[IPO Watch] Mingyu Pharma: Founded by Former Eli Lilly and Co Biologist, Rich Pipeline of Innovative Drug Candidates but Persistent Losses

After its initial prospectus submitted in November last year lapsed, Mingyu Pharmaceutical Co., Ltd. (hereinafter “Mingyu Pharma”) refiled its listing application with the Hong Kong Stock Exchange on July 8, seeking a main board listing under Chapter 18A of the Listing Rules.

This company, focused on developing innovative therapeutics in oncology and autoimmune diseases, was founded by Dr. Cao Guoqing, a former senior biologist and research consultant at Eli Lilly and Co (LLY.US) and former vice president at Hengrui Pharma$HENGRUI PHARMA (01276.HK)$> Founded by Dr. Cao Guoqing, former vice president. Prior to its Hong Kong IPO filing, the company raised over USD 240 million from investors including OrbiMed and Qiming Venture Partners. Following its Series C financing in August 2025, the company’s valuation reached RMB 3.936 billion.

What makes Mingyu Pharma’s latest listing application noteworthy isn’t merely ‘another Chapter 18A company arriving,’ but rather that it is advancing both its ADC (antibody-drug conjugate) and immunotherapy pipelines while already recognizing revenue through out-licensing collaborations. However, this revenue stems from business development (BD) deals and does not signify that the company has truly crossed the commercialization threshold. Against the backdrop of increasingly cautious pricing for innovative biotech assets on the Hong Kong stock exchange, the market remains focused on pipeline execution capability, cash burn rate, and whether external validation can be sustained.

From ADCs to JAK inhibitors—numerous pipeline assets, yet none approved

Founded in 2018, Mingyu Pharma positions itself as a biotechnology company centered on integrated oncology, specializing in the development of ADCs combined with advanced immunotherapies.

As of July 1, Mingyu Pharma had 11 clinical candidates, including two core products—all independently discovered and developed. The first core product, MHB036C, is a TROP-2 ADC targeting solid tumors; it has completed Phase I trials and is now advancing in a Phase II trial in combination with MHB039A. The second core product, MHB018A, is a subcutaneous IGF-1R monoclonal antibody primarily for thyroid eye disease (TED); both active TED and chronic TED indications have entered Phase III trials. Additionally, MHB088C, a B7-H3 ADC, is one of the company’s key assets currently undergoing multiple Phase III trials across various indications. MH004, a topical JAK inhibitor, had its NDA for mild-to-moderate atopic dermatitis submitted in China in March 2026.

From a pipeline perspective, Mingyu Pharma is not reliant on a single early-stage program; its portfolio spans oncology and immuno-inflammatory diseases, with several assets already at relatively advanced clinical stages. This is certainly a positive for a Chapter 18A company, as the market tends to assign higher valuations to pipelines demonstrating earlier clinical progress and broader indication expansion.

However, it must be emphasized that advancing pipeline stages does not equate to successful commercialization. As of July 1, the company had no approved drug candidates on the market. Although MH004 has been submitted for NDA approval, it remains under regulatory review, and neither MHB018A nor MHB036C has received marketing authorization. Therefore, Mingyu Pharma should still be classified as a pre-commercial Chapter 18A biotech company, not an innovative drug enterprise already in a stable commercial sales phase.

It has revenue on the books—but hasn’t sold a single dose from its pipeline

The most commonly misunderstood aspect of Mingyu Pharma’s current listing application is that it recognized revenue in 2025. On the surface, a pre-commercial Chapter 18A company reporting hundreds of millions in revenue might suggest its business model is beginning to take off—but according to disclosures in the prospectus, this interpretation is incorrect.

The company explicitly states that it has not commercialized any of its drug candidates during the historical period presented and has not generated any revenue from commercial product sales to date. Revenue was zero in 2024; in 2025, the company recognized RMB 264 million in revenue (all figures in RMB unless otherwise noted); and revenue was again zero in the first five months of 2026. The prospectus further clarifies that the 2025 revenue primarily arose from a licensing agreement with Qilu Pharmaceutical: on March 31, 2025, the company entered into an exclusive licensing collaboration granting Qilu rights to develop and commercialize MHB088C in Greater China.

According to the prospectus, the company is entitled to receive upfront payments and development, regulatory, and sales milestone payments totaling up to RMB 1.065 billion, in addition to tiered royalty fees. As of December 31, 2025, the company had already received RMB 300 million in milestone payments.

This means Mingyu Pharma’s revenue in 2025 essentially stems from business development (BD) collaborations and represents stage-based recognition, rather than product sales. These two revenue types are valued differently under the pricing logic of Hong Kong-listed biopharma companies. BD revenue demonstrates a degree of external validation, indicating that the company’s pipeline has been endorsed by industrial capital or pharmaceutical partners, and helps alleviate cash pressure. However, such income is typically one-off, event-driven, and non-recurring. Future performance will depend on clinical progress, achievement of milestones, and collaboration timelines—it may not generate the stable operating cash flows seen in mature pharmaceutical firms.

