Reporter Chen Ting and Cao Xueping report from Shenzhen

During the window period for A-share companies to go public in Hong Kong, another pharmaceutical company hit the "A+H" dual listing.

Recently, Mabwell (688062. SH) has issued nearly 40 announcements in a row, revealing that the company plans to issue H shares and list on the Hong Kong Stock Exchange, and the company is actively discussing with relevant intermediaries, and the specific details have not yet been determined.

Mabwell, which is mainly engaged in the research and development, production and sales of innovative drugs and biosimilars, was listed on the Science and Technology Innovation Board in January 2022 with a net IPO proceeds of about 3.3 billion yuan. Up to now, Mabwell has more than 10 projects under research, and it still needs to continue to invest in large-scale R&D.

It is worth noting that in addition to planning for the secondary listing, Mabwell also announced an investment plan, the company plans to invest no less than 1.6 billion yuan to build a bone health innovative drug project, and this round of investment in intangible assets is 1.008 billion yuan, and a third party contributes shares in cash.

The day after the above announcement, Mabwell's share price fell more than 8% intraday, closing at 21.19 yuan per share, down 6.65%.

Regarding the latest progress of the company's planning to go public in Hong Kong and other measures to solve the capital needs, the reporter of "China Business Daily" called and sent a letter to Mabwell, but as of press time, the other party did not respond.

The secondary market votes with its feet

"Burning money too quickly, investors panicking." "Burning in bundles is simply not enough." Since Mabwell announced its plan to list in Hong Kong, some investors have been sighing on the interactive platform.

From December 16th to 18th, Mabwell's share price fell for three consecutive trading days after the announcement, and as of the close of December 18, the company's share price was 20.81 yuan / share, down 8.33% from the closing price of 22.7 yuan / share on the previous trading day before the announcement.

On the evening of December 15, Mabwell announced that a meeting of the board of directors and the board of supervisors was held to deliberate and approve the company's issuance of H shares and listing on the Hong Kong Stock Exchange. Mabwell said that the company plans to issue H shares and go public, which will be completed at an appropriate time and within the validity period of the resolution of the general meeting of shareholders.

The above matters remain uncertain. Up to now, Mabwell's issuance and listing of H shares is subject to the approval of the general meeting of shareholders of the Company, subject to the requirements and conditions of relevant laws, regulations and normative documents in China and Hong Kong laws, and needs to be recorded, approved and/or approved by relevant government agencies and regulatory agencies such as the China Securities Regulatory Commission and the Hong Kong Stock Exchange.

In fact, with the support of relevant policies, A-share companies have ushered in the window period for listing in Hong Kong this year, and the "A+H" dual listing has become a major attraction in the capital market.

Mabwell said in the announcement that the issuance of H shares and listing is to meet the capital needs of the company's operation and development, realize the sustainable development of the company, and enhance the company's internationalization level. It can be seen that the need for funds comes first.

Mabwell was listed on the A-share market two years ago at an issue price of RMB34.8 per share, raising net proceeds of approximately RMB3.3 billion at that time. As of June 30, 2024, the company has used a total of 1.685 billion yuan in fundraising, and temporarily supplemented liquidity with 877 million yuan of partially idle fundraising, with a balance of about 815 million yuan at the end of the period. At the same time, the company is not yet profitable and has accumulated uncovered losses, and its working capital is mainly dependent on external financing.

Wind data shows that from 2022 to 2023 and in the first three quarters of this year, Mabwell's short-term borrowings increased by 89.3153 million yuan, 109 million yuan, and 698 million yuan respectively, and the company's asset-liability ratio increased significantly from 24% at the end of 2022 to 57.64% at the end of September 2024.

It is worth noting that Mabwell has increased the credit and financing quota applied for from financial institutions twice this year, from the initial total of no more than 2.3 billion yuan to no more than 6.2 billion yuan. As of May 31, 2024, the total balance of the company's short-term and long-term borrowings was 1.776 billion yuan. As of the end of the third quarter of this year, Mabwell's cash and cash equivalents on hand were about 1.598 billion yuan, a decrease of about 200 million yuan from the same period last year.

At this time, Mabwell threw out a multi-billion yuan "investment plan".

Also on December 15, Mabwell announced that it intends to sign the "Mabwell Bone Health Innovative Drug Project Contract" with the Management Committee of Chongqing High-tech Industrial Development Zone and Chongqing Zhongxin Pharmaceutical Big Health Private Equity Investment Fund Partnership (Limited Partnership) (hereinafter referred to as "Big Health Fund"), with Mabwell's wholly-owned subsidiary, Mabwell (Chongqing) Biopharmaceutical Co., Ltd. (hereinafter referred to as "Mabwell Chongqing"), as the main body of the operation project, to jointly invest in the construction of "Mabwell Bone Health Innovative Drug Project". The total planned investment of the project is 2 billion yuan.

Among them, Mabwell's total investment is not less than 1.6 billion yuan, of which 1.008 billion yuan is contributed in the form of intangible assets, and it will still plan to invest in the development of drug projects in related fields in the future, and the big health fund plans to invest a total of 400 million yuan in monetary terms.

