Maiwei Biology (688062. SH) seems to have taken every step very accurately.

This company, founded in May 2017, was listed on the Science and Technology Innovation Board on January 18, 2022. This success was not only due to the registration system reform at that time, but also closely related to the country's encouragement policies for emerging industries such as science and technology innovation and biomedicine. In this context, Maiwei Biotechnology, like many other innovative pharmaceutical companies of the same period, has achieved its listing plan even without commercial products and revenue.

In 2024, with the further implementation of the "National Nine Measures" policy, the A-share IPO market has ushered in a stricter review environment, leading to an overall market downturn. At the same time, due to the further relaxation of overseas listing policies for mainland enterprises and the listing conditions for Hong Kong stocks, it has stimulated the willingness of mainland enterprises to go public in Hong Kong. Especially the A+H dual listing model has become the preferred choice for many companies, such as Midea Group and SF Holding, which successfully completed this plan in 2024. At the beginning of 2025, Maiwei Biotechnology, which has been listed on the Science and Technology Innovation Board for three years, also submitted a prospectus to the Hong Kong Stock Exchange, intending to catch up with this small-scale A+H listing trend.

The reasons behind it are similar to those of the initial IPO, mainly to raise funds for clinical development testing and drug research, as well as for research and commercialization of other pipelines.

However, since its listing on the Science and Technology Innovation Board in 2022, Maiwei Biotechnology has not yet achieved profitability.

Closely related to Junshi Biology, the first product MAH transfer has not been completed yet

Maiwei Biotechnology is a pharmaceutical company mainly focused on independently developing drugs for tumors and age-related diseases, such as immunology, ophthalmology, and orthopedics, and is in the commercial stage.

As of the submission deadline, Maiwei Biotechnology has already received approval for three products to be launched on the market. One of them is Junmai Kangwei recombinant human anti TNF - α monoclonal antibody injection, which belongs to Class 2 therapeutic biological products and is a biosimilar drug of the drug Xiumeile (generic name: Adalimumab). This product applied for new drug listing in November 2019 and was approved in March 2022 for the treatment of rheumatoid arthritis, ankylosing spondylitis, psoriasis, etc. In November 2022, supplementary applications for indications such as Crohn's disease, uveitis, and multi joint juvenile idiopathic arthritis were approved.

The marketing authorization applications for the other two drugs, Maiweijian and Mailishu, were both accepted in December 2021. Malishu received market approval in March 2023 for the treatment of osteoporosis in postmenopausal women at high risk of fractures; Maiweijian originally intended to apply for the indication of preventing bone related events in patients with solid tumor bone metastasis, but the approved indication for marketing in March 2024 is the treatment of non resectable or surgically resectable talus cell tumors that may cause severe functional impairment. The company is planning to submit a supplementary application to the National Medical Products Administration for the originally expected indications.

The aforementioned three drugs have all been included in the national medical insurance drug catalog. In 2023 and from January to October 2024, Malishu obtained sales revenue of approximately 42.1 million yuan and 85 million yuan respectively; Maiweijian achieved a sales revenue of approximately 10.2 million yuan from January to October 2024. The prospectus did not separately disclose the sales revenue of Junmaikang.

It should be pointed out that the first approved product of Maiwei Biotechnology, Junmaikang, is a drug developed in cooperation between the company and Junshi Biotechnology.

On August 28, 2017, Taikang Biopharmaceuticals, a wholly-owned subsidiary of Maiwei Biotechnology, entered into a cooperative development agreement with Junshi Biotechnology (1877.HK, 688180. SH) and its affiliates regarding the recombinant human targeted TNF - α monoclonal antibody injection (hereinafter referred to as the Junmai Kang Cooperation Agreement).

