Core Viewpoint - The visit of Yantai Municipal Party Secretary Jiang Cheng to Yantai Progi Pharmaceutical Technology Co., Ltd. highlights the importance of the biopharmaceutical industry as a strategic emerging industry in Yantai, emphasizing the need for technological innovation, product development, and talent cultivation to enhance industry competitiveness [1][2]. Company Overview - Yantai Progi Pharmaceutical Technology Co., Ltd. is an innovative high-tech private enterprise established in April 2015, located in the Yantai Huangbohai New Area, and is a wholly-owned subsidiary of Beijing Progi Biotechnology Development Co., Ltd. [2][3] - The company has built the first phase of the Yantai Progi Biopharmaceutical Park, covering 200 acres with a construction area of 120,000 square meters, and has completed the main construction of 12 buildings including production workshops and quality inspection buildings [2]. - Progi specializes in the development and production of recombinant protein drugs, antibody drugs, and in vitro diagnostic reagents, with experience in successfully developing national Class 1 new drugs and Class 3 medical devices [2][3]. Industry Context - The biopharmaceutical industry is a key focus for Yantai's development, with the city establishing a systematic layout of "1+3+X" for the industry, promoting various development zones and clusters [4][5]. - As of June this year, Yantai has 274 key enterprises in the biopharmaceutical and health industry, including 146 above-scale enterprises, featuring leading companies such as Rongchang Bio and Green Leaf Pharmaceutical [5][6]. - The rapid development of Yantai's biopharmaceutical industry is attributed to the "chain leader system," which focuses on building, extending, and strengthening industrial chains, with biopharmaceuticals being a model industry for this initiative [5][6].

Core Viewpoint - Wuhan Heyuan Biotechnology Co., Ltd. has submitted its IPO registration application and is expected to become the first successful listed recombinant protein company this year [1][2]. Group 1: Company Overview - Heyuan Biotechnology focuses on plant-based recombinant protein expression technology, specifically developing recombinant human serum albumin using rice endosperm cell bioreactor systems [4][12]. - The company was founded in 2006 and has a leading global plant bioreactor technology platform, with its founder being a professor at Wuhan University [8]. Group 2: Financial Performance - The company has reported continuous losses, with revenues of 13.40 million yuan, 24.26 million yuan, and 25.22 million yuan for 2022, 2023, and 2024 respectively, and net losses of -144 million yuan, -187 million yuan, and -151 million yuan for the same years [9][10]. - As of the end of 2024, the cumulative unabsorbed losses reached 851 million yuan [9]. Group 3: Product Development and Market Potential - Heyuan Biotechnology's lead product, recombinant human serum albumin injection (HY1001), is expected to be approved for market soon, which could reduce reliance on imported products in China [11]. - The company has established a pilot-scale production capacity and is building a commercial-scale production line with an annual output of 10 tons of OsrHSA raw liquid and formulations [12]. - A strategic cooperation framework has been signed to establish a production line with an annual capacity of 20 tons in Western China [12][13]. Group 4: Technological Advancements - The company has achieved a breakthrough in its "rice-based blood production" technology, which has garnered significant attention in the capital market [7]. - The rice expression system can yield 15-20 grams of protein per kilogram of brown rice, providing advantages in high yield, simple processes, low costs, and scalability [12].

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 increased to approximately $394,000 compared to $335,000 for the same period last year, driven by an increase in grants revenue of approximately $210,000 from the Gates Foundation and CEPI [15] - Research and development expenses for Q1 2025 decreased to $495,000 from $523,000 year-over-year, reflecting a decrease in ongoing internal research projects [16] - General and administrative expenses decreased by 10.8% to $1,596,000 compared to $1,789,000 for the same period last year [17] - Net loss for Q1 2025 was $2,028,000 or $0.07 per share, compared to $2,010,000 or $0.07 per share for the same period last year [18] Business Line Data and Key Metrics Changes - The focus is on commercializing high-value recombinant enzymes and proteins, particularly in life sciences, nutrition, and industrial applications [4][5] - The top commercialization priority lies in the cell culture media space, valued at over $6.1 billion globally, growing at a 13% compound annual growth rate [6] - Significant progress is being made in the development of recombinant human serum albumin, with expectations for launch in Q3 2025 [7] Market Data and Key Metrics Changes - The animal-free dairy products market was valued at approximately $26.5 billion in 2023, with increasing partner interest in non-animal dairy proteins [9] - The nucleic acid tools market is projected to exceed $4 billion globally by 2028, with ongoing development of recombinant DNase-one and RNase-free enzymes [8] Company Strategy and Development Direction - The core growth strategy is centered on high-value life sciences, bioactives, ingredients, and industrial markets, aiming for sustainable growth in non-pharmaceutical sectors [5] - The company is focusing on product development rather than platform development, prioritizing commercialization-ready products [35][36] - Strategic partnerships are maintained in vaccine therapeutic developments, with collaborations with CEPI and the Gates Foundation [4][12] Management's Comments on Operating Environment and Future Outlook - Management emphasizes the importance of transitioning from a development stage to a product-driven