Shanghai, was set up as a transformation medicine research station, and the Yangtze River Baonuo Nanjing innovative Drug Research and Development Center was established at the same time, forming a tripod situation among Beijing, Shanghai and Nanjing.

In March 2013, Dr. Zhao Renbin (spouse of Dr. Shi Yigong) was appointed Director of Discovery Biology in Runnuo, Shanghai.

In December 2013, Shi Yigong and Yan Zhiyu (now Sanofi Pasteur Executive Director and head of Business Operations) jointly founded InnoCare Beijing Nuocheng in Beijing Changping Science and Technology Park. At that time, Shi and Yan injected a total of 560000 yuan in capital, Shi Yi held 62% of the shares, and Yan Zhiyu owned 38% of the shares.

Since May 2014, Ruinian Investment has continued to restructure its Beijing Nuocheng stake through a series of equity injections into InnoCare Beijing Nuocheng and fair share transfer transactions with other shareholders at the time.

In 2015, Beijing Nuocheng Jianhua Medical Technology Co., Ltd. was established in Beijing Changping Zhongguancun Life Science Park. In November 2015, Nuocheng Jianhua Cayman was founded with initial shareholders Sunny View (wholly owned by Dr. Cui Jiansong) and Sunland (wholly owned by Dr. Zhao Renbin).

In May 2015, InnoCare Beijing Nuocheng and Shanghai run Nuo signed an intellectual property transfer agreement to obtain the following global intellectual property rights: 1) aromatic amide derivatives, their preparation methods and pharmaceutical applications; 2) BTK alternative nicotinamide inhibitors and their preparation methods and their applications in the treatment of cancer, inflammation and autoimmune diseases 3) aromatic amide derivatives and their preparation methods and their applications in medicine; 4) kinase inhibitory compounds (collectively referred to as "Runuo transfer products"). Details of the deal and consideration prospectus are not disclosed.

In the second half of 2015, some core team members of the company have come to Nuocheng Jianhua from Shanghai Runuo, CEO Dr. Cui Jiansong (CEO and Chief Scientific Officer of Baonuo Technology), Dr. Chen Xiangyang, Chief Technology Officer (Executive Director of Pharmaceutical Chemistry), and Dr. Liu Ruiqin, Director of Biology and Business Management (Senior Director of Pharmaceutical Research Biology of Runuo). Dr. Renbin Zhao, Executive Director of Biology and Clinical Development Strategy (Director of Pharmaceutical Research Biology of Runuo), and Mr. Bright Wang, Executive Director of Human Resources and Operations (Senior Director of Human Resources of Runuo).

In January 2016, Nuocheng Jianhua entered into a series An and B share purchase agreement with King Bridge (controlled by Mr. Hebert Pang Kee Chan). In March, series A preferred shares were issued at the consideration of: 1) Ocean Prominent (which is the sole shareholder of Ruannian Investment, which holds a 20% stake in InnoCare Beijing Nuocheng at the relevant time). And 2) the bondholder's right of King Bridge in respect of the $1.4847 million shareholder loan borrowed from Ocean Prominent. In April, Series B preferred shares were issued for a total consideration of $3.7996 million in cash.

In March 2016, Ruannian Investment became an indirect wholly-owned subsidiary of Nuocheng Jianhua.

In April 2017, Ruannian Investment acquired all the shares of InnoCare Beijing Novostown for a total cost of about 54.8 million yuan, becoming the sole shareholder of InnoCare Beijing Nuocheng, and Nuocheng Jianhua indirectly owned the entire equity of InnoCare Beijing Nuocheng. Since then, the basic design of Nuocheng Jianhua team, assets and structure has been completed, and the B round has ended.

In February 2018, round C was launched to raise funds from various external investment institutions, with a substantial increase in valuation and the amount of financing. After round C worth US $55 million and D-round US $180.5 million, Hong Kong stocks were listed.

Since then, the face of the card has become clearer, and the early plate is: Baono technology team headed by Dr. Cui Yisong + expert team headed by Dr. Shi Yigong + funds from Mr. Hebert Pang Kee Chan, built the initial platform, brushed the progress of BTK with the fastest speed, and then launched C and D-round financing to meet regulatory requirements and quickly list Hong Kong stocks.

2. "extreme" pipeline

Currently, the company has three pipelines for clinical-phase drug candidates for a variety of indications, as well as six IND preparation-phase drug candidates focusing on the treatment of cancer and autoimmune diseases.

Specifically, the most core variety to meet the market requirements is the second generation of BTK inhibitors: ICP-022 (Obutinib).

Bruton tyrosine kinase ("BTK") is a key component of B cell receptor signaling pathway and an important regulator of cell proliferation and cell survival in various lymphoid tumors (mainly NHL). BTK inhibitors block the activation of BTK and its downstream signal pathway induced by B cell receptor ("BCR"). Successful blocking of BTK activation will lead to B cell growth inhibition and cell death.

