Recently, Dannuo Pharmaceutical (Suzhou) Co., Ltd. (hereinafter referred to as Dannuo Pharmaceutical) submitted a prospectus to the Hong Kong Stock Exchange, intending to list on the main board, which immediately attracted high attention from the capital market.

Dano Pharmaceuticals' new Helicobacter pylori drug, Leflunomide (TNP-2198), is experiencing a thrilling leap before commercialization - this world's first differentiated antibiotic, which has advanced to the Phase III clinical endpoint, is regarded as the "hope of the whole village" by the company, but also carries the triple test of solving the drug resistance dilemma, overcoming medical insurance barriers, and increasing sales volume.

As a potential solution for 44% of the infected population in China, the clinical value of levofloxacin and the 775 million yuan commercial betting agreement ignite capital imagination; But Dano Pharmaceuticals' 530% debt ratio and cash flow crisis have made the market closely monitor every move in its August NDA submission and subsequent medical insurance negotiations.

Can the alliance with Yuanda Group quickly open up sales opportunities? Will the goal of entering the pharmaceutical catalog consume the profit margin of this innovative drug? The "zero competitor" new drug, Leflunomide, is standing at the crossroads of scientific ideals and commercial reality, and its success or failure may define the future of a biotech company.

Three innovative drugs with zero competitors are poised for development

Danuo Pharmaceutical was founded in 2013, focusing on the discovery, development, and commercialization of innovative drug products, with a focus on bacterial infections and metabolic related diseases. The company is registered in Suzhou and its founder, Ma Zhenkun, is 63 years old. He has over 30 years of experience in the development of new drugs in the field of infectious diseases.

At present, Dano Pharmaceuticals has established a differentiated pipeline consisting of 7 innovative assets, including 1 near commercialization stage, 2 in late clinical development stage, 1 in IND approval stage, and 3 in preclinical stage innovative drugs.

According to the prospectus, Dannuo Pharmaceuticals has three innovative drugs that are exclusively developed, and there are no competitors in either other companies' research pipelines or existing drugs in the market.

Three innovative drugs are targeted at gastric diseases, implanted bacterial bacteria, and gut microbiota metabolism.

Linfotnazole (TNP-2198) - a new molecular entity candidate drug that is close to commercialization for the treatment of Helicobacter pylori infection.

Levoquinone (TNP-2092) injection - the world's first potential antimicrobial candidate for implant associated bacterial infections. This innovative drug is specifically designed to treat infections caused by implants such as artificial joints/heart valves. The characteristic of this drug is the world's first "triple targeted antibiotic", which simultaneously kills bacteria from three pathways and reduces drug resistance. Its advantage is that it may avoid patients undergoing secondary surgery and can directly control infections with medication.

TNP-2092 oral formulation - a multi-target candidate drug for the treatment of intestinal microbiota metabolism related diseases, which is the world's first. This innovative drug aims at metabolic diseases caused by intestinal flora disorder, such as cirrhosis related encephalopathy, obesity diabetes, etc. Its breakthrough point is the only oral intestinal flora regulating drug that simultaneously acts on multiple key targets.

Among the three core innovative drugs, the innovative drug levofloxacin targeting Helicobacter pylori is receiving widespread attention from the market and capital as it is about to be commercialized. The company stated that the innovative drug has completed phase III clinical trials in February 2025 and plans to submit a new drug application (NDA) by the end of August 2025.

Helicobacter pylori (Hp) has a huge "user base" worldwide - about 4 billion people are infected, equivalent to 50% of the global population. In China, its "market share" is as high as 44%, closely related to various stomach diseases, including gastric ulcers, chronic progressive gastritis, and gastric cancer. As a WHO certified 'level one carcinogen', Hp infection is directly linked to 80% of gastric cancer cases. In China, it causes 340000 new cases of gastric cancer annually, involving 42% of Hp related gastric cancer cases worldwide.

The commonly used antibiotics for treating Helicobacter pylori infection, including clarithromycin, metronidazole, levofloxacin, and amoxicillin, are not specific to Helicobacter pylori and are widely used to treat other infections such as pharyngitis, pneumonia, and urinary tract infections. The widespread use of these antibiotics has led to the rapid development of drug resistance.

Leflunomide has the potential to address this type of resistance. Dano Pharmaceuticals claims that this drug is the world's first new molecular entity candidate drug for the treatment of Helicobacter pylori infection, which has the potential to overcome the common problem of cross resistance in existing antibiotics (i.e. when two drugs have the same mechanism of action, once bacteria develop resistance to one drug, they will develop resistance to both drugs).

