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Projected loss exceeds 700 million, Dizhen Pharma heads to Hong Kong for a boost

By Dong Xuan

Source / Node Finance

As the capital market rebounds and the biopharmaceutical sector continues to attract investment, pharmaceutical companies are experiencing a wave of collective listings on the Hong Kong stock exchange.

A favorable wind lends its strength to send us soaring to the clouds. As one of the most anticipated innovative pharmaceutical companies, Dizhen Pharma (688192-U.SH) is actively pursuing dual listing status on both A-shares and H-shares. It recently submitted its application to the Hong Kong Exchange, planning to list on the main board.

According to the prospectus, Dizhen Pharma, which has yet to remove the 'U' label on the A-share market (indicating that it hasn't achieved profitability), not only faces the challenge of self-sustained growth but also contends with limitations due to the capacity of its core product's market segment.

Has yet to achieve self-sustaining profitability

Dizhen Pharma was founded in 2017 as the former AstraZeneca Global Oncology Translational Science Center - Asia Innovative Drug and Early Development Center (iMED Asia). It went public on the STAR Market in December 2021.

In terms of business, Dizhen Pharma focuses on oncology and hematological diseases, with two core products: Suwozhe (Sunvozertinib tablets) and Gaoruizhe (Golidocitinib capsules), along with multiple pipelines in clinical stages.

However, it is important to note that the company has yet to achieve self-sustained profitability. Despite rising revenues, net profits have consistently remained negative.

The prospectus shows that for the years 2023 and 2024, and the first nine months of 2025, Dizhe Medicine's revenue reached 91.289 million yuan, 360 million yuan, and 586 million yuan respectively; during the same periods, net losses were 1.108 billion yuan, 940 million yuan, and 583 million yuan respectively.

If we trace back to the company's inception, from 2018 to 2024, Dizhe Medicine has cumulatively bled over 4 billion yuan.

Source: Dize Pharmaceutical Prospectus

On January 13, Dizhe Pharmaceuticals disclosed a preliminary earnings loss announcement: Benefiting from the inclusion of its two main products, Shuwozhe and Gaoruizhe, in the national medical insurance directory, which accelerated market growth, the company expects to achieve revenue of approximately 800 million yuan in 2025, more than doubling its 2024 revenue.

However, the explosive revenue growth did not immediately lead to a turnaround for Dizhe Pharmaceuticals. The company's projected net profit attributable to shareholders for 2025 is approximately -770 million yuan. Although the loss narrowed by 8.98% compared to 2024, there is still a long way to go before reaching breakeven.

Notably, in August 2025, Dizhe Pharmaceuticals released an inspiring interim report. The financial data confirmed that it achieved revenue of 355 million yuan in the first half of 2025, nearly matching its total revenue for the entire year of 2024.

At that time, Dizhe Pharmaceuticals publicly claimed that it had achieved 'commercial profitability' for the first time.

However, the latest earnings loss announcement still reveals an undeniable fact: the so-called 'commercial profitability' has once again stalled, or is still on the path to being achieved.

Dizhe Pharmaceuticals told the media: 'In 2025, the company’s revenue grew rapidly, achieving commercial profitability, and its self-sustaining capability has started to show results. The company strives to achieve high-quality profitability as soon as possible—meaning achieving profitability while rapidly advancing the launch of its main product pipelines—in order to maximize shareholder value.'

High R&D spending defines the future but also consumes net profits.

Positioned as an innovative pharmaceutical company, Dizhe Pharmaceuticals’ high R&D expenditure serves as its 'secret weapon' for defining the future, but it is also constrained by factors such as long cycles and high costs, inevitably eroding the company's net profit and resulting in losses becoming commonplace during the early stages of development.

According to Node Finance, over the past three years, Dizhe Pharmaceuticals’ R&D spending has consistently remained several times higher than its revenue.

In 2023, 2024, and the first nine months of 2025, Dizhe Pharmaceuticals’ R&D expenditures were 806 million yuan, 724 million yuan, and 644 million yuan respectively, representing 8.76 times, 2 times, and 1.1 times its revenue.

R&D expenses for the full year of 2025 are projected to be around 860 million yuan, still exceeding revenue scale.

This massive expenditure acts like a powerful gravitational field, continuously draining Dizhe Pharmaceuticals' gross sales profits, causing the 'net profit' line on financial reports to remain in the red.