BTK inhibitors have fewer side effects than traditional treatments. At present, there are only three approved BTK inhibitors in the world. IMBRUVICA ®(ibrutinib) of Johnson & Johnson / Abbvie is the first generation of BTK inhibitors (Abbvie sales in the United States, Johnson & Johnson sales outside the United States), AstraZeneca's Akatinib CALQUENCE ®(acalabrutinib) and BeiGene, Ltd. 's Zambuteni BRUKINSATM (zanubrutinib) are the second generation BTK inhibitors. In contrast, the second generation shows excellent efficacy and less miss. From the perspective of the competitive landscape, based on the preclinical and clinical data available to date, the company believes that Obutini is a potential best-in-class BTK inhibitor with the advantage of less side effects and daily administration.

If we take a specific look at the clinical layout of these four companies, Nuocheng Jianhua's strategy is actually very obvious. if we do not vigorously engage in the grandiose things reported by both China and the United States, it would be good to have an indication in the United States, and focus on brushing the indications in China. At present, the layout of indications in China is the most, and it is also more cautious in clinical design, not making head-to-head, enough examination and approval, listing and expanding indications as quickly as possible. The new drug application for recurrent refractory CLL/SLL was submitted to NMPA and accepted in November 2019, and the new drug application for relapsed refractory MCL was submitted to NMPA and accepted in March 2020.

In addition to ICP-022 (Obutini), there are two other varieties in the early stage of phase 1 clinical, both are small molecular products.

ICP-192 (pan-FGFR inhibitor), ICP-192 is a powerful, highly selective and irreversible small molecule pan-FGFR inhibitor developed for the treatment of a variety of solid tumors. From the current preclinical data, compared with the reported data of erdatinib erdafitinib (Balversa) of Johnson & Johnson, the only pan-FGFR inhibitor approved in the world, ICP-192 has a similar inhibitory effect on FGFR1-4. Fibroblast growth factor receptor (FGFR) signal abnormalities have been observed in a large number of solid tumors, including liver cancer, gastric cancer, lung cancer, breast cancer, colorectal cancer, urethral epithelial cancer, cholangiocarcinoma, head and neck cancer, endometrial cancer and ovarian cancer. A phase I/IIa study of ICP-192 is currently being conducted in China to determine its MTD and / or OBD and PK/PD in patients with solid tumors.

ICP-105 (FGFR4 inhibitor), ICP-105 is a potent and highly selective FGFR4 inhibitor mainly developed for the treatment of advanced HCC. There are no FGFR4 inhibitors on the market at present. The company is the only Chinese biomedical company to discover and develop clinical FGFR4 inhibitors on its own. The preclinical data of ICP-105 prove that there is a strong anti-tumor effect in HCC mouse model. Phase I trials are currently under way in China to evaluate the efficacy of ICP105 as a monotherapy in patients with solid tumors.

Therefore, combined with the history of the company before, as well as the current pattern of pipelines, the context is clearer. After the obtini is removed from Baono's plate, resources are concentrated and the maximum profits are brushed out in China as quickly as possible. In addition, the layout is cautious and innovative. Do not pile up popular varieties.

After two rounds of continuous financing of C and D, they did not spend much. In fact, there was still a lot of money in the account. As of 2019Q3, there was 2.349 billion yuan. This round of IPO raised 19.5-2.34 billion Hong Kong dollars. After listing, there is more than 4 billion RMB lying on the account, which is already relatively rich.

Combined with the variety, look at this path, that is: the Baono technology team headed by Dr. Cui Yisong + the expert team headed by Dr. Shi Yigong + Mr. Hebert Pang Kee Chan's funds to concentrate resources to improve certainty and maximize the benefits of Obutinib (financing, listing, commercialization) in the shortest possible time.

III. The way forward

At the present time, listing is already a certainty, and the key is how to unfold the logic after listing. After all, there will be a long time to come.

1. Commercialization

At present, Obutinib has already approved new drugs for adaptation, and the issue of commercialization (production and sales) should also be put on the agenda.

The production problem of small molecules is relatively easy to solve, and the company is building a production facility covering an area of 50,000 square meters in Guangzhou for commercial mass production, with an annual production capacity of 1 billion pills. The design of the facility complies with the GMP regulations of the United States, Europe, Japan and China, and the construction of the production facility is estimated to be completed in the fourth quarter of 2020.

Interestingly, the factory was taken down at a low cost through a strong ability to brush policies. In August 2018, Nuocheng Jianhua and Guangzhou Development Zone Financial holding Group (before renaming: Guangzhou Kaide) established a joint venture company InnoCare Guangzhou, with a registered capital of 1 billion yuan and a corresponding shareholding ratio of 93 and 7 percent. The cooperative landing mode of "government support + innovative financing of state-owned enterprises + project investment + commercial loans" will be adopted. InnoCare Guangzhou borrows RMB 93 million in convertible loans due on December 31, 2024 from Guangzhou Caide, bearing interest at an annual interest rate of 6.5 per cent.

If the shares are converted in the future, the target amount of InnoCare Guangzhou equity obtained by Guangzhou Caide is about 6.5%. The conversion must meet one or more of the following conditions: InnoCare Guangzhou (1) obtains the production approval of ICP-022; (2) obtains the new drug development certificate issued by the State Food and Drug Administration for the early candidate drug ICP-093. (3) the third party shall increase the registered capital with cash of not less than RMB200 million and the post-financing valuation of InnoCare Guangzhou shall be equal to or more than RMB 12 billion; or (4) the valuation of InnoCare Guangzhou shall be equal to or more than RMB 12 billion.

