​ recentlyFreeroulettespinsHuatai Biotechnology (Qingdao) Co., Ltd. (hereinafter referred to as "Huacheng Biology") submitted a prospectus on the Hong Kong Stock Exchange for listing on the main board of Hong Kong. Huatai International and CITIC Securities are the company's co-sponsors.

Gronghui learned that Huacheng Biology, founded in 2012, is an innovative biopharmaceutical company headquartered in China, focusing on protein drugs with unmet medical needs and market opportunities. Committed to the development of breakthrough therapy.

In terms of ownership structure, as of the last practicable date, Jia Li's shareholding ratio was 19.Freeroulettespins.54%, Wang Kelong's shareholding ratio is 17.98%, Zhang Hongbo's shareholding proportion is 17.47%, and Li Gewei's shareholding proportion is 12%.

According to the prospectus, Ms. Jia Lijia, 55, is the chairman and executive director of the board of directors of Huamai Bio; Wang Menglong, 33, is the president, executive director and vice chairman of the board of directors. Among them, Wang Minglong is the son of Jia Lijia.

According to the prospectus, this fund-raising will be used for the continuous clinical development of the company's core products Pro101-1 and Pro-101-2; the payment of third-party services, personnel and raw materials for the preclinical research and development of the non-core product PDGF to treat new diseases; and the purchase of professional equipment and instruments to enhance R & D capabilities and to be used as working capital and other corporate affairs.

Two consecutive years of losses

According to the prospectus, Huacheng Biology focuses on the discovery, development and commercialization of multi-functional treatments for wound healing, and currently focuses on the development of PDGF drugs.

Huacheng biological core products such as Pro-101-1 and Pro-101-2 are recombinant human platelet-derived growth factor-BB (rhPDGF-BB) drugs, which can be used in a wide range of wound healing indications, covering a variety of acute and chronic wounds as well as mild and difficult to heal wounds, including burns, sugar feet, fresh wounds, pressure sores, corneal injuries and gastric ulcers.

According to Frost Sullivan's report, Pro-101-1 is the fastest-growing PDGF candidate for the treatment of burns in China, and is expected to be the first commercial PDGF product for this indication in China.

Huazheng Bio said in its prospectus that as of the last practical date, the company had not officially sold the products to be launched, so it had not been able to make any profit from these products.

In terms of performance, according to the company's prospectus, the revenue in 2022 and 2023 is about 0 yuan and 472000 yuan respectively, while the net loss in the same period is about 85.93 million yuan and 105 million yuan respectively. All of the company's revenue comes from providing research services for wound healing medical device projects for a single customer, including pharmaceutical preparation research and related technical advice.

At the same time, the company's performance is greatly affected by the cost structure, and the cost is mainly composed of R & D expenses and administrative expenses. In terms of R & D expenditure, it was about 34.82 million yuan in 2022 and 39.92 million yuan in 2023, accounting for 44.1% and 48.7% of the annual expenditure, respectively. As for the increase in R & D costs, the company stated that it was mainly due to increased service fees and raw material costs related to the continuous clinical development of Pro-101-1 for the treatment of burns and CDMO and CRO services for preclinical studies of PDGF candidates for other indications.

As for the future performance trend of the company, Huacheng Biology predicts that the company will have a lot of expenses and operating losses in the next few years. This is because the company plans to promote research and development, strive to obtain product regulatory approvals, promote the commercialization of candidate products, and increase operational personnel, and the company's financial performance fluctuates due to the impact of product development progress, approval progress and commercialization.

In terms of gross profit margin, the gross profit margin of Huadu in 2022 and 2023 is 0 and 46%, respectively.

Commercialization of products to be tested

The track that Huacheng Biology is in is a biological preparation track.

According to the Frost Sullivan research report, China's biological preparation market has increased sharply from 34 billion yuan in 2017 to 90 billion yuan in 2022, with a compound annual growth rate of 21.5%. It is expected to further increase to 142 billion yuan and 232 billion yuan in 2026 and 2032 respectively, with a compound annual growth rate of 10.6% from 2022 to 2026 and 8.1% from 2026 to 2032.

Investors should pay attention to the various risk factors faced by the company while paying attention to the broad industry space that Huacheng Biology is in. Huacheng's market performance and ability to turn losses into profits in the field of biological agents will be directly affected by the success of its new drug development and other factors.

Huacheng biological prospectus shows that ten of its candidate products are at different stages of research and development, and profitability mainly depends on the success of new drug development. If the development of new drugs is difficult, the market sales are poor, the research and development takes too long or the cost is too high, it may affect the company's business and competitive position. At present, the company has invested heavily in new drug research and development, and will continue to increase investment.

From research to development, and then to drug sales, every link is subject to strict management and regulations. Getting approval for drugs on the market is time-consuming and costly, and the results are difficult to predict. Once the company fails to comply with current or future regulations and industry standards, or the drug regulatory agency makes adverse decisions on the company, these may damage the company's reputation and adversely affect the future development of the company.

Notably, Huamao also said in its prospectus that the company conducted clinical trials of candidate products mainly in China, and that the data might not be acceptable to the US Food and Drug Administration (FDA) or similar foreign regulators. In order to speed up the review, it may apply to domestic and foreign regulatory authorities for approval for the use of test data. If it is not approved, it will adversely affect the business and finance of the company.