On the evening of May 13th, Bailey Tian Heng (SH688506, share price 194)Pennbattleiiispinningcombos.08 yuan, market capitalization 77.8 billion yuan) announcement that the company is in discussions with relevant intermediaries on the issue of H-shares and listing on the main board of the Stock Exchange of Hong Kong Limited. In response to this announcementPennbattleiiispinningcombosThere were rumors about the listing of Hong Kong stocks before Baili Tianheng.

As a company that has transformed from generics to innovative drugs, Bailey Tianheng has been better known for its licensing deal with Bristol-Myers Squibb. At that time, Bristol-Myers reached a licensed partnership with Bailey Tian Heng for an ADC drug with a down payment of $800m and a potential transaction of $8.4 billion.

Thanks to the deal, Bailey Tianheng's monetary funds rose from 404 million yuan at the end of last year to 5.826 billion yuan at the end of the first quarter. However, with the growth of potential R & D investment and the decline in the profitability of the generic drug business, Bailey Tianheng now chooses to plan a Hong Kong stock listing to broaden its financing channels.

It is worth mentioning that Bailey Tianheng received a regulatory work letter on May 14. According to the Beijing Business Daily, Baili Tianheng said the company received the regulatory work letter because investors questioned the authenticity of the company's transactions with Bristol-Myers Squibb, which had nothing to do with the company's proposed listing in Hong Kong.

Planning Hong Kong stock financing after a substantial increase in funds on hand

On the evening of May 13, an announcement by Bailey Tianheng confirmed previous rumors about the listing of Hong Kong stocks.

Bailey Tianheng said in the announcement that the company is discussing with relevant intermediaries about the issuance of H-shares and listing on the main board of the Hong Kong Stock Exchange. the company will consider the interests of existing shareholders, the value of the company and the situation of capital markets at home and abroad. Up to now, the relevant matters are still under demonstration, and the specific details of the H-share issue have not yet been determined.

According to the announcement, according to the relevant regulations on the issuance of H shares by A-share listed companies and listing in Hong Kong, this matter needs to be submitted to the company's board of directors and shareholders' general meeting for consideration, and examined by the Hong Kong Stock Exchange and the China Securities Regulatory Commission for the record. Whether it can pass the review and review / filing process and final implementation has significant uncertainty.

In January 2023, Baili Tianheng landed on the board, raising a total of 988 million yuan. After more than a year of listing, the company has sought to land in Hong Kong stocks. Bailey Tianheng said that this move is to further promote the development of the company's international business, make better use of domestic and foreign financing platforms, consolidate capital reserves, support the global development of the company's many innovative products in Europe, the United States, Japan and other international markets, and promote the company to become a global leading multinational pharmaceutical company (MNC) in the field of oncology drugs.

As a typical company transforming from generics to innovative drugs, Bailey Tianheng is well known for its "sky-high price deal" with Bristol-Myers Squibb (hereinafter referred to as BMS). At the end of 2023, Bailey Tianheng granted Bristol-Myers Squibb the global rights and interests outside China of its new anti-ADC drug BL-B01D1. The transaction received US $800m and the total contract value could reach US $8.4 billion, the highest amount of domestic innovative drug "license-out" last year.

In March this year, Bailey Tianheng received a down payment of $800m from BMS. In the first quarter of this year, revenue of Bailey Tianheng surged 4325.45% year-on-year to 5.462 billion yuan, while monetary funds rose from 404 million yuan at the end of last year to 5.826 billion yuan at the end of the first quarter. In addition, by the end of last year, the company's raised funds had invested a total of 508 million yuan, and about 43% of the raised funds had not been used.

It seems that there is still plenty of money in Bailey Tianheng's account, so why did you plan to list Hong Kong stocks one year after Science and Technology Innovation Board's listing?

The reporter noted that at present, Baili Tianheng has not promoted the innovative drugs to the market stage, and the company's main income still comes from the sales of chemical and proprietary Chinese medicine preparations. However, under the dual pressure of collection and R & D investment in innovative drugs, Baili Tianheng's revenue continues to shrink and its net profit level changes from positive to negative.

From 2018 to 2021, Bailey Tianheng's operating income was 1.111 billion yuan, 1.207 billion yuan, 1.013 billion yuan and 797 million yuan respectively, while the net profit in the same period was 32.8289 million yuan, 7.7423 million yuan, 37.922 million yuan and-99.99 million yuan respectively. By 2022, the loss will further increase, with operating income of 703 million yuan and net profit of-282 million yuan.

Last year, Baili Tianheng achieved an operating income of 562 million yuan and a net profit of-780 million yuan. On the other hand, Baili Tianheng's R & D investment continues to rise, from 181 million yuan in 2019 to 746 million yuan in 2023.

In the context of the need to promote a number of R & D pipelines, Baili Tianheng also urgently needs to open up financing channels.

Intensive promotion of pipeline clinical and cooperative partners to share the development costs

At present, the drug that has attracted the most attention and advanced in clinical research is the above double anti-ADC drug BL-B01D1 in cooperation with BMS. In China, BL-B01D1 monotherapy for terminal nasopharyngeal carcinoma and second-line esophageal squamous cell carcinoma has entered the III phase and completed the first case in the group. the treatment of EGFR wild-type non-small cell lung cancer, EGFRmut non-small cell lung cancer, HR+HER2- breast cancer and triple negative breast cancer has entered the III phase clinical research stage, and the treatment of small cell lung cancer is advancing to III phase clinical research.

In the United States, the Phase I clinical trial of BL-B01D1 in the treatment of non-small cell lung cancer was approved by FDA in July last year and is currently being enrolled in the group.

It is worth noting that Bailey Tianheng not only needs to continue to invest a large amount of R & D funds in domestic clinical research for a number of indications, but also states in its authorized cooperation with BMS, "Bailey Tianheng wholly-owned subsidiaries SystImmune and BMS will cooperate to promote the development and commercialization of BL-B01D1 in the United States. SystImmune and BMS will share the global development costs of BL-B01D1, as well as profits and losses in the US market. This mode of cooperation is different from the previous authorized cooperation between domestic innovative pharmaceutical companies and overseas pharmaceutical companies.

According to the 2023 annual report of Baili Tianheng, a total of 5 ADC drugs have been approved in China and have entered the clinical research stage. 2 ADC drugs have been approved by FDA in the United States and are in phase I clinical trials. In addition, a variety of ADC drugs are in the preclinical research stage and will be promoted to the IND stage one after another. This means that Baili Tianheng may have greater pressure on R & D investment in the future.

It is worth mentioning that Bailey Tianheng landing after the board, the stock price performance is more excellent. When the company went public, the issue price was 24.7 yuan per share. On the first day of listing, the company's share price rose 29.76% to close at 32.05 yuan per share. As of the close of trading on May 15, Baili Tianheng shares were 194.08 yuan per share, up 685.75% from the offering price.

At a time when the financing environment has not yet completely warmed up, it remains to be seen what kind of report card Bailey Tianheng will be able to hand in when it is listed in Hong Kong.

(Article source: Daily Economic News)