Behind the RMB 900 million loss: Redeemable convertible preferred shares take the blame, while cash burn continues

For Chapter 18A companies, looking solely at net losses is often insufficient, as accounting figures and actual cash burn do not always align. Mingyu Pharma serves as a textbook example.

The prospectus shows that the company reported a net loss of RMB 283 million in 2024, which widened significantly to RMB 919 million in 2025, and further reached RMB 210 million for the first five months of 2026—a substantial year-over-year increase. At first glance, the sharp escalation in 2025 losses might suggest deteriorating operations. However, the company clarified that the significant 2025 loss expansion was primarily due to a RMB 9.28 billion increase in fair value changes of financial liabilities measured at fair value through profit or loss, partially offset by RMB 2.64 billion in revenue from the Qilu licensing agreement.

In other words, the massive 2025 accounting loss does not fully reflect a corresponding sharp deterioration in operational cash burn; a significant portion stems from non-cash accounting items related to convertible preferred shares. Such volatility is common among innovative drug developers, especially during the period before listing when certain financing instruments have not yet been converted into equity, often distorting the net income statement through fair value movements of financial liabilities.

Nonetheless, this does not mean cash pressure can be ignored. Operating cash flow showed net outflows of RMB 146 million in 2024, RMB 183 million in 2025, and RMB 181 million for the first five months of 2026, reflecting the company’s ongoing heavy R&D investment. Cash and cash equivalents rose from RMB 297.12 million at the end of 2024 to RMB 8.01 billion by the end of 2025, before declining to RMB 6.05 billion as of May 31, 2026.

Meanwhile, the company still recorded substantial net current liabilities and net total liabilities prior to its listing submission: RMB 11.65 billion and RMB 11.25 billion, respectively, as of the end of 2024, which further expanded to RMB 21.96 billion and RMB 21.49 billion as of May 31, 2026. The company explained that this was primarily because redeemable convertible preferred shares were classified as current liabilities during the reporting period.

Therefore, the most accurate financial interpretation of Mingyu Pharma is not simply to label it as 'expanding losses,' but rather to unpack the components: the reported loss is heavily influenced by fair value fluctuations of financial liabilities, while actual operations continue to reflect sustained R&D investment and cash consumption. Hong Kong market tolerance for Chapter 18A companies typically hinges on whether such cash burn translates into clinical progress, partnership execution, or regulatory approvals. If R&D spending continues to rise while external validation slows, market sentiment could come under pressure.

The litmus test for Chapter 18A companies: both clinical advancement and external validation are essential—neither can be missing

Mingyu Pharma’s latest listing application positions it, based on asset characteristics, as a relatively typical yet somewhat differentiated company within Hong Kong’s Chapter 18A biotech segment. It is typical in that the company has not yet commercialized any products, and its core valuation drivers remain pipeline progress, regulatory approval timelines, partnership validation, and fundraising capability. Its differentiation lies in the fact that it has already secured an out-licensing deal with Qilu Pharmaceutical for MHB088C, resulting in the recognition of a meaningful amount of milestone-based revenue—placing it a step ahead of 18A companies with no external validation whatsoever.

However, whether the market will embrace this story hinges not on the fact that 'it has already recorded one revenue stream,' but rather on its ability to consistently generate new validations going forward. On one hand, the MHB088C partnership demonstrates the company’s business development (BD) capabilities and provides interim industry endorsement of its pipeline value. On the other hand, if the company fails to secure additional partnerships, misses expected milestones, or experiences delays in advancing its lead clinical programs, the sustainability of this BD-driven revenue model will come under renewed scrutiny. Particularly after multiple cycles of sentiment swings in Hong Kong’s innovative drug sector, investors have grown significantly less tolerant of 'pipeline storytelling' and now place greater emphasis on whether a company can truly navigate through successive funding cycles.

Looking ahead, there are at least three key developments worth closely monitoring. First, the clinical advancement timelines for MHB018A, MHB036C, and MHB088C—especially whether trial results in core indications support further regulatory filings or expanded partnerships. Second, the regulatory review progress following the NDA submission for MH004, which will determine whether the company can take its first step toward product commercialization. Third, beyond existing BD deals, whether the company can secure additional out-licensing agreements, achieve milestone payments, or attract further external collaboration resources. For 18A companies, capital market acceptance has never been determined by a single financing round alone, but rather by whether they can consistently advance their R&D, clinical development, and commercialization pathways after raising capital.

Summary

Overall, Mingyu Pharma possesses a reasonably robust pipeline and has already obtained external partnership validation. However, its listing rationale remains firmly rooted in the premise of 'not yet commercialized, requiring continuous investment, and awaiting clinical and regulatory validation.' While such assets are not without appeal in the Hong Kong market, their valuations are unlikely to be front-loaded.

Ultimately, whether Mingyu Pharma can garner greater attention within the 18A segment will depend on the step-by-step validation of its fundamentals and milestone achievements—not on a single licensing revenue event triggering a market re-rating.

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