The background of the cooperation is the development of recombinant human targeted TNF - α monoclonal antibody injection (Junmaikang) by Junshi Biotechnology and its affiliates, which further improves the production process and submits patent applications. Junmaikang was approved for clinical trials in May 2016 and entered phase I clinical research in November 2016. On the basis of the existing research and development achievements of Junshi Biotechnology, Maiwei Biotechnology shares all the rights and interests of Junmai Kang and cooperates in the development of Junmai Kang, so that it can ultimately be marketed and sold. Both parties become the Marketing Authorization Holders (MAHs) of drugs.

Maiwei Biotechnology holds the leading decision-making power for subsequent clinical trials, while Junshi Biotechnology is responsible for cooperating with the company to complete the trials. According to the Junshi Kang cooperation agreement, Junshi Biotechnology's affiliates should prepare Junshi Kang samples for clinical trials and be responsible for producing Junshi Kang for marketing until the construction and acceptance of the company's GMP workshop are completed.

According to the Junmai Kang cooperation agreement, after obtaining MAH, Maiwei Biotechnology will be responsible for coordinating Junmai Kang's sales. Due to the development of the Chinese Drug Administration Law and related laws and regulations after August 2017, MAH can only be held by one party, and Junshi Biotechnology has been designated as MAH. In 2020, the company signed a supplementary agreement with Junshi Biotechnology and its affiliates to jointly establish a joint venture company as Junmaikang MAH, and the profits of the joint venture company will be distributed by both parties in a certain proportion.

According to the prospectus, the two parties do have a joint venture company, Shanghai Junshi Kang, with Junshi Biotechnology holding 49% and Maiwei Biotechnology holding 51%. However, due to the regulatory requirements of the National Medical Products Administration to strengthen MAH management, in April 2024, the company entered into a supplementary cooperation agreement with Junshi Biotechnology and its affiliates. Both parties have agreed that Junshi Biotechnology will transfer MAH to Maiwei Biotechnology.

As of December 30, 2024, the transfer of MAH is still ongoing and not yet completed.

The relationship between the two parties goes beyond that. In November 2023, Maiwei Biosciences announced the appointment of Wu Hai as its R&D President, responsible for Maiwei Biosciences' research and development as well as global business expansion. Wu Hai was one of the founders of Junshi Biosciences and TopAlliance Biosciences Inc., and has extensive experience in biopharmaceutical research and development. Wu Hai has worked at Tris Biotech and Anjin Biopharmaceutical, engaged in the development of innovative biopharmaceuticals.

In 2015, Wu Hai joined Junshi Biotechnology as Vice General Manager. From December 2016 to October 2020, he served as an Executive Director of Junshi Biotechnology. From October 2020 to August 2023, he served as a Non Executive Director of Junshi Biotechnology before resigning. Wu Hai was once one of the core technical personnel at Junshi Biotechnology, responsible for the early development of over ten antibody drugs.

Over 800 million R&D costs in 1 year, but still not profitable

In 2023 and the period from January to October 2024, Maiwei Biotechnology's revenue was 128 million yuan and 160 million yuan respectively, with a change in revenue structure. In 2023, the company's main source of revenue was external authorization revenue, accounting for 67.0% of the total revenue. From January to October 2024, sales of drugs became the main source of revenue, accounting for 68.3%.

The sudden increase in sales costs of the company from January to October 2024 is mainly due to the increase in drug sales, which resulted in a sharp increase of 2820.38% in direct material costs compared to the same period last year, and a significant increase of 2533.67% in production costs compared to the same period last year.

Although some of Maiwei Biotechnology's drugs have been commercialized and generate revenue, there are still 10 pipelines in the clinical stage or have not yet obtained commercial sales approval. The development of a candidate drug requires long-term investment of significant financial resources to promote and expand the clinical and preclinical candidate drug pipeline. In 2023 and January October 2024, the research and development costs of Maiwei Biotechnology were 836 million yuan and 606 million yuan, respectively.

Image source: Prospectus

The core product 9MW2821 of Maiwei Biotechnology is currently highlighted in the prospectus, which is an antibody conjugated drug (ADC) targeting Nectin-4. Its multiple indications are currently in clinical trials. As of December 30, 2024, Padcev is the only drug targeting Nectin-4 ADC approved by the United States and China, which is used to treat urothelial cancer or bladder cancer in both jurisdictions. According to Frost Sullivan's data, Padcev ranks fourth among all ADC drugs worldwide in terms of annual sales in 2023.

