IPO News | Another addition to the “A+H” pharmaceutical stocks! Baili Tianheng launches its IPO subscription, with a planned listing on November 17; the minimum subscription amount is HKD 39,292.31.

Futu News reported on November 7 that $BIOKIN (02615.HK)$ an announcement was issued stating that the company would offer shares for subscription from November 7 to November 12. The company plans to globally distribute approximately 8,634,300 shares and expects to be listed on November 17.

Company Profile

Bailey Tianhe is a comprehensive healthcare enterprise group with capabilities in early-stage R&D, clinical development, production, and commercialization. During the performance record period, the company operated two main businesses: innovative biopharmaceuticals and generic drugs as well as traditional Chinese medicine. In 2014, a decade ago, the company established SystImmune in Seattle, USA, and began developing Iza-bren, the world's first and, to date, only EGFR×HER3 bispecific antibody ADC to enter Phase III clinical development. A decade later, the company entered into a global strategic licensing and collaboration deal with BMS for Iza-bren, valued at a total of USD 8.4 billion, with an upfront payment of USD 800 million, marking the largest single-asset transaction amount in the ADC field to date.

Since 1996, after years of accumulation, the company has developed profound expertise in the fields of generic drugs and traditional Chinese medicine. The product portfolio of its generic drug and traditional Chinese medicine business covers therapeutic areas such as anesthesia, parenteral nutrition, anti-infectives, and pediatrics. The company has accumulated extensive experience in R&D, production, and marketing of special formulations such as emulsion injections and effervescent preparations, forming a competitive product portfolio.

Financial Overview

During the performance record period, Bailey Tianhe’s revenues for 2022, 2023, and 2024 were RMB 701.8 million, RMB 560.4 million, and RMB 5,821.1 million, respectively. In 2022, 2023, and 2024, the company's gross profits were RMB 455.0 million, RMB 307.0 million, and RMB 5,530.2 million, respectively, with gross profit margins of 64.8%, 54.8%, and 95.0%. The company incurred net losses of RMB 282.4 million and RMB 780.5 million in 2022 and 2023, respectively, and achieved a profit of RMB 3,707.5 million in 2024.

Industry Overview

Over the past century, cancer treatment has made significant progress, starting with the development of surgical techniques to remove tumors from patients. Subsequently, the advent of radiotherapy and chemotherapy allowed for the killing or inhibition of cancer cell growth. Today, precision oncology offers safer and more selective therapies by leveraging the patient’s own immune system to fight cancer. Cancer is a broad category of diseases characterized by the uncontrolled growth of abnormal cells and remains a leading cause of death worldwide. In 2024, the number of new cases in China, the United States, and globally continued to rise, reaching 5.1 million, 2.5 million, and 20.8 million cases, respectively, driving sustained growth in the oncology drug market.

Despite the increasing diversity of new cancer treatment methods, the fundamental goals of cancer therapy remain similar: to kill cancer more effectively and with greater precision. Existing targeted therapies and immunotherapies have several limitations that hinder their efficacy in treating cancer. The emergence of primary and secondary resistance presents significant challenges, undermining the long-term effectiveness of these therapies. Additionally, cold tumors with low levels of T-cell infiltration exhibit lower response rates to immunotherapy. Moreover, some patients experience limited durations of remission without substantial survival benefits. Overcoming these challenges is key to developing potent and durable cancer therapies.

Cornerstone investors

The cornerstone investors have agreed to subscribe for, or cause their designated entities to subscribe for, the relevant number of offer shares purchasable at the offer price, subject to certain conditions, for a total amount of approximately USD 32 million (or approximately HKD 249 million). Based on the mid-range offer price of HKD 368.25, the total number of offer shares to be subscribed by the cornerstone investors will be 674,700 shares. The cornerstone investors include: BMS, OAP III, Fidelity Fund, GL Capital, and Athos Capital.

Use of Proceeds

In terms of use of proceeds, Baili Tianhe estimates that the net proceeds from the global offering will be approximately HKD 3.018 billion (assuming the over-allotment option is not exercised and based on the mid-range offer price of HKD 368.25). According to the prospectus, Baili Tianhe intends to allocate the proceeds from the global offering for the following purposes:

Approximately 60% will be used to fund the company's research and development activities for biologic drug candidates outside mainland China; approximately 30% will be used to establish the company’s global supply chain, primarily to finance the construction or potential acquisition of new production facilities for the company’s biologic drug candidates outside mainland China; and approximately 10% will be allocated for working capital and other general corporate purposes related to the company’s operations outside mainland China.