On March 9th, Baili Tianheng released the "2025 Plan for Issuing A-shares to Specific Targets", which showed that the company plans to issue A-shares to specific targets and raise no more than 3.9 billion yuan (including the main amount). After deducting the issuance expenses, the actual raised funds will be used entirely for innovative drug research and development projects. Affected by this news, on March 10th, the stock price of Baili Tianheng rose slightly by 0.97%, closing at 213.05 yuan per share, with a total market value of 85.4 billion yuan.

There is nearly 5 billion yuan in cash lying on the account, but it still needs to raise funds through both A-share and Hong Kong stock platforms. This seemingly contradictory capital operation contains the survival rules and strategic ambitions of Chinese innovative pharmaceutical companies in global competition.

1. Five billion yuan in cash is difficult to fill the research and development black hole: relying on 3.9 billion yuan in private placements to extend life
From the fundraising situation, this 3.5 billion yuan will be used for the research and development of innovative drugs related to the innovative ADC (antibody conjugated drug) drug development platform (HIRE-ADC platform), innovative multispecific antibody development platform (GNC platform), and innovative ARC (nuclear drug) development platform (HIRE-ARC platform).

Specifically, it includes clinical trials of ADC pipelines BL-B01D1, BL-M07D1, BL-M11D1, BL-B16D1, BL-M17D1, BL-M09D1, GNC pipelines GNC-038, GNC-077, ARC pipelines BL-ARC001, BL-ARC002 and other products.

As of the announcement date of the contingency plan, Baileys Tianheng has 14 candidate drugs in the clinical stage, many of which are currently undergoing global clinical development. Of particular concern is that the company's BL-B01D1 is the world's first and only EGFR × HER3 dual antibody ADC to enter phase III clinical trials.

Previously, Baili Tianheng and BMS (Bristol Myers Squibb) reached a global strategic licensing and cooperation deal for BL-B01D1, with a total amount of $8.4 billion and a down payment of $800 million, making it the largest single asset transaction in the global ADC field to date.

It is worth mentioning that, thanks to receiving the down payment from BMS, Baileys Tianheng's performance has significantly increased in 2024. According to the recent performance report released by Baili Tianheng, the company achieved a total operating revenue of 5.823 billion yuan in 2024, a year-on-year increase of 936.31%; Realize a net profit attributable to the owners of the parent company of RMB 3.658 billion, an increase of RMB 4.438 billion compared to the same period last year; Achieved a non recurring net profit of 3.604 billion yuan, an increase of 4.416 billion yuan compared to the same period last year.

But behind the glamour lies cruel R&D investment - R&D expenses reached 932 million yuan in the first three quarters of 2024, accounting for 132.81% of revenue, and the R&D team size doubled to 738 people in three years. This "burning money" speed forces companies to continue their lives with a private placement of 3.9 billion yuan after IPOs on the Science and Technology Innovation Board and secondary listings on the Hong Kong stock market, like an endless capital relay race.

From generic drugs to attacking the king of ADC, the capital path of Baili Tianheng reflects the collective dilemma of Chinese innovative pharmaceutical companies.

02. Several A-share pharmaceutical companies open refinancing
Unlike companies such as Xinda Biotechnology and Rongchang Biotechnology that rely on overseas authorization (BD) for blood transfusion, Baili Tianheng chooses a "dual wheel drive" approach: on the one hand, it leverages BMS's $800 million down payment to achieve annual turnaround, and on the other hand, it supports the global development of 14 pipelines through diversified financing.

The cost of this strategy is obvious - even with 5 billion yuan in cash, it is still difficult to fill the R&D black hole. In 2024, except for the first quarter's profit due to BD revenue, the subsequent quarterly losses will continue to expand to 439 million yuan.

This reminds people of Hengrui Pharmaceutical, which once fell into a growth bottleneck due to excessive reliance on a single market, while Baileys Tianheng attempted to solve the dilemma with "global multi center clinical trials+dual capital market financing". Its Hong Kong stock prospectus revealed a milestone payment target of $500 million, which deeply tied the research and development progress with the capital chain.

In 2024, the progress of "burning money" in innovative drug pipelines has led some innovative pharmaceutical companies to turn their attention to Hong Kong stocks. In addition to Baili Tianheng, there are also companies such as Hengrui Pharmaceutical and Maiwei Biotechnology attempting to create an "A+H" dual listing platform.

