Dexi Biotech Back for IPO: Workforce Reduction, Controlling Shareholder Cashes Out $66 Million, Industry AI Adoption at Only 1%

Following the filing for the Hong Kong Stock Exchange Main Board at the end of June 2025, Hangzhou Dexi Biotech Co., Ltd. (hereinafter referred to as 'Dexi Biotech') has recently resubmitted its listing application, with Huatai International acting as the sole sponsor.

At the same time, Dexi Biotech’s Hong Kong stock listing was approved by the CSRC for record-filing. If all goes smoothly, the company is one step closer to a successful listing.

Core Product Set to Become World's First? AI Adoption at Only 1%

According to the prospectus, Tianyancha, and the official website, Desh Bio was founded in September 2016. The company provides intelligent and standardized imaging equipment, Model-as-a-Service (MaaS) cloud platforms, and localized self-training solutions to global medical institutions, research institutions, and corporate clients. Relying on its independently developed general medical imaging base model iMedImage, the company has successfully built a diversified portfolio of intelligent equipment and complementary products, including the Auto Vision® Chromosome Karyotyping Analysis System, MetaSight® Automatic Cell Microscopic Image Scanning System, Kayo Flow® Automatic Cell Harvesting Instrument, and integrated staining machine. These products meet clinical needs across various scenarios. The company's clients have covered more than 400 healthcare centers and medical institutions nationwide, gaining widespread market recognition.

The company offers a diversified product portfolio that can effectively enhance diagnostic efficiency and service quality. This includes six medical imaging software products: our core product under registration, AI Auto Vision®, one commercialized product AutoVision®, and four preclinical candidate products; three commercialized medical devices; and four key reagents and consumables.

Desh Bio stated that the successful development of its core product, AI Auto Vision®, is based on a long-term commitment to developing technology-backed solutions to address challenges faced by traditional medical imaging services. Medical imaging covers multiple modalities, including microscopy, X-rays, CT, MRI, ultrasound, and endoscopy, forming the foundation of modern clinical diagnostics. It encompasses over 3,000 medical imaging applications, whose growth has long been constrained by significant challenges such as time-consuming operations, heavy reliance on doctors' expertise, and lengthy R&D and clinical validation cycles.

In detail, this product can generate timely alerts for doctors regarding numerical and structural chromosomal abnormalities, providing valuable assistance for clinical diagnosis of related diseases and saving doctors significant time in their workflow. Additionally, multicenter clinical trial reports submitted as part of the registration materials show that the product achieved 100.00% sensitivity and 100.00% specificity in detecting numerical abnormalities, and 94.05% sensitivity and 100.00% specificity in detecting structural abnormalities.

Desh Bio stated that AI Auto Vision® has successfully completed clinical trials. In May 2025, it submitted an application for Class III innovative medical device registration to the National Medical Products Administration (NMPA) and was recognized as a 'Class III innovative medical device' in the same month, qualifying for expedited regulatory approval. As of the latest practicable date, the company is preparing corrective materials as required by the NMPA during the review period. The plan is to submit all corrective materials at once in January 2026 and expects to obtain the Class III medical device registration certificate in the first quarter of 2026.

According to Frost & Sullivan, upon receiving NMPA approval, AI Auto Vision® is expected to become the world’s first and only intelligent chromosome karyotype-assisted diagnostic software, as well as the world’s first software capable of automatically identifying chromosomal abnormalities intelligently.

Some healthcare industry observers believe that if AI Auto Vision® can indeed improve the sensitivity of clinical diagnostics and significantly enhance the efficiency of doctors, it will undoubtedly experience rapid growth. However, medical diagnostics cannot tolerate high error rates, as precision is crucial. For both doctors and patients, ensuring data accuracy is the top priority. Therefore, improvements in AI Auto Vision®’s advantages and error margins, including whether there may be instability, require more case studies and time for verification.

The company also mentioned in the prospectus that despite the rapid development of the intelligent medical imaging testing market in recent years, its penetration rate in overall medical testing projects remains relatively low.As of the latest practicable date, China has approximately 3,285 medical testing items, of which 35 are supported by intelligent assistance, accounting for about 1.0%. However, the company believes this ratio reflects the enormous application potential of intelligent technology in medical imaging testing.

