Innovative drugs return to the Hong Kong stock market: BeiGene (02659), which has already launched one new drug, starts listing.

"After the Hong Kong stock market improved, the 18A boom has returned." A person from a Hong Kong investment bank's biopharmaceutical group told Tencent News "Insight" that institutional investors are once again turning their attention to 18A companies this year. Chapter 18A of the Hong Kong Stock Exchange Listing Rules sets out the listing conditions for biotechnology companies that are not profitable and have no revenue, and these companies are generally referred to as 18A companies in the market. After a gap of four years, the total amount raised by IPOs in Hong Kong Stock Exchange will once again exceed HK$200 billion, second only to the historical peak in 2021 when the amount raised exceeded HK$320 billion. Ernst & Young Hong Kong Capital Markets Services spokesperson Lai Yunfeng stated that, in terms of funds raised, the top five industries include industrial, materials, technology, retail, and 18A. Public data shows that, as of December 3 this year, 13 18A companies listed in Hong Kong have raised a total of over HK$26 billion. "After nearly 10 years of development, most of China's biopharmaceutical companies have entered a key period of vigorous growth, and now the quality of 18A companies listing in Hong Kong is gradually improving." Liu Yanjun, the founder of 18A company Baoji Pharmaceutical, which is about to IPO in Hong Kong, recently told Tencent News "Insight". This year, the 13 18A companies listed in Hong Kong include Baoji Pharmaceutical, Zhonghui Biotechnology, Jin Fang Biotechnology, among others, all of which had a newly approved drug before listing. Most of the 18A companies listed in Hong Kong before did not have the approval of the drug regulatory authority for new drug listing. Public data shows that Baoji Pharmaceutical is a biopharmaceutical company established in 2019 and conducted its IPO in Hong Kong from December 2 to 5. The company issued 37.912 million shares at a price of HK$26.38 per share, with a planned fundraising of approximately HK$1 billion. The sponsors were HAITONG INT'L and CITIC SEC, with Anhui Anke Biotechnology Hong Kong, DC Alpha SPC, and Guotai Junan Securities Investment and 2.006 billion Hong Kong dollars, accounting for 22% of the total funds raised. This may also be the last 18A company to IPO in the Hong Kong stock market this year. The company has products in four areas, targeting subcutaneous administration of large-capacity drugs, antibody-mediated autoimmune diseases, reproductive assistance, and recombinant biopharmaceuticals. The drug pipeline extended from this mainly includes 12 independently developed investigational products, including three core products. In addition to holding a new drug approved for listing in August, Baoji Pharmaceutical has also submitted an application for listing one large-capacity subcutaneous drug, and one drug for desensitization before organ transplantation and autoimmune diseases in Phase III clinical trials, nearing commercializationAt the same time, the drug is being prepared for Phase III clinical trials in China for another lack of drugs in the severe autoimmune disease anti-GBM disease, as well as one indication in Phase II clinical trials, and one indication completed Phase I clinical trials overseas. Among the companies listed in 18A this year, it is one of the most mature companies in terms of pipeline. "With commercialized products already available, and new commercialized products coming soon, these are self-replenishing opportunities that are becoming increasingly important for 18A companies." An institutional investor who has participated in the IPO of 18A companies multiple times this year told Tencent News "Insight". Biopharmaceutical companies return to the Hong Kong stock IPO table "In 2025, the market is optimistic about 18A companies, and they have become the main force for the growth of Hong Kong stock IPOs." Chan Yat-fai, a capital market expert at Ernst & Young Hong Kong, stated that this year, the average first-day and first-month gains of new Hong Kong stocks have been the best in nearly five years, with 18A companies performing especially well. Data provided by Ernst & Young indicates that the average first-day and first-month gains of new Hong Kong stocks in 2025 reached 38.4% and 40.2%, respectively, with the corresponding growth rates for 18A companies being 69.4% and 88.7%which is double the average for the entire industry. The gains in other industries such as industrial, consumer, and technology are mostly concentrated around 20-30%. For investors, the past year has shown that investing in 18A companies during the IPO process has been much more profitable compared to other industries, with returns almost doubling. A fund manager who has participated in multiple 18A company IPO subscriptions told Tencent