Biotech will cut meat to survive without money?

Unable to sell medicines and cash in cash, Biotech is looking for new sources of money to continue its life in the cold capital winter

On April 20, Bloomberg reported that Tianjing Bio was considering various options including selling the business

Tianjing Bio is not a Biotech that is short of money

Even so, there have been rumors of "cutting meat" in the market

Image source: Tianjing Biological Bulletin

The largest shareholders of Tianjing Bio include Cambridge Capital, Hillhouse Capital and GIC, the Singapore government investment company

Tianjing Bio is not an isolated case.

Pay close attention to market value, be careful of risks

IPOs are good and IPOs are bad

Biotech has experienced a wave of listings in the past few years.

Beginning in the second half of 2021, the share price of innovative biopharmaceutical companies has suffered a sharp drop, and the shrinking market value has not only caused losses to retail investors who took over at a high level, but also caused risks to large institutional investors and the company’s founding team

First, it is a shock to large institutional investors

Regardless of whether it is a public offering or a private placement, funds have their deadlines, and once the deadline comes to an end, the situation will become more complicated

Secondly, the most original purpose of IPO is to raise money

Finally, once a Biotech company IPOs, it will face constant supervision and review by all parties, and more information about the company needs to be disclosed.

Once the market value of Biotech drops sharply, not only the stocks pledged and financed by the founding management team will face the risk of liquidation, delisting is not impossible, and it is more commonly possible that there will be a knock on the door from the barbarians

The market value fell sharply, and the company's equity was very scattered, falling below the psychological price estimated by some people, and hostile takeovers began to be imminent

Does the founding management team have a strategy for dealing with a Barbarian takeover? Can the white knight be found and rescued when the barbarian knocks on the door? Otherwise, in the sluggish market, the founding management team has conquered the country and can only give it away in the end

Cover your purse and save the day

A more realistic test is Biotech's pocketbook
.
Self-sufficiency is Biotech's ideal way to survive in a downturn and difficult refinancing
.

Image source: Maibo Pharmaceutical Announcement

But there are already Biotech companies that have nearly emptied their pockets
.
Taking Hong Kong stock 18-A Biotech as an example, the latest 2021 financial report shows that Maibo Pharmaceutical's cash and bank balances will drop 83.
2% from 485 million yuan in 2020 to 81.
556 million yuan in 2021.
The sales and distribution expenses are 9.
423 million yuan, the research and development expenses are 264 million yuan, and the administrative expenses are 90.
632 million yuan.
Based on this calculation, its cash flow cannot support its one-year expenses
.

For Biotech companies, finding revenue is the top priority, whether it is to realize product commercialization, or to realize early realization of the license-out transfer rights, or to reluctantly cut the meat and transfer part of the equity in exchange for revenue, otherwise the cash flow situation will further deteriorate, and the barbarians will knock on the door.
When a hostile takeover comes, the founders and management team will be more passive
.

In addition to open source, throttling is also extremely necessary
.
Previously, with the investment and financing of Biotech in full swing, Biotech also began to rise up the wind of extravagance and waste
.

For example, the phenomenon of Biotech taking hundreds of millions of dollars of license-in innovative drug projects in China has repeatedly appeared.
Of course, there is an incentive to use the news to increase the market value, but buying such limited rights and interests at such a high price is not in line with common sense.
It will also put great pressure on the follow-up promotion and commercialization of the project
.

With the arrival of the cold winter of biomedicine, Biotech's money bag must be getting tighter and tighter.
The commercialization of innovative drugs has been long and difficult.
Although BD has been realized in advance, it is only a lifespan
.

Not wanting to reluctantly cut the meat in the future or be taken away by the barbarians, the current Biotech must rationally spend every money in its hand, consider the commercialization of innovative drugs as realistically as possible, and make money as soon as possible in order to truly achieve self-reliance
.