In January, Maiwei Biotechnology, a company listed on the Sci-Tech Innovation Board, officially commenced its process of listing on the Hong Kong Stock ExchangeThis strategic move aims to meet its funding needs for operational growth, ensuring sustainability while raising its international profile.

The company has submitted and disclosed its application materials to the Hong Kong stock marketMaiwei Biotechnology, which has yet to turn a profit, is facing a tightening cash flow and has found itself under pressure to make this move, reflecting the industry's cyclical challenges and shifts.

The landscape for innovative drug development is no longer as promising as it once was, and the creativity and realization of potential in this sector find themselves under scrutiny.

The history of Maiwei begins in the 1990s when Tang Chunshan, a fresh graduate with a degree in materials science, began his career at Baosteel Group as a technical worker

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Driven by the winds of reform sweeping across Hainan, he later established a pharmaceutical company, marking his entry into a new industryFollowing this, he acquired several pharmaceutical enterprises in his home province of Jiangxi, culminating in the formation of the Qingfeng Pharmaceutical Group.

In 2017, Tang, his spouse Chen Shanna, along with partner Liu Datal, founded the company that we know today as Maiwei BiotechnologyLiu, previously the R&D director at Shanghai Pharmaceutical Research Institute, helped consolidate resources, directing acquisitions toward building a comprehensive enterprise that spans research, production, and sales within the drug development sectorAt that time, the field of innovative medications was flourishing, leading Maiwei to focus on the development of monoclonal antibodies, bispecific antibodies, and antibody-drug conjugates.

In 2022, the company made a noteworthy debut on the Sci-Tech Innovation Board, raising over 3 billion RMB in funding

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At that point, it benefited from relaxed listing standards allowing firms without profits or approved products to apply for an IPOAs of today, Maiwei has secured approvals for three drugs, yet it remains in the red financiallyIn the first three quarters of 2024, its revenue was recorded at 141 million RMB, with a net profit loss attributed to the parent company amounting to about 694 million RMB.

Amidst this financial backdrop, the primary reason for its Hong Kong listing is imperative funding needsBy Q3 2024, the company had liquid funds of approximately 1.564 billion RMB but bore expenses totaling around 809 million RMB, coupled with short- and long-term loans reaching almost 1.895 billion RMBTherefore, should sales of its pharmaceuticals not increase quickly, the company might face cash flow challenges as early as 2025 necessitating an urgent response—hence the IPO push.

However, the environment for innovative drugs has drastically changed, shifting from a previously favorable market climate to a more challenging one

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Initially, the capital market was welcoming for companies like Maiwei, creating openings driven by investors eager for high valuationsNow, however, the focus is on the practical application of research and development, leading to a tightening capital environment where the pursuit of innovative drugs is met with careful scrutiny by investors.

Two years ago, when Maiwei entered the Sci-Tech Innovation Board, it had an exciting narrative full of promising research prospectsFast forward to today, and the essence of the company's story has undergone a significant transformationThe number of R&D employees dropped from 568 in 2022 to 403 in October 2024, amidst an overall personnel count of 166 for production controlThe R&D expenses for 2023 and 2024 (up to October) were reported as 836 million RMB and 606 million RMB, respectively.

While consistent investment in R&D remains high, the current frostiness affecting the innovative pharmaceutical sector has caused the marketplace to seek tangible results in research application, including business development and commercialization initiatives

For instance, in 2021, Maiwei and a subsidiary entered a collaboration with a subsidiary from Yangtze River Pharmaceutical Group, creating an opportunity for shared licensing and associated royalties—a transaction that bolstered its journey within the capital markets.

Yet, in February 2024, news broke of the termination of this partnershipCiting intensified market competition and fluctuating drug prices, the company decided to reclaim rights over two critical drugs, refunding a collective 102 million RMBThis decision highlights the rapidly evolving landscape of competition within the pharmaceutical market.

With evolving circumstances, Maiwei is in search of new business development outletsEarly this year, the company announced that one of its projects, the Nectin-4 ADC, was poised for new business development opportunities, alongside the potential for other investigational pipelines

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However, the firm warned investors about the unpredictability of business development timelines, urging a rational approach.

On the commercialization front, by Q3 2024, sales for its core product, Dazhuo monoclonal antibody, reached 91 million RMB, with access granted to 1,336 hospitals and inclusion in 2,632 pharmacies across 30 provincesThe drug has triggered international attention, having signed contracts across 13 countries and submitted a market application in Pakistan.

As the company prepares for its IPO in Hong Kong, it is simultaneously accelerating its expansion effortsRecently disclosed plans include a collaboration with the Chongqing High-tech Zone Management Committee and a healthcare-focused private equity fund, aiming to invest in the "Maiwei Bone Health Innovative Drug Project" with a total funding goal of 2 billion RMB where the company will commit no less than 1.6 billion RMB.

The plan is to create a larger share of the market while efficiently utilizing fewer resources

Specifically, the tangible assets comprise land rights, drug distribution, software, and patented technologies worth an estimated 142 million RMB by Q3 2024. This capital will notably come from the approved drug, Mailyshu, utilized for treating osteoporosis, contributing 1.008 billion RMB in intangible assets.

Moreover, the collaborating party, the private equity fund, has invested a total of 400 million RMB towards the first round of this ventureMajor shareholders include stakeholders within Chongqing’s state-owned enterprises, further linking Maiwei's burgeoning business in orthopedics while retaining access to prior product lines acquired externally.

Additionally, in August 2024, a subsidiary signed a licensing agreement with Runjia Pharmaceuticals to obtain rights to a product designated for orthopedic treatmentsThis transaction involves an initial payment of 50 million RMB, potentially escalating up to 1.07 billion RMB.

On a parallel front, a new business development project is underway between a subsidiary and American counterpart DISC Medicine, where the latter will pay a non-refundable upfront fee of 10 million USD to secure rights for the 9MW3011 project, which concerns various rare diseases, potentially yielding profit share escalations summing to 412.5 million USD.