On March 10th, the same day that Baili Tianheng released its private placement plan, Dizhe Pharmaceutical disclosed its prospectus (registration draft). The total amount of funds raised from the issuance of stocks to specific targets this time shall not exceed 1.848 billion yuan (including the principal amount). After deducting relevant issuance expenses, 1.042 billion yuan will be used for new drug research and development projects, 607 million yuan for international standard innovative drug industrialization projects, and another 200 million yuan will be used to supplement working capital.

The company stated that facing competition from major global pharmaceutical and biotechnology companies, it is necessary to accelerate the clinical trial progress of existing drugs under development, strengthen the drug research and development capabilities of core pipelines, and further enhance the company's core competitiveness.

At the end of February, Hisilicon released its plan for issuing A-shares to specific targets in 2025, with a planned issuance of no more than 70 million shares and a total fundraising of no more than 1.365 billion yuan. After deducting issuance expenses, the net amount is planned to be 965 million yuan for investing in new drug research and development projects and 400 million yuan for supplementing working capital. Haisco plans to use the raised funds for research and development of innovative drugs.

03. Awakening of Chinese Innovative Pharmaceutical Companies
On the ADC track, Baili Tianheng has formed a subtle competition with Patritumab Deruxtecan from First Sankong/Merck.

The former attempts to overtake the curve with a dual target design, while the latter has been given priority review by the FDA. Behind this "China US R&D race" is a competition of clinical efficiency - the average clinical start time of Chinese pharmaceutical companies is 3-6 months faster than that of the United States, but the complexity and regulatory differences of international multicenter trials still pose challenges.

The policy environment is also reshaping the competitive landscape: the 2025 government work report proposes for the first time the "Innovative Drug Catalog", the dynamic adjustment mechanism of medical insurance opens up payment channels for high-value drugs, and the experience of accelerating the approval of the 21st Century Cures Act in the United States is being partially absorbed by China's drug review reform.

Baili Tianheng's decision to raise funds at this time precisely captures the dual benefits of the "policy window period+technological breakthrough period".

When Baileys Tianheng plans to submit its first indication application to the China National Medical Products Administration in 2026, the capital market has already voted for it with a market value of 93.4 billion yuan in advance. But this valuation frenzy hides hidden concerns: the milestone payment of $7.1 billion in BD transactions is like a "hanging sword", requiring specific clinical trials to be launched before the end of 2025 to unlock $500 million.

The curse of the "Double Ten Law" for innovative drugs has not been broken, and even BMS has terminated cooperative projects due to clinical failures. The breakthrough path of Baili Tianheng may be witnessing the collective awakening of Chinese innovative pharmaceutical companies: from followers of "license in" to rule makers of "license out", the resonance of capital, technology, and policies, a global narrative belonging to Chinese pharmaceutical companies may be about to unfold.

The ultimate outcome of this bold gamble is still unknown, but what is certain is that in the field of innovative drugs, Baili Tianheng is not fighting alone.

In recent years, a number of excellent innovative pharmaceutical companies have emerged in China, such as Kangfang Biotechnology and Kelun Botai. These enterprises have their own characteristics in terms of financing scale, research and development pipelines, and international layout.

In 2019, Kangfang Biotechnology completed a Series D financing of nearly $150 million, led by Zhengxin Valley Innovation Capital and China Biopharmaceutical, with other well-known institutions such as Qingchi Capital and Jianxin Capital also participating. In addition, Kangfang Biotechnology announced a rights issue and refinancing of HKD 1.2 billion in March 2024 to support its research and commercialization process.
As a leading enterprise in the field of ADC drugs in China, Kolombotai has a leading financing scale in the same industry. In 2022, Kolombotai secured $200 million in Series B financing, tied with another pharmaceutical company for the top spot. In 2024, after the merger of Kelun Botai and Kelun Pharmaceutical, its capital strength was further enhanced, providing a solid guarantee for the commercialization process of its ADC drugs.

From the perspective of financing scale, the 3.9 billion yuan private placement of Baileys Tianheng has more diversified purposes. For example, in recent years, Kangfang Biotechnology's financing has mainly been used for the development and commercialization of PD-1 monoclonal antibody drugs, while Kelombotai has focused on the research and development of ADC drugs. In contrast, Baili Tianheng's financing uses cover three major fields: ADC, multispecific antibodies, and nuclear drugs, reflecting its comprehensive technological layout.

In terms of R&D pipelines, Baili Tianheng's differentiation advantage is particularly evident. For example, Kangfang Biotechnology's flagship product is PD-1 monoclonal antibody drugs, while Baili Tianheng focuses on the research and development of ADC and multispecific antibody drugs. This differentiated layout not only avoids homogeneous competition, but also provides a guarantee for the company's leading position in segmented fields.

Source: https://pharm.jgvogel.cn/c1494791.shtml