The first three listed pharmaceutical shares, Baiji Shenzhou 100 billion market value can continue?
In recent years, Hillhouse has been one of the most active domestic investment institutions in the medical and health sector.During the seven years from 2014 to 2021, Hillhouse has successively invested in innovative drugs, medical devices, service outsourcing and other fields, with an investment amount of more than 120 billion yuan.In the medical and health layout of Hillhouse, innovative drugs occupy the highest proportion.Among the many innovative pharmaceutical enterprises invested in, Hillhouse has always loved and held Baiji Shenzhou (hereinafter referred to as “Baiji”).Since the A round in 2014, Hillhouse has participated in 8 rounds of financing of Baekje and is the only full investor of Baekje in China.According to the latest F13 filing, Baekje was also Hillhouse’s top U.S. stock position in the third quarter of 2021.Among many pharmaceutical companies in China, Baekche can be said to be an “unusual” existence. It is the first domestic biopharma company to achieve the listing of “US +H +A shares”. It is also an enterprise with A huge loss for A long time, relying on the mode of “burning money” to boost the enterprise forward, so that its accumulated loss of more than 30 billion yuan.In order to fill up the “pit” of losses, in the 11 years since its establishment, Baekche has obtained a total of more than 70 billion yuan of financing, which can be called the “financing machine” in pharmaceutical enterprises.So that the feat of the listing of the three places has been questioned by many people is to “circle money”.On December 15, 2021, Baekche listed on the A-share Science and Technology Innovation Board, and suffered A break at the opening, with the share price falling 16.42% on the day.Since then, The stock price of Baekje has been “falling” all the way. As of press time, the value of Baekje in the A stock market is 157.5 billion yuan, which is 220 billion yuan from the peak, and its market value has lost about 62.5 billion yuan.Under the halo of innovative medicine, in the support of investors in the three places, what is the magic of Baekje?Can the $100 billion market cap last?1. The combination of science and business The entrepreneurial story of Baekche is a typical model of “scientist + businessman”, mainly started by the two founders wang Xiaodong and Ou Leiqiang.Wang Xiaodong, born in 1963 in Xinxiang, Henan province, received his bachelor’s degree in biology from Beijing Normal University. After studying in the United States, he received his PhD in biochemistry from The University of Texas Southwestern Medical Center, and conducted postdoctoral research under the supervision of two Nobel Prize winners.In 1995, at the age of 32, Wang xiaodong set up his own laboratory and began to study the field of apoptosis.During this period, Wang Xiaodong made a number of major breakthroughs, which are of great significance to the treatment of cancer and other incurable diseases.In 2003, Wang Xiaodong was invited back to China to establish the Beijing Institute of Life Sciences (hereinafter referred to as “Beisheng Institute”) and served as the first director of the institute.The following year, wang Xiaodong, 41, was elected to the US National Academy of Sciences for his contributions to the field of apoptosis. He became the first scientist from the Chinese mainland to be so honored after China’s reform and opening-up policy and one of the youngest ever members of the US Academy of Sciences.Born in Pittsburgh of the United States, Ou Leiqiang’s resume is also very good.He is a graduate of the Massachusetts Institute of Technology and Stanford Graduate School of Business, and spent five years as a business consultant at McKinsey.This experience gave him extensive contact with Chinese companies and a deep understanding of China.In 2005, Ou leiqiang set up A pharmaceutical research and development outsourcing (CRO) company in Beijing, less than 3km away as the crow flies from Wang Xiaodong’s beisheng Institute.In 2009, Roche bought 44% of Genentech, a leading American biopharmaceutical company, for $95 per share, or $46.8 billion in total.This also makes Ou Leiqiang very enchanted, see the broad prospects of biomedical industry.Wang xiaodong and Ou Leiqiang met at a party in San Francisco in 2010 after a friend introduced them.After many long talks, the two finally decided to start a Chinese version of Genentech.In December 2010, “Baiji Shenzhou”, co-founded by Wang Xiaodong and Ou Leiqiang, was founded in Changping District, Beijing.The English name Beigene literally means “Beijing Genentech”.In new company, wang Xiaodong and Ou Leiqiang use respective director, division of labor is clear.Wang xiaodong, a scientist, focuses on tumor targeting and immunotherapy