After breaking the record for innovative drug exports, Bally Tianheng is set to venture into the Hong Kong stock market

The STAR Market is expected to welcome the 15th "A+H" dual listing company.

On the evening of May 13th, Bailingtianheng (688506.SH) announced that it will go public in Hong Kong to develop its international business, targeting the main board of the Hong Kong Stock Exchange, but the specific financing amount has not been determined yet.

However, the financing plan has been leaked.

On May 13th during the day, media reports stated that Bailingtianheng plans to go public in Hong Kong early next year with a financing amount of 500 million US dollars.

At this time, preparing for a Hong Kong listing is indeed a good opportunity for Bailingtianheng.

In December last year, Bailingtianheng granted part of the commercial rights of its independently developed ADC drug "BL-B01D1" to BMS (Bristol Myers Squibb), with a total transaction value of up to 8.4 billion US dollars, setting a new record for Chinese innovative drugs going global.

Perhaps it is under this positive expectation that Bailingtianheng has started preparing for a listing on the Hong Kong stock market.

However, after cooperating with Bristol Myers Squibb, Bailingtianheng is actually "not short of money." As of the end of March 2024, its cash and cash equivalents have reached 5.812 billion yuan.

IPO Again Within 2 Years

On the evening of May 13th, Bailingtianheng announced that it has been in discussions with intermediaries regarding the listing on the main board of the Hong Kong Stock Exchange.

"The company is in discussions with relevant intermediaries on the issuance of H shares by the company and the listing on the main board of The Stock Exchange of Hong Kong Limited. The company will fully consider the interests of existing shareholders, the reflection of the company's value, and the judgment of the domestic and foreign capital markets." Bailingtianheng stated.

The main reason for Bailingtianheng's announcement of its Hong Kong stock market listing plan to the public is that the news of its Hong Kong stock financing has been leaked.

On May 13th during the day, IFR, a subsidiary of Reuters, reported that Bailingtianheng has hired Goldman Sachs and JP Morgan to arrange its Hong Kong listing matters, with the earliest possible transaction to take place early next year, with a financing amount of around 500 million US dollars.

In the announcement, Bailingtianheng also stated that it has been paying attention to the relevant market sentiment and said, "As of now, the relevant matters are still under discussion, and the specific details regarding the issuance of H shares have not been determined."

It is worth mentioning that in April this year, Bailingtianheng originally planned to launch a simple refinancing in the A-share market, with a fundraising amount not exceeding 300 million yuan.

Now, with the continuous progress of the Hong Kong IPO plan, Bailingtianheng's refinancing plan may be facing uncertainty.

"This refinancing proposal may not be implemented." A person close to Bailingtianheng told TradeWind01.

In fact, this Hong Kong listing is only a little over a year after Bailingtianheng's STAR Market IPO.

In December 2022, Bailingtianheng successfully landed on the STAR Market, raising 990 million yuan through its IPO.

According to Wind data as of May 14th, there have been 14 companies on the STAR Market that have successfully achieved "A+H" dual listings If successfully listed on the Hong Kong stock market, Bailing Tianheng will become the 15th company on the Sci-Tech Innovation Board to achieve dual listing in both A shares and Hong Kong shares.

From the perspective of cash reserves, Bailing Tianheng's financing needs do not seem to be urgent. As of the end of the first quarter of this year, its cash and cash equivalents balance reached as high as 5.812 billion yuan, which is 14.83 times that of the end of 2023.

The surge in cash mainly comes from Bailing Tianheng granting the overseas commercialization rights of the important pipeline and ADC drug BL-B01D1 to Bristol-Myers Squibb.

In December 2023, Bailing Tianheng reached a cooperation agreement with Bristol-Myers Squibb on BL-B01D1 to jointly promote the development and commercialization of the drug in the United States. Bristol-Myers Squibb is also exclusively responsible for the development and commercialization of BL-B01D1 in regions outside mainland China.

After the cooperation agreement took effect, Bristol-Myers Squibb paid Bailing Tianheng an initial payment of 800 million US dollars, and a near-term or contingent payment of up to 500 million US dollars. Upon reaching development, registration, and sales milestones, Bailing Tianheng will receive additional payments of up to 7.1 billion US dollars.

This means that the potential total transaction value of this deal could reach as high as 8.4 billion US dollars, setting a new record for Chinese innovative drugs going global.