News "Insight" that investing in 18A companies this year has indeed felt the "money-making effect". Public data shows that there were 13 18A companies that IPOed in Hong Kong this year, second only to the historical peak of 20 in 2021. Among these companies, only 2 experienced price drops on the first day, while 10 saw gains on their debut, with Yinnuo Pharmaceuticals, which went public in August, seeing a first-day increase of over 200% on the day of listing. Among the 18A companies in the second half of this year, the gains were significantly higher compared to the first half, with most of them seeing gains of over 100%. This has boosted investor sentiment, making upcoming 18A companies more enthusiastic about submitting IPO applications. Public data shows that in the second half of this year, 33 18A companies have submitted IPO applications in Hong Kong, nearly doubling the 18 companies that submitted applications in the first half of the year, with 9 companies submitting applications in just November. The most exaggerated case was in the two weeks before September 30, when 7 companies simultaneously submitted IPO applications. A banker in charge of a certain 18A company project told Tencent News "Insight" that after experiencing a market situation where 18A companies were not sought after in 2024, the market sentiment is now full, and it is important to seize the "sentiment window" while investors favor 18A companies. This is indeed an important goal for issuers, including Liu Yanjun. Baoji Pharmaceutical becomes a market favorite With the secondary market performing better and most issuers from other industries speeding up their Hong Kong IPO pace, 18A issuers are also picking up the pace. Regarding the reasons behind this wave of 18A companies listing in Hong Kong, many bankers and investors in Hong Kong told Tencent News "Insight" that it is mainly due to the temporary backlog of listing demand after a downturn in the 18A market in the past 2 years, as well as the surge in external environment enthusiasm warming up. One institutional investor who participates in multiple 18A company IPO subscriptions pointed out that in a hot market, 18A companies flock to it, and for many investors, they may be more selective in choosing 18A company targets, mainly considering factors such as the industry to which the 18A company belongs and the richness of its pipeline. He believes that it is more important for 18A companies to enter Phase III clinical trials and have short-term product commercialization expectations. In the early years, some 18A companies only needed to meet the requirements of being in Phase II clinical trials to list in Hong Kong, which was equivalent to "listing while lying down". He believes that such 18A companies may become less in the future, as companies with core products approved for Phase II clinical trials are eligible for 18A listing according to the requirements of the Hong Kong Stock Exchange (note, the phases of new drug clinical research generally include preclinical research and Phase I, II, III, IV trials, with Phase III being a critical clinical stage for proving efficacy and safety, assessing side effects, and evaluating interactions with other drugs). "Truly commercialized 18A companies will become investors' favorites." This investor said that in the pile of 18A companies heading to Hong Kong IPO, the quality of the company will be an important consideration for investment. They will try to avoid biopharmaceutical companies with long research and development cycles that are difficult to generate revenue in the short term, especially those in the early stages of clinical trials. Currently, revenue generation has become one of the most important things for 18A company issuers. Liu Yanjun told Tencent News "Insight" that after 10 years of development in the biopharmaceutical industry, most of the domestic 18A companies have found suitable ways to generate revenue, including speeding up the commercialization of products, technical services, and licensing income. Among these methods, technical services and licensing income are early sources of revenue for many 18A companies. The prospectus data shows that Baoji Pharmaceutical's revenue increased by over 40 million in the first half of this year due to increased licensing income and technical services. Liu Yanjun told Tencent News "Insight" that now Baoji Pharmaceutical's revenue also comes from material sales and upfront fees for external authorization. Public data shows that in the first half of 2023, 2024, and 2025, Baoji Pharmaceutical's revenue was 6.93 million yuan, 6.16 million yuan, and 41.99 million yuan, respectively. Among these, the revenue generated by the innovative drug "Assisted Reproduction" product Shen Nuo Wa, developed by Baoji Pharmaceutical, has been approved for listing since August 25, 2025. This is the first long-acting recombinant human follicle-stimulating