As of December 30, 2024, there are eight targeted Nectin-4 ADC candidate drugs (including 9MW2821) under clinical development worldwide for the treatment of solid tumors.

The marketing application for 9MW2821 as a monotherapy for second-line or second-line therapy for locally advanced or metastatic urothelial carcinoma, as well as the marketing application for the first-line treatment of locally advanced or metastatic urothelial carcinoma with combination therapy of trastuzumab; As a second-line or third line therapy for the treatment of recurrent or metastatic cervical cancer, the marketing application is expected to submit an NDA (New Drug Application) in 2027, and the expected time for marketing may be in 2027.

In 2023 and from January to October 2024, the R&D cost of 9MW2821 for the company will reach 143 million yuan and 179 million yuan respectively. Maiwei Biotechnology stated, "We believe that innovation in antibody conjugation technology is our core advantage in the ADC field

It is worth noting that the coupling technology in the core product 9MW2821 of Maiwei Biology was introduced. On March 24, 2020, the company entered into a technology development agreement with the Chinese Academy of Sciences Shanghai Institute of Materia Medica (hereinafter referred to as the Shanghai Institute of Materia Medica) to introduce the new generation of bridge fixed point coupling technology developed by the Institute of Materia Medica and apply it to the development of targeted Nectin-4 ADC drugs.

According to the agreement, Maiwei Biotechnology has paid a global patent technology transfer fee of 4 million yuan for the coupling technology and approximately 22.5 million yuan for the 9MW2821 project milestone, totaling 26.5 million yuan.

Maiwei Biotechnology is responsible for conducting clinical research on 9MW2821 and providing financial support. Shanghai Institute of Materia Medica promises to cooperate during preclinical, clinical research, and NDA registration stages. In addition, the cooperation agreement allows the company to develop ADC drugs using coupling technology, including independent or collaborative development, but requires payment of patent usage fees to Shanghai Pharmaceutical Institute (6 million yuan for each non jointly developed and non 9MW2821 ADC drug, and Shanghai Pharmaceutical owns the development of two different target ADC drugs free of charge).

Maiwei Biotechnology stated, "The technology has been optimized for 9MW2821, and Maiwei Biotechnology has independently developed all other patents related to 9MW2821, including innovative antibodies, ADCs, and drug loaded linkers

At present, Maiwei Biotechnology has not yet achieved profitability, with losses of -1.059 billion yuan and -864 billion yuan in 2023 and January October 2024, respectively.

With high debt levels, can external funds continue to support it?

As of the end of October 2024, the total assets and liabilities of Maiwei Biotechnology reached 4.367 billion yuan and 2.629 billion yuan respectively, with an asset liability ratio exceeding 60%. Among them, the current liabilities are 1.48 billion yuan, including 1.053 billion yuan of short-term borrowings; Non current liabilities amounted to 1.149 billion yuan, including 986 million yuan of long-term borrowings.

From the cash flow statement, from January to October 2024, Maiwei Biotechnology generated a net cash flow of -805 million yuan from operating activities and 856 million yuan from financing activities, including an additional 2.284 billion yuan in bank loans.

During its IPO on the Science and Technology Innovation Board, Maiwei Biotechnology raised 2.98 billion yuan, mainly for the construction of a 1000kg antibody industrialization project, antibody drug research and development projects, and supplementary working capital.

For this IPO, Maiwei Biotechnology plans to raise funds for the development of its core product 9MW2821 for various indications and clinical trials at different stages; On the other hand, for the development of other pipeline products targeting tumors and age-related diseases with a large clinical demand; At the same time, it will also be used for commercialization and general fund purposes of the company.

Whether Maiwei Biotechnology, which relies on external financing for "blood transfusion", can successfully support the commercialization of its core products still needs further observation.