20 November 2025 | 1:03AM EST Equity Research China Healthcare: Pharmaceuticals: Takeaways From Our China Biopharma Trip We hosted an investor trip to China (Nov 10-14) to meet local companies including 3SBio, Akeso (not covered), AbelZeta (private), BeOne, Duality (not covered), Eccogene (private), Everest Medicines, GenFleet (not covered), Grand Pharma (not covered), Hansoh, Hengrui, Henlius, InnoCare, Innovent, Kelun Biotech, Keymed (covered by Honglin Yan), Lepu Biopharma (not covered), Pyrotech (privat ...

Core Viewpoint - Chengyi Biotech Cayman Limited is seeking to enter the rapidly growing GLP-1 drug market by submitting a listing application to the Hong Kong Stock Exchange, with Jefferies, BofA Securities, and CICC as joint sponsors. The company has attracted attention from AstraZeneca through its oral small molecule GLP-1 receptor agonist ECC5004, but faces significant challenges including clinical delays, revenue volatility, reliance on a single product and partner, and increasing market competition [1][2]. Financial Performance - Chengyi Biotech's revenue has shown significant volatility, with figures of $36 million, $221 million, and $557,000 for the years 2023, 2024, and the first half of 2025 respectively. The company's profitability has also fluctuated, with a loss of $52 million in 2023, a profit of $139 million in 2024, and a loss of $21 million in the first half of 2025 [2]. - The company's revenue instability is primarily due to its over-reliance on AstraZeneca, which is not only a strategic shareholder holding 7.49% of the company but also the sole source of revenue during the reporting period. A licensing agreement in November 2023 allowed AstraZeneca to acquire commercialization rights for ECC5004 outside Greater China for up to $2.01 billion, including a $185 million upfront payment and $1.825 billion in milestone payments [2][4]. Product Development and Market Competition - ECC5004 is positioned as a convenient oral alternative for patients, boasting a 90% oral bioavailability. However, its clinical development is lagging behind competitors, with global Phase IIb trials and Chinese Phase I studies expected to conclude by Q4 2025. In contrast, Eli Lilly's oral GLP-1 drug Orforglipron has completed Phase III trials and is set to submit for FDA approval soon [6]. - The competitive landscape is intensifying, with Novo Nordisk's semaglutide and Eli Lilly's tirzepatide dominating the market, generating over $30 billion in combined sales in the first half of 2025. Additionally, domestic competitors like Innovent Biologics have rapidly advanced their products, further complicating Chengyi Biotech's market entry [6][7]. Financial Health and Funding Challenges - As of June 30, 2025, Chengyi Biotech has $174 million in available cash, including $56.428 million in cash and cash equivalents and $118 million in financial assets. However, the company’s cash burn rate is concerning, with R&D expenditures reaching $15.734 million in the first half of 2025, a 169.8% increase year-over-year, suggesting that current cash reserves may only sustain operations for about 1.5 years [4]. - The company also faces potential financial pressure from a $130 million redemption liability, which allows investors to demand share buybacks if the company fails to go public within 18 months of its listing application [5]. Historical Context and Investor Sentiment - Since completing a Series C financing round in 2023, Chengyi Biotech has not secured new funding, and some early investors have begun to divest. For instance, in January 2024, an early investor transferred 126,600 shares for approximately $3.06 million, indicating a lack of confidence in the company's long-term prospects [7].

Core Viewpoint - Chengyi Biotech has generated over 1.7 billion RMB in revenue in two and a half years through licensing oral GLP-1 receptor agonist ECC5004 to Alisker, but faces financial challenges as revenue contributions from Alisker decline, leading to a projected net loss of 20.11 million USD in the first half of 2025 [1][15]. Group 1: Financial Performance - Chengyi Biotech's revenue is entirely derived from Alisker, with a peak revenue of 221.29 million USD in 2024, but a significant drop to 55.68 million USD in the first half of 2025 [1][14]. - The company recorded a net loss of 52.23 million USD in 2023, achieved a net profit of 139 million USD in 2024, and is projected to incur a net loss of 20.11 million USD in the first half of 2025 [15][20]. - As of June 30, 2025, the company had cash and cash equivalents of 56.43 million USD, a decrease of 110 million USD from the end of 2023, but still maintains 118 million USD in financial investments [20][21]. Group 2: Investment and Financing - Chengyi Biotech has completed four rounds of financing, raising approximately 585 million RMB, with a post-money valuation of 498 million USD after the C round in December 2023, representing a 16.26-fold increase since the A round in 2018 [2][3]. - The company has convertible redeemable preferred shares totaling 131 million USD as of August 2025, which could create significant financial pressure if redemption rights are exercised [4][1]. Group 3: Product Pipeline and Development - The company has three candidate drugs in its pipeline, including ECC5004, ECC4703, and ECC0509, targeting metabolic diseases and related complications [10][11]. - ECC4703, a liver-targeting THR-β agonist, is expected to initiate Phase IIa clinical trials in Q4 2025, while ECC5004 is in Phase IIb trials for T2D and obesity, expected to complete in Q4 2025 [10][11]. - The oral GLP-1 receptor agonist market is projected to grow significantly, with ECC5004 expected to become a leading product in this category [13][12]. Group 4: Management and Corporate Structure - Chengyi Biotech was founded in 2018 by alumni of Fudan University, with key leadership roles held by Zhou Jingye and Xu Jianfeng, who have extensive experience in the pharmaceutical industry [7][8]. - The company appointed Jaikrishna Patel as Chief Medical Officer and Xiao Ting as Chief Financial Officer prior to its IPO filing, enhancing its leadership team [9].

