(AI-generated)

Two years after the A-share listing, the 80 billion market value innovative drug "upstart" Baili Tianheng-you (688506.SH) threw out a refinancing plan.

On March 10, Baili Tianheng announced that the company intends to issue A shares to specific objects and raise no more than 3.9 billion yuan (including this number), which will be used for innovative drug research and development projects after deducting the issuance costs.

In fact, in 2024, Baili Tianheng has reversed four consecutive years of revenue decline and three consecutive years of losses with an innovative drug license-out, and as of the end of September last year, it has nearly 5 billion yuan of monetary funds in hand. And just before the Spring Festival of the Year of the Snake, the company has just submitted its statement to the Hong Kong Stock Exchange for the second time, and the process of sprinting to the H-share secondary listing is advancing simultaneously.

Titanium Media APP noticed that behind the repeated fundraising, the core is still the huge amount of funds required to promote the R&D of innovative drugs in Baili Tianheng's pipeline. On top of this, it is the founder of Baili Tianheng, Zhu Yi, who has a "big plan" - to become a multinational pharmaceutical company (MNC) with a global leading advantage in the field of oncology drugs.

Three direct financing within 3 years

Baili Tianheng initially started with chemical generics and Chinese patent medicines, and tried to lay out the field of biological drugs around 2010, starting the long transformation road of "imitating and cultivating". In 2014, the company founded SystImmune, Inc. in Seattle, USA, and invested a lot of resources in the research and development of ADC drugs.

According to the company, Baili Tianheng focuses on the field of tumor treatment, has built a world-leading innovative ADC drug research and development platform (HIRE-ADC platform), and has successfully developed 8 innovative ADC drugs that have entered the clinical stage, including BL-B01D1, as well as a series of preclinical innovative ADC drugs; Innovative multi-specific antibody R&D platform (GNC platform), successfully developed 4 innovative GNC drugs that have entered the clinical stage, including GNC-077, and a series of preclinical innovative GNC drugs; and the innovative ARC (Nuclear Medicine) R&D Platform (HIRE-ARC Platform).

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R&D investment of innovative drugs is large and the cycle is long, known as "ten years, one billion dollars, 10% success rate", and the funds required for the multi-pipeline research and development of 14 drug candidates are even more huge. And with the advancement of R&D, each stage needs hundreds of millions of yuan of support, especially under the company's globalization strategy, overseas R&D costs are more expensive. The rapid increase in the company's R&D investment in recent years is an example.

From 2019 to 2023, the company's R&D expenses will reach 181 million yuan, 196 million yuan, 279 million yuan, 375 million yuan, and 746 million yuan respectively; In the first three quarters of 2024 alone, 932 million yuan has been "burned".

Under the pressure of multi-pipeline advancement, Baili Tianheng has frequent financing. In January 2023, the company successfully landed on the Science and Technology Innovation Board, raising 990 million yuan and raising a net amount of 884 million yuan. However, as of the end of September 2024, a total of 766 million yuan has been used for the fundraising, and there is not much left.

In May 2024, Baili Tianheng will launch a Hong Kong stock IPO and submit its first statement in July. In December last year, it was announced that the company had received a filing notice issued by the China Securities Regulatory Commission, and the company planned to issue no more than 24.271 million overseas listed ordinary shares and list on the Hong Kong Stock Exchange. On January 21 this year, Baili Tianheng submitted the form for the second time. According to the prospectus, all the proceeds will be used for overseas operations, including the research and development of biologics candidates outside Chinese mainland, the establishment of global supply chains, and the construction or acquisition of production facilities overseas.

"Burning money" innovative drug research and development

Of course, the ambition of globalization requires sufficient self-confidence, and the phased victory of the self-developed product BL-B01D1 has given Baili Tianheng confidence. It's just that this confidence still needs more funds to support it in the future.

In December 2023, Baili Tianheng granted part of the commercialization rights of its self-developed product BL-B01D1 to Bristol-Myers Squibb (BMS), with a total transaction value of up to US$8.4 billion, which is the largest single-asset cooperative transaction in the history of the ADC field. In 2024, the company received an irrevocable upfront payment of $800 million. Since then, it has directly reversed the company's performance loss for several consecutive years.

According to the performance report, in 2024, Baili Tianheng will achieve revenue of 5.823 billion yuan, a year-on-year increase of 936.31%; The net profit attributable to the parent company will be 3.658 billion yuan, and in 2023, it will be -780 million yuan.

However, with the support of the down payment of US$800 million, the company's profit in 2024 has been declining quarter by quarter, which on the one hand shows the acceleration of the speed of R&D "burning money", and on the other hand, it reflects the contraction of the company's original generic drug and Chinese patent medicine business.

From 2019 to 2023, the company's chemical drug preparation revenue will be 962 million yuan, 821 million yuan, 606 million yuan, 535 million yuan and 381 million yuan respectively, and the revenue in 2023 will be less than 40% of 2019, and the gross profit margin will drop from 87.31% in 2019 to 69.46% in 2023.

In the Chinese patent medicine preparation segment, the revenue will decrease from 243 million yuan in 2019 to 179 million yuan in 2023, and the gross profit margin will decrease from 56.11% to 37.80%.

By 2024, excluding the $800 million down payment contribution, the company's other businesses will have even less revenue. According to the disclosure of the Hong Kong stock prospectus, from January to September 2024, the company's sales from generic drugs and Chinese patent medicines were only 328 million yuan.

It is worth noting that under the dual pressure of the continuous narrowing of the original source of income and the increase in R&D investment, the indirect financing of Baili Tianheng is also accumulating simultaneously. Wind data shows that in the first three quarters of last year, the company's short-term borrowings increased by 496 million yuan, non-current liabilities due within one year increased by 172 million yuan, and long-term borrowings increased by 374 million yuan. As of the end of the third quarter of last year, the three data reached 651 million yuan, 272 million yuan and 614 million yuan respectively.

Although BL-B01D1 has already contributed to the performance, the R&D of "Nine Deaths" still faces the risk of "chargebacks", and the subsequent milestone payments are still uncertain. Even if it ultimately achieves its expected "BL-B01D1 will submit its first indication NDA application to the China Food and Drug Administration in 2026 or before, and the first BLA application to the FDA as early as 2028, BL-B01D1 will submit regulatory approval applications for more indications in China, Europe and the United States and other markets in the next three to five years." "However, due to the company's participation in the clinical development of BL-B01D1 in the United States, the follow-up funding needs are still very large. (This article was first published in Titanium Media APP, author: Su Qitao).

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