He Xun Wang·2025-06-26 07:39Core Viewpoint - Rongchang Biologics has licensed its proprietary drug Taitasip to US-listed VorBio for global development outside Greater China, but the market reaction has been lukewarm, leading to significant declines in stock prices for both A-shares and Hong Kong shares [1] Group 1: Licensing Agreement Details - Rongchang Biologics will receive $125 million from VorBio, including a $45 million upfront payment and $80 million in warrants, which can be exercised at $0.0001 per share for 320 million shares, representing approximately 23% of VorBio's expanded total share capital [1] - The total potential payment from VorBio could reach $4.105 billion, with additional sales royalties [1] Group 2: Market Reaction and Analysis - Following the announcement, Rongchang Biologics' A-shares fell over 18% and Hong Kong shares dropped over 16%, attributed to high market expectations prior to the announcement and profit-taking by investors [1] - Analysts noted that the upfront cash payment of $45 million is relatively low and raised concerns about VorBio's financial strength, as its total market capitalization is only $69.28 million compared to Rongchang Biologics' over 30 billion [1] Group 3: Industry Trends - Despite the negative market response, the trend of overseas licensing is seen as a crucial pathway for Chinese innovative pharmaceutical companies to gain capital support and improve valuations [1] - In a tightening financing environment, there is an increase in License-out transactions, which are becoming more diversified, allowing domestic pharmaceutical companies to secure upfront payments, milestone payments, and sales shares [1]