hormone approved for listing in China, and the company has signed an exclusive sales agency agreement with Anhui Anke Biotechnology, a leading assisted reproduction company in China. This will soon increase the company's revenue. An investor who participated in Baoji Pharmaceutical's institutional subscription told Tencent News "Insight" that the product had already received approval before listing, which is a rare "milestone" event for 18A companies. Public data shows that among the listed 18A companies in Hong Kong, the average number of products in the pipeline is 1-2 in Phase II clinical trials, and only less than 25% of the companies submitted NDA (New Drug Application) for new drug registration 1-2 years after going public. The investor told Tencent News "Insight" that a company like Baoji Pharmaceutical, which has already had one drug approved for NDA and another one submitted for NDA, is one of the "top performers" among 18A companies. In terms of product progress, Baoji Pharmaceutical has one of the most diverse pipelines among 18A companies listed in Hong Kong in the past four years. The prospectus shows that Baoji Pharmaceutical submitted an NDA for a drug called recombinant human hyaluronidase used in a large-capacity subcutaneous drug in June 2024 and is expected to be approved in the first quarter of 2026. This is likely to be the most anticipated event for investors in Baoji Pharmaceutical in 2026, as it is expected to once again become the first company in China to introduce a large-capacity subcutaneous drug. Publicly available information shows that its competitor, the biotechnology platform company Halozyme Therapeutics under ENHANZE has been approved for use in the United States as the first hyaluronidase, reducing the injection time from 30-60 minutes to approximately 7 minutes when used in combination with several antibody drugs. Public data shows that Halozyme's business model has provided stable growth and strong profitability. As of early November 2025, the company has a market value of over USD 8 billion. In the past twelve months, the company's revenue was USD 1.24 billion, with a net profit of USD 595 million, including USD 350 million in revenue in the third quarter of this year. Liu Yanjun told Tencent News "Insight" that based on the Phase III clinical data of Baoji Pharmaceutical, its product is on par with the product of Halozyme Therapeutics. In addition to waiting for the approval of the national drug regulatory authority for the large-capacity subcutaneous drug product, Baoji Pharmaceutical is also actively exploring a similar business model to Halozyme, where it can be used in combination with several antibody drugs, creating new possibilities for clinical applications and transforming them into rapid subcutaneous injections from long-term intravenous infusions. In addition, Baoji Pharmaceutical also has a drug in Phase III clinical trials, with one indication in late Phase III clinical trial stage, nearing commercialization. A few years ago, this institutional investor participated in subscriptions of several other 18A companies, many of which had only 1 or 2 drugs in Phase III, and most of them were a considerable distance from commercialization. He believes that this is one of the reasons why 18A companies did not perform well in the Hong Kong stock market when there were fluctuations in the past few years because companies without revenue imply a lack of short-term opportunities to turn losses into profits. Like all 18A companies, Baoji Pharmaceutical had a net loss of RMB 16 million, RMB 364 million, and RMB 18 million in the first half of 2023, 2024, and 2025, respectively. An institutional investor in Hong Kong told Tencent News "Insight" that compared to most 18A companies, these losses are not significant, and more importantly, Baoji Pharmaceutical has a lot of cash on its books and is about to generate substantial income from the new drug listing, unlike other 18A companies that are in urgent need of raising funds for their survival. According to the prospectus, Baoji Pharmaceutical still has HK$450 million in cash and cash equivalents. A Local Medical Doctor, Ph.D., aged 55, ventures into entrepreneurship The surge of 18A companies heading to the Hong Kong IPO is enough to illustrate that the number of biopharmaceutical companies incubated in China in recent years is quite large: homogenization is severe, and the competition is more intense. Like most industries, with the support of capital and technological advances, particularly in the age of AI, the pace of iteration has been accelerating rapidly: even in the pharmaceutical industry, opportunities that once led the industry for decades may no longer exist. This is the biggest experience Liu Yanjun has had in the past five years since starting his business. He told Tencent News "Insight" that during the roadshow period in Hong Kong in the