After being suspended from trading for several days, OPPEIN's major asset restructuring plan has recently been released: the company plans to purchase 100.00% equity of Pengli Biopharmaceutical Technology (Shanghai) Co., Ltd. (referred to as "Pengli Biotechnology") from 31 counterparties through issuing shares and paying cash, and raise matching funds. This transaction has a performance compensation commitment, but due to the incomplete audit and evaluation of the underlying assets, a clear performance compensation agreement has not yet been signed for the transaction. On February 10th, OPPEIN's stock resumed trading.

The reporter from Economic Reference Daily noticed that as the target company in this transaction, Pengli Biotechnology mainly engages in preclinical research CRO (Contract R&D Organization) services for biopharmaceutical research and development. It once rushed to IPO on the Science and Technology Innovation Board, but ultimately failed. On the other hand, OPPEIN's main business has been experiencing a continuous decline in performance in the past two years, with revenue and non recurring net profit decreasing by 17.41% and 60.89% respectively in 2023; In 2024, the net profit attributable to the parent company and the net profit after deducting non recurring expenses are expected to decrease by approximately 62.37% and 83.33% respectively.

The specific transaction price is yet to be determined

It is reported that the overall plan for this transaction consists of issuing shares, paying cash to purchase assets, and raising matching funds. The raising of matching funds is conditional on the issuance of shares and the payment of cash to purchase assets, but the success or failure of the final matching financing does not affect the implementation of the issuance of shares and the payment of cash to purchase assets.

Among them, Aopu Mai plans to purchase 100.00% equity of Pengli Biotechnology from 31 counterparties, including PharmaLegacy Hong Kong Limited and Jiaxing Huituo Enterprise Management Partnership (Limited Partnership), by issuing shares and paying cash. The final transaction price of the underlying asset will be based on the evaluation results of the evaluation report issued by an asset appraisal institution that complies with the provisions of the Securities Law, and will be determined through full consultation between the trading parties. After the completion of the audit and evaluation work related to the target assets, OPPEIN will sign a transaction agreement with the counterparty, confirm the final transaction price and transaction plan, and disclose them in the restructuring report.

Although the estimated value and transaction price of the underlying assets in this transaction have not yet been determined, according to the disclosure of OPPEIN, the issuance price for purchasing assets through the issuance of shares is 32.00 yuan per share, and no adjustment plan for the issuance price has been set. On the trading day before the suspension (i.e. January 16, 2025), the closing price of OPPEIN was 39.16 yuan per share, and the total market value of the company was 4.447 billion yuan.

At the same time, in this transaction, OPPEIN plans to issue shares to no more than 35 specific investors through inquiry to raise matching funds. The total amount of matching funds raised shall not exceed 100% of the transaction price for purchasing assets with the issued shares, and the number of issued shares shall not exceed 30% of the total share capital of the listed company before this issuance.

It is worth mentioning that according to the disclosure by Oppenheim, there is a performance compensation commitment for this transaction. However, given that the audit and evaluation of the underlying assets have not yet been completed, a clear performance compensation agreement has not been signed for this transaction. After the completion of relevant audits, evaluations, and other work, OPPEIN will negotiate with the relevant counterparties regarding performance commitments and compensation in accordance with the requirements of the "Restructuring Management Measures", and sign relevant agreements separately.

The target company once sprinted to the Sci Tech Innovation Board and failed

As the target company in this transaction, Pengli Biotechnology was established on March 7, 2008. It is a professional enterprise that provides CRO services for preclinical research in biopharmaceuticals. With a scientific research evaluation system, a complete core technology platform, and advanced technological innovation capabilities, it is committed to providing global innovative biopharmaceutical companies with pharmacological research evaluation, pharmacokinetic research evaluation, and safety evaluation services that comply with international standards for non-GLP (research activities that do not comply with GLP standards) and US GLP (Good Clinical Practice) standards.

Pengli Biotechnology is an IPO delisted company listed on the Science and Technology Innovation Board. According to the official website of the Shanghai Stock Exchange, Pengli Biotechnology's Science and Technology Innovation Board IPO was accepted on March 27, 2023, and entered the inquiry stage on April 18 of the same year. The company plans to raise 601 million yuan to invest in the Jinqiao Preclinical R&D Service Industry Base Project, Innovative R&D Platform Project, Zhangjiang Preclinical Service Industry Base Technology Transformation and Enhancement Project, and to supplement working capital. However, after only one round of inquiries, Pengli Biotechnology ultimately decided to withdraw the order, and the company's IPO terminated on February 5, 2024.

The Economic Reference Daily reporter noticed that compared with top CRO companies such as WuXi AppTec and Kanglong Huacheng, Pengli Biotechnology has a relatively small business scale. According to the prospectus of Pengli Biotechnology, from 2019 to 2021 and from January to September 2022, the company's revenue was 68 million yuan, 111 million yuan, 193 million yuan, and 180 million yuan, respectively. The net profit attributable to the parent company was 7.8614 million yuan, 14.5282 million yuan, 37.4031 million yuan, and 39.533 million yuan, respectively. According to OPPEIN's disclosure, Pengli Biotechnology's revenue for the years 2022, 2023, and January to November 2024 was RMB 256 million, RMB 311 million, and RMB 274 million, respectively; The net profits were 57.1709 million yuan, 56.8847 million yuan, and 35.3069 million yuan, respectively.

Not only that, Pengli Biology also has a high level of goodwill in its accounts. According to Pengli Biotechnology's prospectus, as of the end of September 2022, the book value of the company's goodwill was 42.3939 million yuan, mainly due to the acquisition of Shanghai Jihui Experimental Animal Breeding Co., Ltd. (referred to as "Shanghai Jihui") in September 2021. It is reported that Shanghai Jihui mainly engages in the breeding and sales of experimental animals such as mice and rats, and its breeding system strictly follows the genetic quality control standards for experimental mice and rats. In the first round of IPO inquiries, the Shanghai Stock Exchange requested Pengli Biotechnology to explain whether there is a risk of goodwill impairment.

