Dongyao Pharmaceutical Co., Ltd. plans to go public on November 8, raising 550 million Hong Kong dollars, or becoming the next king of over purchase of Hong Kong stocks

In the IPO tide in Hong Kong, "you sing and I come on stage" On October 29, information on the official website of the Hong Kong Stock Exchange showed that Dongyao Pharmaceutical Co., Ltd submitted a global offering prospectus, offering 90 million shares (accounting for 15.78% of the total issued share capital), 9 million shares in Hong Kong and 81 million shares in the international market, with the offering price of no more than HK $7.55 and no less than HK $6.55 According to the expected timetable, Dongyao pharmaceutical will be listed on November 8 According to the median of the selling price range, after deducting the required fees, the net proceeds from the global offering is about HK $550 million 1 R & D plus "accelerator" directly refers to the 10 billion market as an enterprise with Taiwan background Although the exposure of Dongyao pharmaceutical industry is not high, its strength of "R & D, production and sales" is no less than that of a first-line star enterprise According to the announcement, Dongyao pharmaceutical has 7 biological drugs and 5 chemical drugs under research, focusing on three categories of "monoclonal antibody drugs, oncolytic viruses and niche chemicals" Among them, the core drug tab008 is undergoing phase III clinical trials and is expected to be launched from the end of 2020 to the beginning of 2021 The drug is an anti vegfmab drug and bevacizumab biological similar drug under development It is sold under the brand name of Avastin, a bevacizumab antigen drug product developed by Roche Avastin has always been the most widely used anti vegfmab drug Since it came into the market in 2004, its effectiveness and safety have abundant practical evidence According to frost Sullivan, in 2017, the global market of bevacizumab reached 7.6 billion US dollars, and the Chinese market reached 1.7 billion yuan It is expected to grow to 8.8 billion yuan in 2022, with a compound annual growth rate of 38.6% At present, the State Food and drug administration has only approved two indications of bevacizumab, i.e metastatic colorectal cancer (mCRC) and non squamous cell non-small cell lung cancer (nsnsclc) Compared with six indications approved by the US FDA and seven indications approved by the EU EMA, bevacizumab has great potential in China as a whole, and it is expected that there will be new indications other than nsnsclc and MCRC approved In addition, based on the fact that bevacizumab can improve the efficacy of PD-L1 inhibitors in multiple tumor types, Dongyao Pharmaceutical Co., Ltd and Suzhou Corning Jerry reached a cooperation in March this year to jointly develop innovative therapies for the combination of kn046 (PD-L1 / CTLA-4 bispecific target antibody) and tab008 (humanized VEGF antibody) In the R & D pipeline, Dong Yao pharmaceutical's ADC drug taa013 also deserves attention Taa013 is expected to be an alternative to kadcyla as an ADC drug containing trastuzul and sitamin, which can be used as a standard second-stage treatment for patients with metastatic HER2 positive breast cancer The drug is currently undergoing phase I clinical trials, and is expected to complete phase III clinical trials by the end of 2022 and be launched in 2023 Figure 1: in addition to the huge development potential of product pipeline, Dongyao pharmaceutical "can not only research and develop but also produce and operate" after more than nine years of "infrastructure construction" and "platform system construction" As early as the end of 2012, Dongyao pharmaceutical industry has established a professional anti-tumor drug production base with international competitiveness, including small molecule oral preparations, small molecule injections and 500L biological medicine pilot plant, etc.; in May 2018, Dongyao pharmaceutical industry has built another 13000 square meters, with 8 production lines of single antibody with the scale of 2000 L cell culture, becoming a large-scale industrialization base of the domestic biological pharmaceutical industry One of the places Not only meet their own needs, but also use the open platform to provide cdmo and CMO services, and cooperate with other pharmaceutical enterprises In 2016, after the introduction of the pilot implementation plan of drug listing license holder system in Jiangsu Province, Suzhou development Pharmaceutical Co., Ltd entrusted the research, development and production of its class 1.1 targeted new drug products to Dongyao Pharmaceutical Co., Ltd for approval by the original CFDA, becoming the first MAH pilot case in Jiangsu Province Figure 2: cooperation in all stages of the industrial value chain is worth mentioning that although no products have been approved for listing, Dongyao pharmaceutical has had a stable marketing team since 2011, covering more than 450 hospitals in more than 20 provinces, municipalities and autonomous regions According to the agreement signed with Dapeng of Japan, the anti-tumor drug tegio capsule (s-1) has been marketed in China According to the prospectus, in 2017 and 2018, the operating revenue of Dongyao pharmaceutical industry was 51.608 million yuan and 39.219 million yuan respectively, mainly from: Marketing Service Commission related to commercialized S-1; cdmo and CMO services provided to a number of pharmaceutical companies; tab014 license fees collected from external licensing 3 The next Hong Kong Super buy king? Since its establishment, Dongyao pharmaceutical has only financed two rounds, with a total amount of 840 million yuan Round B financing was completed in August 2018 Compared with other unprofitable pharmaceutical enterprises going to Hong Kong for listing, the number and amount of financing rounds are "light" a lot In fact, for innovative biological enterprises, it may not be a bad thing to have fewer rounds of financing The more rounds of financing, the higher the valuation of the company, if there is no corresponding performance support, it is easy to break the IPO On September 25, Fuhong Hanlin was listed on the Hong Kong stock exchange, with an issue price of HK $49.60 per share As of the issuance of HK $44.85 per share, it has a lot to do with "after three rounds of financing, nearly US $400 million, the valuation has risen from US $4 million to nearly US $3 billion, a full 750 times increase" in the past 10 years " The small amount of financing does not mean that the research and development of Dongyao pharmaceutical industry is weak and refuses to "burn money" It is reported that Dongyao pharmaceutical spent 106 million yuan and 189 million yuan in research and development in 2017 and 2018 respectively As of December 31, 2018, the loss of Dongyao Pharmaceutical Co., Ltd reached 269 million yuan, nearly doubling compared with the loss of 149 million yuan in 2017 According to the global prospectus, 80% of the net fundraising of Dongyao Pharmaceutical Co., Ltd is intended to support the R & D and commercial launch of a series of core drugs Specifically, about 30.0% of the funds will provide funds for the clinical trials, registration and filing preparation and potential commercial launch (including sales and marketing) of tab008 in progress and planned; about 50.0% of the funds will provide funds for the pre clinical and clinical trials, facility expansion, registration and filing preparation and potential commercial launch (including sales and marketing) of other drugs under research and planned Provide funds; about 15.0% of the funds will be used for non project specific capital expenditure, mainly including: quality control, production and quality assurance facilities for biological drugs; construction of new medical research centers and production facilities for several drugs under research in Suzhou production center; upgrading of enterprise resource planning system and GMP software, etc According to the price of this offering, the market value of Dongyao pharmaceutical will be about 3.5 billion Hong Kong dollars, about 470 million US dollars Judging from the valuation of 327 million US dollars at the time of round B financing, such a stable IPO may be easier to obtain recognition from the capital market "Dongyao pharmaceutical industry is expected to become another super buyer after AXA," said one industry insider It's the so-called "the best comes the best" More than nine years of research and development, as well as "infrastructure construction" and "platform system construction", now, under the spotlight, it is waiting for the high light moment 37