IPO Observation: No Commercial Sales, Continuous Losses Face Registration "Difficulty"

As early as January 11, 2023, Guangzhou Biobeet Pharmaceutical Co., Ltd. (hereinafter referred to as "Biobeet") had passed the review of its IPO application through the sci-tech board.

However, by the end of 2023, Biobeet's registration results are still pending. What's behind Biobeet's delay in receiving the latest progress on its registration?

Registration "Difficulty"?

On June 29, 2022, Biobeet applied for listing on the sci-tech board and received approval; on January 11, 2023, Biobeet passed the review of its IPO application, with listing nearing; on June 1, 2023, Biobeet submitted its registration.

Since then, Biobeet's registration has entered a "silent period", with the effectiveness of its registration pending. From receiving approval to the present, Biobeet has already waited for over 10 months, exceeding the initial review process by only about 6 months.

Recalling the review meeting held by Biobeet in January 2023. The exchange asked Biobeet three questions: one about the company's core product competitiveness and market space; two about BioBeeT's relationship with other companies; and three about BioBeeT's own development process, including stockholding issues.

BioBeeT may have passed the review, but question one was asked to be further addressed by the exchange, namely "Please explain whether the company's calculation of its product market space is cautious and reasonable, and whether the company has a competitive advantage or disadvantage compared to other companies in the same field."

Independent economist Wang Chikun once told Beijing Commercial Daily, "Companies that experience delays in their registration process generally have some unresolved issues, but it doesn't necessarily mean there are problems, as they may just need time to respond."

Gap in Market Space

From the initial inquiry letter to the review meeting, "market space" has been a key point of focus for the exchange.

BioBeeT is focused on developing major disease fields such as cancer, autoimmune diseases, and metabolic disorders, with a global first-in-class drug and innovative drugs that meet clinical needs.

According to the prospectus, the data from Frost & Sullivan shows that China's newly diagnosed cases of cancer are increasing steadily, reaching 4.688 million in 2021, with a compound annual growth rate of 3.0% from 2017 to 2021.

The same report predicts that China's new diagnosis cases will reach 5.196 million by 2025 and 5.812 million by 2030, with a compound annual growth rate of 2.3% from 2025 to 2030.

Furthermore, in the Chinese pharmaceutical market, the sales of anti-tumor drugs have been steadily increasing over recent years. The market scale reached 23.11 billion yuan in 2021.

Specifically, China's anti-tumor drug market is dominated by chemotherapy drugs, accounting for 63.4%, while other targeted therapies, including small molecule targeted therapies and biologics, account for 29.1%, and the remaining 7.5% is accounted for by immunotherapy drugs.

BioBeeT's main market space data relies on Frost & Sullivan's data, which has a significant discrepancy between the prospectus and its latest published version.

As for China's self-immune disease drug market, according to BioBeeT's prospectus, Frost & Sullivan gave data from 2016 to 2030E, with an estimated scale of 126 billion US dollars in 2025 and 323 billion US dollars in 2030.

However, in Frost & Sullivan's 2023 published report, the estimated market size for China's self-immune disease drugs was given as 61 billion US dollars in 2025 and 199 billion US dollars in 2030, a significant reduction from BioBeeT's prospectus data.

The same data from Frost & Sullivan shows that the prospectus and the latest published version have a significant discrepancy.

No Commercial Sales Data

BioBeeT's "market space" is being closely watched, aside from its relationship with the company's operations. Another special circumstance exists – BioBeeT's products have not yet been commercially sold.

The company's products lack sales data, and whether they will be able to meet market demand after commercialization or whether the company's operating situation will continue to deteriorate is a crucial uncertainty.

As of the signing date of the prospectus registration book, BioBeeT has six self-developed innovative core products in clinical trials. Among them, one has been submitted for PRE-NDA meetings, one is in phase III clinical trials, one is in phase II clinical trials, and three are in phase I clinical trials.

However, all these products are still in the development stage and have not yet undergone commercialization or obtained sales data.

BioBeeT has continued to invest in research and development, but its financial reports show that it has consistently reported losses. From 2019 to 2022, BioBeeT's net profit was respectively -5.89375 million yuan, -6.126 million yuan, -1.37 billion yuan, and -1.88 billion yuan, with the loss amount continuously increasing.

As of the end of the reporting period, BioBeeT's undistributed profits were -2.05 billion yuan.

The uncertainty surrounding BioBeeT's product commercialization prospects and its continuous losses will affect its future operating situation after listing.

According to the Shanghai Stock Exchange's sci-tech board listing rules, if BioBeeT's net profit (excluding non-recurring gains and losses) is negative at the end of its fourth fiscal year after listing, and its latest audited revenue is less than 1 billion yuan, or its net assets are negative, the exchange will implement a warning for possible delisting.