Prior to this, the highest record holder for Chinese innovative drugs going global was Kangfang Bio (9926.HK), which granted exclusive licensing rights for the PD-1/VEGF bispecific antibody drug "Yivoxi" for the treatment of small cell lung cancer to Summit Therapeutics Inc, a rare disease-focused pharmaceutical company in the United States, Canada, Europe, and Japan, with a total transaction value of 5 billion US dollars.

The deal with Bristol-Myers Squibb in February this year provided Bailing Tianheng with ample ammunition.

"In the first quarter of 2024, the company has already received an initial payment of 800 million US dollars based on the international cooperation reached with BMS, and the company's cash balance is currently abundant," Bailing Tianheng pointed out.

Heavy Bet on ADC

With the positive expectations of the deal with Bristol-Myers Squibb, Bailing Tianheng's decision to prepare for a Hong Kong listing at this moment may have the potential to achieve a good valuation and ideal financing.

In fact, from the beginning of 2023 to the present, Bailing Tianheng's market value has soared from 12.8 billion yuan to the current 74.6 billion yuan, with an increase of up to 482.81% during this period.

Many innovative drug companies will choose to launch financing plans at the point when important pipelines reach milestones.

For example, Kangfang Bio announced its plan to list on the Sci-Tech Innovation Board when it announced its $5 billion deal with Summit.

The deal between Bailing Tianheng and Bristol-Myers Squibb may have already proven the sales potential of BL-B01D1.

BL-B01D1 is currently the world's only clinical-stage bispecific ADC drug targeting both EGFR and HER3, mainly for solid tumors, with indications approved for clinical trials reaching 8 BL-B01D1 monotherapy for advanced nasopharyngeal carcinoma and second-line esophageal squamous cell carcinoma has entered the Phase 3 study and completed the first case of enrollment; treatment for EGFR wild-type non-small cell lung cancer, EGFRmut non-small cell lung cancer, HR+HER2- breast cancer, and triple-negative breast cancer has entered the Phase 3 clinical research stage, and treatment for small cell lung cancer is progressing to Phase 3 clinical research; the clinical research of combining PD-1 monoclonal antibody ± chemotherapy for non-small cell lung cancer has obtained Phase 2 clinical trial approval.

It can be seen that the markets targeted by BL-B01D1 are all large indications. For example, the proportion of non-small cell lung cancer in lung cancer is basically over 85%, and this indication has always been a focus of industry research.

In addition to BL-B01D1, Biocytogen is also exploring more possibilities for ADC drugs, covering solid tumors and hematologic malignancies.

Currently, Biocytogen's ADC pipeline includes BL-M07D1 (HER2-ADC) for breast cancer, gastric cancer, and non-small cell lung cancer, BL-M02D1 (TROP2-ADC) for triple-negative breast cancer, lung cancer, and gastric cancer, BL-M11D1 (CD33-ADC) for acute myeloid leukemia, and BL-M05D1 for gastric cancer, pancreatic cancer, and other solid tumors.

Among them, BL-M11D1 (CD33-ADC) is one of the few investigational drugs in Biocytogen's ADC pipeline targeting hematologic malignancies, currently in Phase 1 clinical research.

BL-M11D1, a benchmark for similar drugs, is Pfizer's Mylotarg (Gemtuzumab ozogamicin), used to treat acute myeloid leukemia, and is the first ADC drug approved by the FDA.

However, Mylotarg did not receive market attention due to poor treatment efficacy and safety issues.

Biocytogen chooses to "face challenges head-on", with the first obstacle to overcome being toxicity.

In response, Biocytogen stated that current data shows low hepatotoxicity of BL-M11D1, covering induction therapy, maintenance therapy, and potentially becoming a Best-in-class drug.

During a conference call on May 7th, Biocytogen stated that future early-stage research on new ADC pipeline drugs will focus on the iteration of new toxins and exploration of new targets.

Expanding multiple pipelines for research and development is indeed a challenge for Biocytogen.

Excluding income from commercial licensing, Biocytogen's drug sales revenue in 2023 is only 560 million yuan, while its research and development expenses have reached 746 million yuan, a year-on-year increase of 98.98%.

The payment from Roche is undoubtedly a "timely rain" for Biocytogen, and as multiple ADC drugs such as BL-B01D1 progress in clinical trials, the market is eagerly awaiting whether Biocytogen can truly achieve the transformation from generic drugs to innovative drugs