In its prospectus, Dizhe Pharmaceuticals frankly admitted that the main reasons for the losses were the high investment nature of innovative drug R&D and the cost pressures during the early stages of commercialization.

Source of the image: Zhedi Pharmaceutical prospectus

In addition to R&D expenses, hefty sales costs including marketing staff salaries, benefits, promotional expenses, and other costs weigh heavily on Dizhe Pharmaceuticals.

As of the reporting period mentioned above, Dizhe Pharmaceuticals' sales expenses remained high at 210 million yuan, 445 million yuan, and 424 million yuan respectively, with both 2023 and 2024 surpassing revenue levels.

The burden of R&D expenses and sales costs also impacted cash flow performance.

For the fiscal years 2023, 2024, and the first nine months of 2025, the cash used in operating activities by Dizhe Pharmaceuticals was consistently net outflow, amounting to -973 million yuan, -654 million yuan, and -424 million yuan respectively.

Meanwhile, net cash flow from investing activities turned negative starting in 2024, reaching -451 million yuan as of September 30, 2025.

Multiple indicators combined highlight that Dizhe Pharmaceuticals still needs to rely on external funding to support operations, underscoring the necessity and urgency of the company's move to raise capital in Hong Kong.

The tug-of-war between 'ceiling' and 'golden window'

The commercial success and rapid scaling of Dizhe Pharmaceuticals' Sunvozertinib (targeting EGFR exon20ins mutation in non-small cell lung cancer) has painted an exciting start for the market.

However, beneath the dazzling halo, more realistic challenges are surfacing: the market space for its core product may be more limited and crowded than anticipated.

According to materials reviewed by Node Finance, among approximately 800,000 new lung cancer patients in China each year, non-small cell lung cancer (NSCLC) accounts for about 85%. Among these, EGFR mutations account for roughly 50%, while exon20ins mutations make up only about 2-4% of EGFR mutation cases.

After multiple calculations, the number of newly diagnosed patients corresponding to the final indication in China is estimated to be between 15,000 and 25,000 annually. Even when considering existing patients, the volume of this 'pool' naturally has a 'constraint,' limiting its growth trajectory.

However, Dizhe Pharmaceuticals noted in its prospectus that EGFR exon 20 insertion mutations account for about 12-15% of all EGFR mutation patients, with the number of new cases in China expected to increase from 41,200 in 2020 to 48,300 in 2024.

The niche area of relapsed or refractory peripheral T-cell lymphoma (r/r PTCL), where Gaorui Zhe operates, also remains highly specialized, with only 26,000 new domestic cases expected in 2024, indicating a very low upward 'ceiling.'

This is not an isolated case but rather a common dilemma under the current innovative drug development strategy of targeting 'niche tracks': In pursuit of higher efficacy and safety, drug indications are continuously subdivided, making target populations increasingly precise. While this improves clinical success rates, it also means that the total potential demand for any single product is clearly bounded from the outset.

Additionally, both Sunvozertinib and Gaorui Zhe face the 'golden window' challenge.

As the first targeted therapy for Exon20ins mutation in advanced NSCLC, Sunvozertinib was approved for marketing in August 2023, enjoying a market exclusivity period of about 2-3 years—a 'golden window' for quickly establishing clinical standards and capturing doctor awareness and patient groups.

However, as competitors like Johnson & Johnson, AstraZeneca, and CSPC Pharma receive approvals or enter late-stage clinical trials, Swozhe will face intensified competition.

Source: Dize Pharmaceutical Prospectus

Gaoruizhe is likely in a tougher position as it is not the first-to-market drug. In the peripheral T-cell lymphoma space, multiple drugs such as Pralatrexate and Romidepsin are already available, leading doctors to form initial treatment habits and prescription patterns based on those earlier options.

There is also positive news as Gaoruizhe has received two designations from the U.S. FDA, which will accelerate its U.S. market entry process and provide another pillar for overseas commercialization.

Overall, Dizhen Pharma’s current losses reflect both the growing pains common to innovative pharmaceutical companies and the structural challenges inherent in its focus areas, which may not offer long-term profitability.

Whether it can complete the challenging leap from 'cash-burning' R&D to sustained profitability within a limited market window will directly determine whether its 'dual-platform' story can truly materialize rather than remain superficial.

*The cover image is generated by AI.

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