Core Viewpoint - The rising public awareness of autoimmune diseases, particularly ankylosing spondylitis, has led to increased interest in the pharmaceutical company Ganzhou Hemei Pharmaceutical Co., Ltd. as it seeks to go public with its core drug Mufemilast targeting psoriasis and ankylosing spondylitis [1][6]. Company Overview - Ganzhou Hemei Pharmaceutical is preparing for an IPO under the Hong Kong Stock Exchange's 18A biotechnology rules, focusing on high investment and potential returns typical of biopharmaceutical companies [2]. - The company has not yet generated revenue and relies heavily on government subsidies and continuous financing to sustain operations [2][11]. Product Pipeline - The company has seven clinical-stage small molecule candidates aimed at addressing unmet medical needs in autoimmune diseases and oncology [2]. - Mufemilast is a dual-action PDE4 inhibitor that has entered the NDA priority review process, targeting multiple indications including psoriasis and ankylosing spondylitis [2][3]. Market Potential - The market for psoriasis drugs in China has seen rapid growth, with a compound annual growth rate (CAGR) of 30.4% from 2019 to 2023, reaching a market size of 13.9 billion yuan in 2023, projected to soar to 89.4 billion yuan by 2032 [3]. - The autoimmune disease drug market in China has expanded from $2.5 billion in 2019 to $4 billion in 2023, with expectations to reach $26.3 billion by 2032, reflecting a CAGR of 23.3% [6]. Competitive Landscape - The competitive environment for Mufemilast is intense, with existing competitors having undergone significant price reductions due to national procurement policies, with price drops exceeding 93% for some products [5]. - There are currently five approved small molecule targeted therapies for psoriasis in China, with 37 more in clinical development, indicating a crowded market for Mufemilast [5][8]. Financial Status - The company reported significant losses of 156 million yuan in 2023 and 123 million yuan in 2024, with minimal other income [11]. - The company has undergone multiple rounds of financing since 2021, raising over 500 million yuan to support its operations, with a post-investment valuation of 3.9 billion yuan [11]. Leadership - The founder and chairman, Zhang Hesheng, has over 20 years of experience in biopharmaceuticals and holds a significant voting power in the company [12].

Core Viewpoint - Ganfeng Pharmaceutical Co., Ltd. (referred to as "Ganfeng Pharma") has submitted a main board listing application to the Hong Kong Stock Exchange, seeking new funding avenues for its ongoing losses in research and development [1][4]. Financial Performance - Ganfeng Pharma reported losses of 156 million RMB and 123 million RMB for the years 2023 and 2024, respectively [3][4]. - The company has a net current asset value of only 4.5 million RMB by the end of 2024, with current liabilities reaching 25.5 million RMB by March 2025 [1][4]. - Cash flow remains negative, with net cash used in operating activities amounting to 141 million RMB and 91.3 million RMB for 2023 and 2024, respectively [4][5]. - The company has raised approximately 951 million RMB through multiple financing rounds, with a valuation of 3.9 billion RMB following the E-round financing in September 2024 [4][5]. Product Pipeline and Market Competition - Ganfeng Pharma's product pipeline includes seven small molecule candidates, with four in Phase II, III clinical trials, or NDA stages, targeting 12 indications [1][2]. - The core product Mufemilast is a novel small molecule PDE4B inhibitor, with an NDA submitted for psoriasis and expected approval in the second half of 2025 [1][2]. - The Chinese psoriasis drug market is projected to grow from 13.9 billion RMB in 2023 to 89.4 billion RMB by 2032, with increasing competition from existing therapies [2]. Research and Development Strategy - The company has invested heavily in R&D, with expenditures of 123 million RMB and 97 million RMB for 2023 and 2024, respectively, but has yet to generate revenue [4][5]. - Ganfeng Pharma plans to establish a commercialization team of about 80 members within a year of Mufemilast's launch [4]. Management and Governance - The company's ownership structure is highly concentrated, with the founders controlling approximately 46.51% of the voting rights [6]. - The CEO, Dr. Zhang Hesheng, has over 20 years of experience in biomedical research and management, with significant compensation tied to equity [6]. Challenges and Risks - The company faces significant cash flow pressures, with only 150 million RMB in cash and cash equivalents by the end of 2024, alongside 25.5 million RMB in current liabilities [4][5]. - There are concerns regarding the company's ability to successfully develop and commercialize its pipeline products, particularly given the lack of a marketed product [7].

Investment Rating - Investment Rating: Positive [2] Core Insights - The pharmaceutical and biotechnology industry index increased by 3.36%, ranking 6th among 31 primary industries, outperforming the CSI 300 index, which decreased by 0.21% [5][17] - The valuation of the pharmaceutical and biotechnology industry as of June 6, 2025, is 28.24x (TTM, excluding negative values), up from 27.60x in the previous period, indicating an upward trend but still below the average [5][23] - Notable sub-industry performance includes chemical preparations and other biological products, with increases of 5.77% and 4.68% respectively, while offline pharmacies saw a decline of 1.15% [5][17] Industry Review - The report highlights three major investment opportunities: 1) Companies with dual-antibody/multi-antibody technology platforms that have differentiated target design capabilities and clinical advancement efficiency are likely to attract international giants [9] 2) Areas with unmet clinical needs, such as advanced liver cancer and non-small cell lung cancer, are promising for dual-antibody therapy development [9] 3) Potential license-out candidates, as domestic innovative pharmaceutical companies continue to engage in global collaborations [9] Important Industry News - CDE launched the "Star Plan" to encourage the development of pediatric anti-cancer drugs, addressing significant unmet clinical needs in this area [7][32] - Alcon's dry eye medication "Tryptyr" received FDA approval, marking it as the first of its kind globally [39] - Hansoh Pharmaceutical's third-generation EGFR-TKI "Amivantamab" was approved in the UK for first-line treatment of NSCLC, becoming the first domestically developed EGFR-TKI approved overseas [42] - BMS and BioNTech entered a collaboration for the dual-antibody candidate BNT327, with an upfront payment of $1.5 billion and potential milestone payments of $7.6 billion [51] Company Dynamics - Stone Pharmaceutical is negotiating three potential deals totaling $5 billion, involving several products including EGFR ADCs [49] - BMS's "Rotecip" was approved for treating lower-risk myelodysplastic syndromes, marking a significant innovation in this therapeutic area [45] - AbbVie’s JAK inhibitor "Upadacitinib" was approved for treating giant cell arteritis, becoming the first approved treatment for this condition in China [48]