recent months, he was often asked, "How many years ahead are you leading your competitors?" Even though Baoji Pharmaceutical already has the first "Assisted Reproduction" long-acting follicle-stimulating hormone for the market in China - Shen Nuo Wa, and the first large-capacity subcutaneous drug product KJ017 that had NDA submitted the earliest in the market, with one indication already in Phase III clinical trials, investors are still concerned that they are being caught up by their competitors. Liu Yanjun told Tencent News "Insight" that it is a long-acting stimulant for enhancing fertility in assisted reproductive uses, the first batch of the product in China. Initially, there may be significant competition for new market segments, but he believes that competitors will later target the existing market for "short-acting stimulation needles." More importantly, he believes that being in the market alongside competitors will accelerate market education and likely secure an early market share. An investor who participated in Baoji Pharmaceutical's institutional subscription told Tencent News "Insight" that Anhui Anke Biotechnology, which has obtained the agent of this drug, estimated that Baoji Pharmaceutical will generate approximately RMB 300 million, RMB 500 million, and RMB 1 billion in revenue in 2026, 2027, and 2028, respectively. Therefore, Liu Yanjun cautiously informed investors that in the AI era, if 18A companies can stay ahead of their competitors for 3-5 years, it is already considered a victory. His caution may be related to his character. Unlike many other founders of 18A companies, Liu Yanjun is a rare technical backbone entrepreneur in the 18A industry who is purely domestic: he completed all his studies in China and spent only 3 years as a visiting scholar in the United States during his doctoral period, without working in a major international pharmaceutical company. This is not common in the biopharmaceutical entrepreneurship circle. In the 1980s, Liu Yanjun entered the Second Military Medical University, studying under the acclaimed "Father of Chinese Hepatobiliary Surgery," Academician Wu Mengchao. He then completed his master's and Ph.D. studies, and after working as a frontline doctor for a few years, he joined the newly established Shanghai FUDANZHANGJIANG Biopharmaceutical Company in 1996, overseeing R&D and external investments until he jumped to the state-owned Shanghai Pharmaceuticals Holding Group in 2013 as Vice President and Dean of the Central Research Institute. During his tenure in the companies, Liu Yanjun has been responsible for new drug R&D. He stated to Tencent News "Insight" that those who work on new drugs ultimately want to be the true decision-makers in new drug development, and he wanted to be the one who can truly control the research and development of new drugs. Liu Yanjun firmly believes that China's biopharmaceutical industry is in an unprecedented period of vigorous development. During the entrepreneurship period in the past 3 years of the pandemic, it became a critical period for Baoji Pharmaceutical's development. At that time, the private equity industry in China faced significant challenges, and many private equity teams suspended further investments due to the failure of fundraising. Many startup companies have collapsed due to the loss of their funding chains. However, Liu Yanjun exceeded all expectations by raising over RMB 1 billion during the pandemic. Public data shows that Baoji Pharmaceutical received over RMB 470 million in investment in 2020 and 2021, with investors including Central Lab, Fangyuan Capital, Yuanchuang Duoying, and others. Tencent News "Insight"learned that in 2022, Baoji Pharmaceutical received over RMB 580 million in investments, ranking among the top single investments in the biopharmaceutical industry that year. After the pandemic ended, in 2024, Baoji Pharmaceutical completed another round of financing for over RMB 470 million in Series C and C+. Liu Yanjun told Tencent News "Insight" that he and his team have been raising funds from day one, and the team has never stopped since. When one round ends, the next one is launched immediately, and when the C round is completed, the plan for a Hong Kong IPO has already started. "This way, Baoji Pharmaceutical has always had a lot of capital on hand, and the team can focus on research and development with peace of mind." The specific financing details are as shown in the figure. Zheng Juan, the manager of the early investor Fangyuan Capital at Baoji Pharmaceutical, told Tencent News "Insight" that as an institutional investor who has been investing in biopharmaceuticals for a long time, the investment portfolio is already very rich. The decision to wager on Liu Yanjun and his team is mainly due to the business strength of the team and their reliability. To her, as an early investor in biopharmaceuticals, "many times, investing in