technology, while Ou Leiqiang, who is good at business, is in charge of marketing and operation of the company. This is when the golden pair started their business journey.Wang Xiaodong and Ou Leiqiang, Photo source: At the beginning of the establishment of Baiji Shenzhou official website, Baiji has determined the strategy of “holding high and beating”.Whether it is the direction of research and development, the formation of the team, or the configuration of experimental equipment, Baekje has reached the full standard.In terms of business direction, Baekje did not choose easier generic drugs, but directly entered the field of cancer drug development, which is the most difficult, risky and competitive. It adopted a two-pronged strategy of targeted and immunotherapy, and simultaneously arranged the simultaneous development of more than 10 new drugs.In terms of hardware configuration, Baekje has invested hundreds of millions of yuan to purchase a batch of the world’s best equipment and instruments according to international standards and set up a world-class laboratory.In order to recruit more excellent r&d managers, Baekje has spent a lot of money to recruit key personnel from multinational giants such as Pfizer and Johnson & Johnson.Under Wang xiaodong’s leadership, Baekche has set up a scientific advisory committee composed of top experts and scholars from the NATIONAL Academy of Sciences and Stanford University, including at least two candidates for the Nobel Prize in Medicine.Close to a “top match” package, baekche also quickly reaped rewards.In 2013, Merck, an established German pharmaceutical giant, paid $465 million for the overseas rights to develop and sell two targeted drugs developed by Baekje, BGB-283 and BGB-290.The deal not only shook the entire Chinese pharmaceutical industry at the time, but also created a milestone in the history of the country’s new drug development.As of November 4, 2021, Baekje has a total of 48 commercial products and clinical phase drug candidates.Among them, 3 independently developed drugs are on the market, 8 independently developed candidate drugs are in the clinical development stage, and 37 cooperative products are in the clinical or commercial stage.Despite its rapid growth, Baekche has never made a profit and has been in the red for a long time.Since 2018, Baekje has lost 4.74 billion yuan, 6.91 billion yuan, 11.38 billion yuan respectively, and 2.49 billion yuan in the first half of 2021, with a total loss of 25.5 billion yuan, according to the prospectus.As of June 30, 2021, The accumulated undistributed profit of Baekche was -30.076 billion yuan.Generally speaking, early loss of innovative pharmaceutical companies is a normal phenomenon.Because the r&d, production and commercialization of innovative drugs is a process with long cycle, large investment and high risk, it is not possible to obtain equivalent returns overnight.There is a saying in medicine circles that goes, “It takes 10 years and a billion dollars to bring a new drug to market.”But compared with its peers, baekje’s spending on research and development is the main cause of its losses and has made it the focus of industry attention.In 2020, for example, Baekje spent 8.943 billion yuan on R&D, ranking first among domestic listed biotech companies.During the same period, Hengrui Pharmaceutical spent 4.989 billion won, Cinda Bio 1.851 billion won, and Junshi Bio 1.798 billion won.The r&d cost of Baekje is almost twice that of Hangseo And five times that of Sinda bio and Gunsil Bio.The high investment in R&D has earned Baekje the title of “r&d leader” in the pharmaceutical industry.As for the problem of high R&D investment in Baekje, as early as in 2019, there were Hong Kong short sellers accused Baekje of excessive spending on R&D personnel, falsifying revenue and other behaviors, “the company either has extremely wasteful behavior, or is falsifying expenses.”In response to the allegations, Baekje said the short seller’s report was inaccurate, baseless and misleading “aimed at negatively affecting the share price of Baekje Shenzhou for the private benefit of the short seller.The allegations in the report are blatantly false.”Wu Xiaobin, president of Baekche, once explained the high r&d investment, saying that most of the “money” is spent on clinical research. The reason why the R&D expenditure is much higher than that of its domestic peers is that clinical trials are conducted more frequently, not only in China, but also around the world.High-speed “burn money” mode, but also forced the company to high-speed “financing” route.In early 2016, The company bucked the trend by listing on NASDAQ and raising $158 million.In 2018, the New regulations of the Hong Kong Stock Exchange “allow biotechnology companies that have not yet made profits to go public