Brushing policy is also an art, there are academicians, fight high, there is no shortage of money.

At the same time, a phased commercialization strategy has been developed, corresponding to the release schedule of Obutinib and the clinical and regulatory approval of other drug candidates. It plans to hire more sales and marketing personnel by the end of 2020, and further expand the commercialization team to about 80 to 90 sales representatives, covering about 300 leading hospitals in the country. If Obutini is included in the national health insurance catalogue, it is planned to expand the commercial team to about 150 sales representatives and cover more than 800 top hospitals.

At present, the sales and marketing leadership is in place. Mr. Zhang Yi was the sales Director of Janssen China, responsible for the sales of Imbruvica in China, and Dr. Si Zhichao was the head of the field of hematology therapy for Janssen, responsible for the launch of Imbruvica in China. At the same time, Mr. Deng Jianmin (General Manager of Becton Dickinson Greater China and former CEO and President of Novartis AG China) will also make suggestions on the commercialization of the company.

The sales team used the original Irutini China team, which was highly adapted to the commercial expectation of Obutini. judging from the current pace, the probability of successfully winning the variety is very high, and the rest of the last hurdle before commercialization will be seen after the negotiation catalogue. I don't know if I'm going to lose my footing.

2. The value of experts

Teacher Shi once said, "I specialize in technology. I only know my basic research and a little education. You asked me to do business management, run a company, and become president. This is putting my talent and wisdom to the wrong place." It is impossible for a person to be a university professor and a company manager while managing finance at the same time. "

This is true. From Beijing Nuocheng to Nuocheng Jianhua, it shows that Mr. Shi is indeed more suitable for basic research. After joining hands with Dr. Cui Zhisong, each has his own division of labor and has been listed for five years, with amazing efficiency.

Teacher Shi also said: "the 21st century is the century of biology." "

The great success of structural biology, devoting itself to the vast world of building small molecules, once again illustrates a profound truth:

As the Yulong teacher said: "at every stage of his life, he said what he believed, so what do you want him to do? he didn't do anything wrong." "teacher Yulong is very wise, deeply impressed, and long live understanding.

The rational optimal decision is always to do the right thing at the right time and in the right place. The integration of industry, university and research is the law of the industry. Under the background of such a favorable industry policy, Academician Shi Yigong's participation in China's pharmaceutical industry certainly has a positive effect on the development of the industry.

In addition to the company's core management team, the company has established a Scientific Advisory Board composed of top professors and key opinion leaders, including Dr. Shi Yigong (Chairman of the Scientific Advisory Committee, non-Executive Director and structural Biology and Oncology expert) and Dr. Zhang Zemin (Independent non-Executive Director, Cancer Genome expert, Professor of Peking University, former Genentech Inc of USA. Director of Bioinformatics Department), Dr. Li Zhanguo (world-class expert in rheumatic immunotherapy, former director of Clinical Immunology Center / Department of Rheumatic Immunology, people's Hospital of Peking University), Professor Arnold Levine (globally recognized leader in cancer research and emeritus professor of Advanced Research Institute).

All members of the Scientific Advisory Committee provide advisory services to the Company, in particular, the following related services are provided: 1) opinions and suggestions on business objectives; 2) updates and technical insights on R & D strategies and commercial results; and 3) innovative drug targets and new drug discovery projects and suggestions related to market data and intelligence in the biomedical industry.

More importantly, in August 2018, the company signed a three-year exclusive strategic cooperation agreement with Dr. Shi Yigong. Dr. Shi will provide assistance and guidance on new drug discovery and charge a fee, including protein crystallization screening, protein structure analysis, protein function analysis, optimal binding of target proteins and drug candidates, and drug target selection. Especially in the RNA splicing regulatory targets of precursor messengers and related family drug targets. In August 2019, the company signed a three-year exclusive strategic cooperation agreement with Dr. Zhang Zemin. Dr. Zhang will help us explore the relationship between cancer and cancer-specific driving genes. and use the most advanced technology to support us to use the most advanced technology to study tumor heterogeneity and drug resistance.

From previous carding, it can be found that the whole process of Nuocheng Jianhua from R & D to production is designed for the fastest commercialization of Aubutini, a professional management team highly adapted to small molecules, with a luxury team of experts in the field of macromolecules, looking forward to their chemical reactions.

After the listing, Dollar got it, and then it depends on how the big players spend their level.

IV. Conclusion

From Changping to Guangzhou, I want to make people look like Baiji, but it is more like Beida, this BTK is different.

The story in the capital market depends on what he says, what he has done, whether he dares to be true, whether he dares to be right, and whether he dares to be right. In the end, it is said that the attitude is where the idealism is good, and realism has the seconds of realism. As Master Tang said: the step is too big, it is easy to pull the egg.

There is no right or wrong route, it all depends on the leader.

Precise planning, step by step, rely on the first variety to be on the market, to start the valuation, depends on the second variety.