Received milestone payment of 25 million yuan

The investment manager of a Shanghai pharmaceutical company told Interface News that many unprofitable innovative drug research and development companies have begun to authorize their pipelines to large multinational pharmaceutical companies (MNCs) to generate revenue through a combination of "high down payments, milestone payments, and sales revenue sharing".

The soon to be commercialized levofloxacin has become the 'hope of the whole village'.

Dano Pharmaceuticals stated that if approved, levofloxacin will become the world's first approved new molecular entity drug for sale against Helicobacter pylori. At the same time, due to the fast track and QIDP certification granted by the US FDA, approval from the China National Medical Products Administration will accelerate the market approval process in the US and global markets.

Currently, Dano Pharmaceuticals has signed an exclusive commercial cooperation agreement with Yuanda Life Sciences Group Co., Ltd. (hereinafter referred to as Yuanda Life) for the commercialization of Leflunomide in Greater China (excluding Taiwan) for this drug.

How much real money will this innovative drug bring to the company?

On November 28, 2024, according to the cooperation agreement, Yuanda Life will make down payments, commercial milestone payments, and sales milestone payments (with sales gradient milestone payments set according to different sales revenues) to Danno Pharmaceutical, with a total payment amount not exceeding 775 million yuan. However, Dano Pharmaceutical needs to pay a marketing service fee to Hangzhou Yuanda.

According to the prospectus, in November 2024, Yuanda Life has paid an exclusive upfront fee of 25 million yuan to Danuo Pharmaceutical.

Interface News found that there will be two milestone payments in the future: the second one meets the condition that the first indication of levofloxacin is approved for marketing in China; The last payment will be made when the drug is included in the national medical insurance drug catalog.

In addition, Dano Pharmaceuticals will also receive sales revenue sharing, with sales milestone payments made in six installments triggered by the cumulative annual net sales threshold.

To what extent can Yuanda Life Sciences sell this drug?

Yuanda Life Sciences is affiliated with China Yuanda Group. The pharmaceutical and health sector of China Yuanda Group consists of East China Pharmaceutical Group, Yuanda Pharmaceutical Group, Yuanda Life Science Group, and Lei Yunshang Pharmaceutical Group. The layout of Yuanda Group in the health field involves almost all categories such as innovative drugs, traditional Chinese medicine, chemical drugs, biological drugs, medical devices, and medical beauty, while sales are developed simultaneously in both domestic and international markets.

The actual controller behind China Yuanda Group is pharmaceutical M&A tycoon Hu Kaijun, who holds two pharmaceutical listed companies, Huadong Pharmaceutical (000963. SZ) and Yuanda Pharmaceutical (00512. HK).

Huadong Pharmaceutical's main business covers four major sectors: pharmaceutical industry, pharmaceutical commerce, medical aesthetics, and industrial microbiology. In 2024, the company achieved a total operating revenue of 41.9 billion yuan, a year-on-year increase of 3%; Achieve a net profit attributable to the parent company of 3.5 billion yuan, a year-on-year increase of 24%.

Yuanda Pharmaceutical focuses on innovative drugs and high-end medical devices, achieving a revenue of HKD 11.64 billion in 2024; The net profit attributable to the parent company is approximately HKD 2.47 billion.

Cash flow crisis, commercial prospects of core products to be observed

The biggest problem for Dannuo Pharmaceuticals is financial pressure, as the drugs have not yet been commercialized, with high R&D investment and serious losses. Cooperating with Yuanda is also to quickly expand sales and feed back profits once the drugs are approved. At the same time, through authorization, funds can be quickly recovered and the scale can be expanded as soon as possible after listing, "the pharmaceutical investment manager told Interface News.

According to Interface News statistics, from 2023 to the first quarter of 2025, Danuo Pharmaceutical incurred a total loss of 342 million yuan over a period of more than two years.

According to the prospectus, Danno Pharmaceutical's net losses for the first quarter of 2023, 2024, and 2025 were 192 million yuan, 146 million yuan, and 38.011 million yuan, respectively. During the same period, Dano Pharmaceutical's research and development expenses were 108 million yuan, 69.838 million yuan, and 13.205 million yuan respectively, totaling 191 million yuan.

Dano Pharmaceutical stated that the vast majority of the company's net losses come from research and development expenses, administrative expenses, and financial costs. The company expects to continue generating net losses in 2025, mainly due to the company's continued promotion of research and development activities.

In addition to levofloxacin, the other two core drugs require further funding investment.

As of the end of July 2025, levofloxacin injection has obtained approval for new drug clinical trial applications (IND) from the National Medical Products Administration and the US FDA, and has completed Phase I clinical trials and one Phase II clinical trial in China and the United States. TNP-2092 oral formulation has completed four phase I and II clinical trials in China.