in Hong Kong”, and Baiji Shenzhou went public in Hong Kong, raising $902 million in IPO.In 2021, Baiji Shenzhou successfully landed on the science and Technology Innovation Board and raised more than 20 billion yuan in IPO, setting the highest amount raised by a biomedical company since the science and technology innovation Board opened.So far, Baekche has become the world’s first biopharmaceutical company to be listed in the US, Hong Kong and A-share markets.So far, Baekche has raised more than 70 billion yuan.Industry insiders comment: Baiji Shenzhou so far the amount of financing, equivalent to the a-share pharmaceutical sector 386 listed companies twice the average market value.Highly matched expert team, “burn money” type of RESEARCH and development, super financing ability, listing in three places……Everything shows that Baekje is different, and some people even call It “different” among Chinese pharmaceutical enterprises. As a result, some people in the industry ridicule: “The end of the universe in the pharmaceutical field is in Baekje Shenzhou.”3. Although the future of innovative medicine is different, the development of Baekje cannot do without the influence of the environment.In 2015, the State issued the Opinions on Reforming the Review and Approval System of Pharmaceutical and Medical Devices, which ushered in new opportunities for domestic innovative pharmaceutical enterprises, followed by the influx of capital and the return of a large number of foreign scientists and returnees.Now, the number of innovative drug patents in China ranks the second in the world, surpassing the traditional pharmaceutical giants of Britain, Japan and Germany in the second tier, and the innovation ecology has begun to show its scale.However, in the past year, innovative drugs targeted only at the Chinese market have struggled to obtain high pricing and high returns due to policies such as cost control and procurement by volume.Compared with the domestic market, the outlook for the international market is much more optimistic.Data showed that China’s prescription drug market was worth about 1.2 trillion yuan in 2020, compared with more than $900 billion (about 5.85 trillion yuan) in the global market.At present, The share of Chinese prescription drugs in the global market is not high, and there is still a large market to develop.Going to sea is becoming the future of local innovative pharmaceutical enterprises.Thanks to the international background of the founding team, Since its inception, Baekje has positioned itself as “the establishment of commercialization platforms in China and the United States, the two largest pharmaceutical markets in the world, and the high-quality production capacity of the world’s advanced level.Paekche not only with bristol-myers squibb, amgen and novartis international pharmaceutical giant, a global strategic cooperation, and in most overseas to conduct clinical trials of Chinese medicine, in its more than 40 countries and regions in the world has carried out more than 95 clinical trials and clinical projects throughout the United States, Europe, Australia and Asian countries such as Japan and South Korea.In 2019, BTK inhibitor, a new anticancer drug independently developed by Baekje, was approved by THE US FDA and successfully marketed, achieving a “zero breakthrough” in China’s innovative drugs going overseas and being praised as “the name card of China’s biotechnology industry” by foreign media.Now Baiyuetze has been approved for market in more than 40 countries and regions.Industry insiders believe that in the future, the strong combination of Chinese and foreign pharmaceutical companies, jointly develop domestic and international pharmaceutical market will become a normal state.For local innovative drugs, going international is also an inevitable trend of future development.The research and development strength of pharmaceutical companies and whether they can cooperate with multinational pharmaceutical companies have also become an important factor for investors to consider.However, for the capital market, it is understandable that biomedical enterprises burn money in the early stage, but in the later stage, the focus of capital will eventually return to the revenue and profit. Long-term continuous losses may affect the patience of the capital market.At the beginning of landing A shares, there are relevant people questioned, Baekje in the United States and Hong Kong shares circle money is not enough, and to the science and technology board.Since its listing on the board, baekje’s share price has fallen all the way, which is a sign of investors’ lack of confidence.If Baekje fails to turn its research results into profits and fill the black hole of losses, it will not be able to meet investors’ expectations.(the author | Ye Han)