In this acquisition of Pengli Biotechnology, OPPEIN stated that both the company and the target company's main businesses revolve around serving innovative biopharmaceutical enterprises. The company is a high-tech enterprise specializing in cell culture medium products and CDMO (customized research and development production organization) services for biopharmaceuticals. The target company is a professional enterprise that provides CRO services for preclinical research in biomedicine. The company and the target company are both at a critical stage in the upstream of biopharmaceuticals, serving innovative biopharmaceutical enterprises in research and development and/or production, which is an indispensable component of the innovation and development of the biopharmaceutical industry. After acquiring the target company, the company will form good synergies in business and customer collaboration, overseas strategic layout collaboration, and operational management system collaboration.

However, OPPEIN also warns that there is a risk of slowing down or shrinking downstream R&D expenditure growth for Pengli Biotechnology: the CRO industry in which the target company operates, as an industry providing R&D outsourcing services, is highly dependent on the R&D expenditure level of downstream pharmaceutical or medical device industries. Although the CRO industry has broad development prospects in the long run, on the one hand, from 2023 to 2024, the CRO industry will be affected by various factors such as the weakening of investment and financing heat, and the slower than expected growth rate of the pharmaceutical market. On the other hand, the R&D investment in the biopharmaceutical industry will be affected by multiple factors, such as adverse changes in future industry policies or regulatory systems, a decrease in capital market support for pharmaceutical innovation, further reduction in R&D success rate or return rate, or other unfavorable factors that may slow down or shrink the growth rate of downstream R&D expenditure, which may lead to a decrease in demand in the CRO industry and have an adverse impact on the operation and performance of target companies.

Last year, the non recurring net profit was expected to decrease by over 80%

In fact, the time it has been on the market for Oppenheim is not long. The company was listed on the Science and Technology Innovation Board on September 2, 2022, and is a technology-based enterprise specializing in cell culture products and services. Based on good cell culture technology, production processes, and development concepts, Opmer provides customers with comprehensive solutions by organically integrating cell culture products and services, accelerating the process of new drugs from gene (DNA) to clinical application (IND) and market application (BLA), and reducing the production cost of biopharmaceuticals by optimizing cell culture products and processes.

However, after going public, OPPEIN's performance has shifted from steady growth to a significant decline. Data shows that from 2019 to 2023, OPPEIN achieved operating revenues of 59 million yuan, 125 million yuan, 213 million yuan, 294 million yuan, and 243 million yuan respectively; The net profit after deducting non recurring expenses was RMB 0.13 billion, RMB 0.05 billion, RMB 50 million, RMB 89 million, and RMB 35 million, respectively. In the year following its listing (i.e. 2023, the same below), OPPEIN's revenue and non recurring net profit experienced declines of 17.41% and 60.89%, respectively.

At the same time as the performance has changed, OPPEIN's profitability is also declining. Data shows that from 2019 to 2023, the gross profit margins of OPPEIN were 49.82%, 45.99%, 59.88%, 63.97%, and 58.85%, respectively, and the net profit margins were -20.96%, 9.35%, 28.40%, 35.80%, and 21.91%, respectively. In the year following its listing, OPPEIN's gross profit margin and net profit margin decreased by 5.12 percentage points and 13.89 percentage points respectively year-on-year.

Entering 2024, the downward trend of OPPEIN will become more apparent. According to the performance forecast disclosed by OPPEIN, it is expected that the company will achieve a net profit attributable to the parent company of approximately 20.3322 million yuan in 2024, a year-on-year decrease of approximately 62.37%; It is expected to achieve a non recurring net profit of approximately 5.7891 million yuan in 2024, a year-on-year decrease of approximately 83.33%. OPPEIN stated that its performance decline is mainly affected by three factors. Firstly, one of the fundraising projects, "OPPEIN CDMO Biopharmaceutical Commercial Production Platform," has been officially put into operation, resulting in an increase in the company's fixed cost expenditures; Secondly, the company's high-tech enterprise qualification was cancelled in 2024, resulting in an increase of 6.8562 million yuan in income tax expenses; The third is significantly affected by the provision of asset impairment losses.

At a time when performance is under pressure, the stock price of Oppenheim is also relatively sluggish. Data shows that in 2023 and 2024, the overall stock price of OPPEIN will decrease by 46.54% and 33.88% respectively.

Against the backdrop of both performance and stock price, OPPEIN is actively seeking a way out. In October 2024, OPPEIN announced its participation in the establishment of an industrial investment fund, with an expected total fundraising amount of RMB 1 billion. OPPEIN and/or its wholly-owned subsidiary Shanghai OPPEIN Bioengineering Co., Ltd. plan to act as limited partners and contribute no more than 30% of the total fund size and no more than RMB 300 million with their own funds. It is reported that the fund mainly focuses on making direct or indirect equity or quasi equity investments or engaging in investment related activities in early to mid stage projects and mergers and acquisitions in the fields of biomanufacturing, pharmaceutical equipment and consumables, biomedicine, etc. within China.

At the same time, OPPEIN also stated in its investor relations activity record table disclosed in November 2024 that the company has been investing around the industry chain since its listing, and currently has stakes in companies such as DiMa Biotechnology and HaiXing Biotechnology. In October, the company announced the establishment of an industrial fund, which aims to ensure the stable development of its main business while investing and acquiring in the upstream and downstream of the biomanufacturing field around cell culture as the core.