During the reporting period, Dano Pharmaceutical's net debt continued to rise. Financial data shows that at the end of 2023, 2024, and the first quarter of 2025, the company's net liabilities were 759 million yuan, 898 million yuan, and 932 million yuan, respectively. As of the end of March 2025, Dano Pharmaceutical's asset liability ratio reached 530%, with funds on hand of 146 million yuan, trading financial assets of 35 million yuan, and other current liabilities of 1.077 billion yuan. The company's net assets are negative, at -932 billion yuan.

The funding for research and development has visibly decreased.

According to the prospectus, in 2023, 2024, and the first quarter of 2025, the R&D expenses attributable to Danno Pharmaceutical's core products were RMB 98 million, RMB 57 million, and RMB 9 million, respectively, accounting for 90.7%, 82.0%, and 65.3% of the company's total R&D expenses; 76.9%, 69.0%, and 48.3% of the total operating expenses (R&D expenses and administrative expenses).

The prospectus points out that the future pipeline promotion still relies on continuous external capital injections. In this sprint IPO, Dano Pharmaceuticals will mainly use the funds raised for core product research and development, factory construction, etc. Specifically, approximately 75.5% of the raised funds will be used for research, development, registration, and commercialization of core products; Approximately 7.3% of the raised funds will be used for the research and development of other candidate products; About 7.2% of the raised funds will be used to build our own factory; 10% of the raised funds will be used for working capital and other general company purposes.

The launch and commercialization of Dano Pharmaceuticals' new Helicobacter pylori drug is at a crossroads of "high probability of success" and "multiple risks coexisting", and its subsequent progress is affecting the market nerves.

The investment director of the aforementioned pharmaceutical company told Interface News that based on the research and development progress, the drug has completed phase three clinical trials. Industry data shows that the overall success rate from Phase III clinical trials to market approval is about 70% -80%, so the market generally believes that the likelihood of approval is high. However, there is still uncertainty in the drug registration process - the drug regulatory authority may require additional materials or even delay or reject applications due to issues such as data integrity and indications, which constitutes the first potential risk.

At the same time, holding hands with Yuanda to bet on commercialization, sales ability becomes a key variable.

Due to the lack of its own commercialization team, Danuo Pharmaceutical has chosen to cooperate with Yuanda Group to promote market implementation. As a traditional Chinese pharmaceutical business enterprise, Yuanda Group has rich experience in the commercialization of drugs that are awaiting approval or have already been approved, which provides a foundation for the rapid market launch of drugs. However, if Yuanda's channel penetration does not meet expectations, or if the acceptance of new drugs by end doctors and patients is low, it may lead to lower than expected commercialization effects, which is the second core risk, "the investment manager of the aforementioned pharmaceutical company told Jiemian News.

According to the agreement, both parties agreed on a "milestone payment" - the first payment has been completed, the second payment is linked to drug approval, and the third payment is conditional on entering the national medical insurance catalog. Entering the medical insurance catalog is a key milestone in the commercialization of this drug, which not only relates to the third milestone payment, but also directly affects market penetration rate. The investment manager of the aforementioned pharmaceutical company said that although entering medical insurance requires accepting price reductions (which may compress individual product profits), the potential for sales expansion is still valued by the company. However, medical insurance negotiations have strict requirements for the clinical value and price reduction of drugs. If drug cost control is poor or clinical advantages are not prominent, opportunities for medical insurance admission may be missed.

Getting a medical insurance admission certificate is not an easy task.

A medical doctor from a hospital in Tianjin told Jiemian News that "after a new drug is launched, whether it can enter the national medical insurance catalog directly affects the market penetration rate. However, from the perspective of industry rules, newly developed drugs often need to go through a long cycle to enter medical insurance, generally within 3-5 years, and some varieties even exceed 10 years.

The medical doctor explained that the reason for this is that the medical insurance bureau needs to fully verify the long-term efficacy and safety of drugs: on the one hand, the clinical data of new drugs in the early stage of market launch are mostly based on small-scale trials, which require 1-2 years or even longer real-world data to prove their effectiveness for the majority of the population; on the other hand, if there are similar substitute drugs, the new drugs need to prove their clinical value is superior to existing varieties, otherwise they may become 'alternative drugs' and further delay the admission process. The new drugs developed by this company as new antibiotics have the core selling point of reducing resistance risks, theoretically filling the gaps of existing therapies. However, the market still remains cautious about their differentiated advantages. Antibiotic resistance is often associated with abuse, so new drugs need to further validate the stability of 'low resistance' and the universal efficacy for most patients in large-scale clinical applications