The reporter noted that the above-mentioned cooperation was actually financed in the form of equity transactions. First of all, Mabwell plans to increase the registered capital of Mabwell Chongqing from 20 million yuan to 1.008 billion yuan, and revoke the original registered capital of 20 million yuan in monetary terms, and the registered capital of 1.008 billion yuan will be fully funded by Jiangsu Taikang Biopharmaceutical Co., Ltd. (hereinafter referred to as "Jiangsu Taikang"), a wholly-owned subsidiary of Mabwell, in the form of intangible assets, and subscribed with the technical achievements of the marketed biological drug denosumab injection (trade name: Malishu). At the same time, the Great Health Fund increased its capital by 200 million yuan to Mabwell Chongqing, obtaining 16.56% of its equity, and then the two parties carried out the second capital increase of Mabwell Chongqing.

After the above operations, Mabwell Chongqing will become the marketing authorization holder of Mabwell, which will build a national marketing center for the product, and at the same time carry out the introduction and clinical research of Mabwell's innovative drug project (RP901) in the field of bone health. From another perspective, Mabwell is planning to expand the field of bone health drugs through this collaboration.

In the above-mentioned cooperation, if Mabwell Chongqing fails to obtain the production license B of denosumab injection on December 31, 2026, or its sales revenue from 2027 to 2029 does not reach the target, the Great Health Fund has the right to request Jiangsu Taikang or Mabwell to repurchase its equity in cash.

In recent years, it has been difficult to make ends meet

Mabwell, which went to Hong Kong for financing with its left hand and introduced investors with its right hand, is actually still in a state of continuous loss.

Since its A-share listing, Mabwell's three products have been approved for marketing and advanced to the commercialization stage. In March 2022, the company entered into a partnership with Junshi Biosciences (688180. SH) co-developed adalimumab injection (trade name: Junmaikang) was approved for marketing, and the original drug of this variety is Humira Humira, the "king of medicine" produced by AbbVie. In 2016, Humira's core patents expired in China, and a number of biosimilar drugs were subsequently approved or submitted for marketing authorization in China. By the time Junmaikang was launched, there were 6 other adalimumab products that had been approved for marketing in China, including Humira.

Increasing market competition has led to a significant drop in the price of adalimumab. In November 2019, Humira passed the national medical insurance negotiation and entered the national class B medical insurance, and the price was reduced from 7,820 yuan (0.4mL:40mg) to 1,290 yuan. The highest retail price of Junmaikang set by Mabwell is 998 yuan/box (40mg/0.8mL).

In 2022, Junmaikang will ship a total of about 20,700 pieces, with a delivery amount of about 19.45 million yuan, and Mabwell will receive a settlement payment of 31.0986 million yuan from Junshi Biosciences. In that year, the company's revenue was about 27.7282 million yuan, a year-on-year increase of 70.88%, but the loss expanded, the net profit was about -955 million yuan, the net cash flow generated by operating activities was about -720 million yuan, and the net cash outflow from R&D investment increased by about 300 million yuan year-on-year. During the reporting period, the company incurred R&D expenses of about 760 million yuan.

In the following two years, Mabwell's products were approved for marketing each year. In April last year, Mylishu was approved by the State Food and Drug Administration for osteoporosis in postmenopausal women at high risk of fractures; In postmenopausal women, the product significantly reduces the risk of vertebral, non-vertebral, and hip fractures. Melissu is the world's second approved biosimilar of Prolia, the original drug of denosumab injection, which is the world's first-line broad-spectrum anti-fracture risk drug. According to Amgen's annual report, Prolia's sales in 2022 were $3.628 billion, up 12% year-on-year.

In April this year, Mabwell announced that another denosumab injection (trade name: Maiweijian) was approved for marketing in China for the treatment of giant cell tumors of bone that are not resectable or may cause severe functional impairment by surgical resection, including adults and adolescent patients with mature bones (defined as at least one mature long bone and weighing ≥45kg). Megavi is the first biosimilar of the original drug Anjiawei to be marketed in China. In 2022, Angavi's sales in China will be 427 million yuan. As of the first half of this year, the marketed varieties of denosumab in China include 2 original and 6 biosimilars.

In the third quarter of this year, Mabwell's sales revenue was 25.05 million yuan, a year-on-year increase of 163.22%, the company's revenue increased by 167.73% year-on-year to 25.568 million yuan, and the net profit was about -250 million yuan. In the first three quarters, the company's drug sales revenue increased by 287.12% year-on-year to 90.715 million yuan, but the overall loss reached about 694 million yuan, and the company's R&D investment during the reporting period was about 481 million yuan, accounting for 340.91% of revenue.

As of October 30, Mabwell had 15 core products in clinical or marketing stages, including 11 innovative drugs and 4 biosimilars. Among them, 3 varieties have been marketed, 1 variety is in the marketing authorization review stage, 3 varieties are in the clinical stage of phase III key registration, and 8 varieties are in other different clinical research stages. Mabwell said that the development of preclinical research, clinical trials and new drug marketing preparation of the varieties under development still needs to continue to invest in large-scale R&D.