revenue-generating enterprise [62] - The company is well-positioned to meet global demand for scalable and affordable animal-free precision engineered proteins and enzymes [63] - There is a commitment to strengthening the balance sheet to support near-term revenue growth and strategic objectives [18] Other Important Information - The company has cash and investment-grade securities of $7.4 million as of March 31, 2025, down from $9.4 million as of December 31, 2024 [18] - The company is participating in various funded programs, including a $4.5 million grant from CEPI and a $3 million program funded by the Gates Foundation [11][12] Q&A Session Summary Question: Can you explain the royalty arrangement with Fermbox? - The profit split is significant for both companies, and revenue sharing will begin immediately as sales start rolling in [22][23] Question: What is the progress on the albumin arrangement? - No advanced orders have been placed yet; sampling is expected to begin in Q2 2025 [24] Question: Will there be opportunities for Fermbox to bid on other contracts? - There are ongoing evaluations for additional contracts in both government and private sectors [27] Question: When will the company start spending less on research and more on revenue-generating areas? - The company is currently reprioritizing resources towards non-pharmaceutical sectors for revenue generation [34][36] Question: What product in the non-dairy applications portfolio has the best margins? - Lactoferrin has the highest margin potential, while alpha-lactalbumin has the largest market potential [40][41] Question: Is there any quantifiable tariff problem for the company? - Currently, there are no significant tariff issues, and there may be potential opportunities with onshoring [50] Question: Will the albumin and dairy enzymes be produced in the U.S.? - Yes, both products are being produced domestically, which mitigates tariff concerns [54][55]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 increased to approximately $394,000 compared to $335,000 for the same period last year, driven by an increase in grants revenue of approximately $210,000 from the Gates Foundation and CEPI [18][19] - Research and development expenses for Q1 2025 decreased to $495,000 from $523,000 year-over-year, reflecting a decrease in ongoing internal research projects [19][20] - General and administrative expenses decreased by 10.8% to $1,596,000 compared to $1,789,000 for the same period last year [20] - Net loss for Q1 2025 was $2,028,000 or $0.07 per share, compared to $2,010,000 or $0.07 per share for the same period last year [20] Business Line Data and Key Metrics Changes - The company is focusing on commercializing high-value recombinant enzymes and proteins, particularly in life sciences, nutrition, and industrial applications [4][5] - The top commercialization priority lies in the cell culture media space, a market valued at over $6.1 billion globally, growing at a robust 13% compound annual growth rate [6][8] - Significant progress has been made in developing recombinant proteins and enzymes, including recombinant human serum albumin and fibroblast growth factors [7][9] Market Data and Key Metrics Changes - The animal-free dairy products market was valued at approximately $26.5 billion in 2023, with increasing partner interest in non-animal dairy proteins [10][11] - The nucleic acid tools market is projected to exceed $4 billion globally by 2028, with ongoing development of recombinant DNase-one and RNase-free enzymes [10][12] Company Strategy and Development Direction - The core growth strategy is centered on high-value life sciences, bioactives, ingredients, and industrial markets, aiming for sustainable growth in non-pharmaceutical sectors [4][5] - The company is committed to delivering sustainable value to shareholders and partners, with a growing pipeline and strong network of collaborators [5][17] - The company is also participating in various initiatives for pandemic preparedness, including collaborations with CEPI and the Gates Foundation [14][15] Management's Comments on Operating Environment and Future Outlook - Management emphasized the importance of focusing on product commercialization rather than long-term platform development, aiming to generate revenue through ready-to-market products [38][61] - The company is optimistic about its position in the market, with commercial launches on the horizon and a robust pipeline backed by non-dilutive funding [63] Other Important Information - The company has cash and investment-grade securities of $7.4 million as of March 31, 2025, down from $9.4 million as of December 31, 2024 [20] - The company is exploring opportunities in onshoring and expanding manufacturing capabilities in the U.S. [51][56] Q&A Session Summary Question: Can you explain the royalty arrangement with Fermbox? - The profit split from the joint venture collaboration with Fermbox is significant, and revenue sharing will begin immediately as sales start rolling in [24][25] Question: What is the progress on the albumin arrangement? - No advanced orders have been placed yet, but sampling is expected to begin in Q2 2025, with orders anticipated in Q3 [26] Question: Will there be more government contracts for Fermbox? - There are opportunities for Fermbox to bid on additional contracts, both government and private sector [30] Question: When will the company shift focus from research spending to revenue-generating areas? - The company is currently reprioritizing resources towards non-pharmaceutical sectors for revenue generation [37] Question: Which non-dairy product has the best margins? - Lactoferrin has the highest margin potential, while alpha-lactalbumin has the largest market potential in terms of volume and margins [43] Question: What caused the drop in paid collaborators? - The decrease is due to the company's pivot towards licensing deals and product partnerships rather than resource-intensive collaborations [51]