Low capacity utilization, workforce reduction, and controlling shareholder cash-out of 66 million yuan

In terms of financial data, for the first three quarters of 2023, 2024, and 2025 (the reporting period), the company achieved revenues of RMB 52.844 million, RMB 70.352 million, and RMB 112 million respectively, with net losses of RMB 56.116 million, RMB 43.375 million, and RMB 36.649 million respectively. Gross profit margins were 71.0%, 65.5%, and 75.9% respectively.

In terms of cost expenditures, Deshi Bio’s three major expenses are relatively high. During the reporting period, the company's R&D expenditures were RMB 28.644 million, RMB 25.519 million, and RMB 68.672 million, accounting for 54.2%, 36.3%, and 61.5% of revenue respectively; administrative expenditures were RMB 29.927 million, RMB 25.618 million, and RMB 40.444 million, representing 56.6%, 36.4%, and 36.2% of revenue respectively; sales and distribution expenditures were RMB 21.912 million, RMB 24.95 million, and RMB 19.339 million, accounting for 41.5%, 35.5%, and 17.3% of revenue respectively.

It is not difficult to see that the company’s emphasis on R&D investment continues to increase, with spending on core products accounting for 5.8%, 58.1%, and 88.1% of total R&D expenditures respectively; administrative expenditures saw a significant increase in 2025.

In terms of cash flow, during the reporting period, Deshi Bio’s net cash flow used in operating activities was -RMB 47.395 million, -RMB 29.777 million, and -RMB 21.553 million respectively. The year-end or end-of-period cash and cash equivalents were RMB 20.419 million, RMB 17.104 million, and RMB 39.595 million respectively. Additionally, the company’s current ratio was 5.5, 3.8, and 3.8, while the quick ratio was 4.4, 3.1, and 3.3 respectively.

In production and capacity, as of September 30, 2025, Deshi Bio has established a comprehensive production system consisting of nine production lines. These nine production lines are further divided into three categories: medical devices, medical consumables, and medical reagents, with designed annual capacities of 2,000 units, 100,000 pieces, and 800,000 pieces respectively, which are sufficient to meet current market demand. As of the latest practicable date, due to the expiration of the lease contract for another production base, the company has reduced the number of production lines to four. All four production lines focus on manufacturing medical devices and medical imaging software. The company is currently building two additional production lines at its Smart Health Valley production base, dedicated to manufacturing medical consumables and medical reagents, which are expected to go into production by April 2026.

During the reporting period, the utilization rates of the company's medical device production lines were 28.6%, 52.6%, and 52.2% respectively, the utilization rates of the medical consumable production lines were 18.4%, 7.2%, and 5.8% respectively, and the utilization rates of the medical reagent production lines were 59.1%, 22.5%, and 31.3% respectively.

At the same time, the total number of employees at the company also dropped significantly during the reporting period, from 206, to 145, and then to 158. Although there was an increase in the first three quarters of 2025, it remains far fewer than in 2023, equivalent to a 23% reduction.

The outside world has also noticed that Song Ning, the founder of Deshi Bio, has been cashing out tens of millions in recent years.

The prospectus shows that Song Ning directly holds 30.04% of shares and, through the employee shareholding platform Deshi Nuohui and three investment holding platforms (Deshi Nuoda, Deqian Technology, and Deshi Nuoxin), controls a combined 52.06% of voting rights. Deshi Bio has also received multiple rounds of investments from Hangzhou Zizhou, Hetu No. 6, Guozhong Investment, and Yuhang Economic Development, reaching a post-money valuation of RMB 2.56 billion after the latest round of financing in June 2025.

The prospectus reveals that in August 2021, Song Ning transferred 3% equity for RMB 9 million to Ningbo Jiayuan; in 2022, there were multiple transfers, including stakes sold to Lishui Jinyan (RMB 10 million, 1.45%), Hangzhou Yuhang Financial Control (RMB 15 million, 2.17%), and Hangzhou Huayun (RMB 2 million, 0.29%). In 2023, Deqian Technology, a platform controlled by Song Ning with a 76.7% stake, transferred 2.73% equity of the company to Hangzhou Hefu at a premium of RMB 30 million, with cumulative cash-outs exceeding RMB 66 million.

Objectively speaking, the founder's cash-out was concentrated between 2021 and 2023, so it cannot be considered as a pre-IPO early exit. It is possible that the actual controller chose to secure some profits for personal financial needs or daily expenses. However, given the company’s claimed strong technology and performance, the early partial exit by the actual controller, instead of waiting for a higher valuation and richer returns post full listing, may somewhat affect investor confidence. (Produced by Harbor Finance)

Wang Lu, Observer of Harbor Business

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