Core Product - ECC5004 is expected to become the best-in-class and the second oral small molecule GLP-1 receptor agonist to be launched globally [1][3] Market Growth - The global GLP-1 receptor agonist market is rapidly growing, projected to reach $246.5 billion by 2029 [2][5] - The market size for GLP-1 cornerstone therapies has increased from $13.2 billion in 2020 to $72.1 billion in 2024, with a compound annual growth rate (CAGR) of 52.9% [5] Company Overview - Eccogene Inc. (诚益生物) is a clinical-stage biotechnology company focused on developing new oral small molecule drugs for unmet medical needs in cardiovascular metabolic diseases and inflammatory diseases [3][6] - The company has achieved a valuation increase of 16.75 times in just three years, from $2.02 million post-A round financing in 2018 to $498 million in 2023 after a collaboration with AstraZeneca [6] Strategic Partnerships - Eccogene has entered a significant collaboration with AstraZeneca, valued at nearly $2 billion, granting AstraZeneca rights to develop and commercialize ECC5004 outside of China [3][6] Clinical Trials - ECC5004 is currently undergoing two global Phase IIb trials for obesity/overweight and type 2 diabetes, with completion expected by Q4 2025 [3][5] Financial Performance - Eccogene's revenue for 2023, 2024, and the first half of 2025 is projected to be $36 million, $221 million, and $557,000 respectively, with net profits showing significant fluctuations [7] - As of June 30, 2025, the company has $56.43 million in cash and cash equivalents to support ongoing clinical research [7] Competitive Landscape - The oral GLP-1 receptor agonist market is becoming increasingly competitive, with Novo Nordisk's oral semaglutide being the first approved oral GLP-1 receptor agonist and Eli Lilly's Orforglipron completing Phase III trials [5][6] - Several Chinese innovative drugs are also progressing rapidly, with at least eight domestic semaglutide products awaiting approval and 14 GLP-1 innovative drugs in Phase III clinical trials [5]

Core Insights - Chengyi Biotech Cayman Limited has submitted its IPO application to the Hong Kong Stock Exchange, with Jefferies, BofA Securities, and CICC as joint sponsors [1] - The company is currently in the clinical stage and does not have any commercialized products, but it has multiple oral small molecule metabolic pipelines supported by AstraZeneca [1][2] Company Overview - Established in 2018 and registered in Shanghai, Chengyi Biotech focuses on developing new oral small molecule drugs to address unmet medical needs in cardiovascular metabolic diseases and inflammatory diseases [2] - The company is developing an oral small molecule GLP-1 receptor agonist, ECC5004, which can be used as a monotherapy and in combination with other oral treatments [2] Financial Performance - Chengyi Biotech's revenue for 2023, 2024, and the first half of 2025 is projected to be $36 million, $221 million, and $557,000 respectively, with corresponding profits of -$52 million, $139 million, and -$20 million [2] - The company's financial performance is heavily reliant on AstraZeneca as its sole customer, leading to significant fluctuations in financial results [3] Strategic Partnerships - In November 2023, AstraZeneca and Chengyi Biotech announced an exclusive licensing agreement for ECC5004, which includes an upfront payment of $185 million and potential milestone payments of up to $1.825 billion [3] - AstraZeneca will have exclusive rights to develop and commercialize ECC5004 outside of China, while both companies will collaborate on its development and commercialization within China [3] Clinical Development - ECC5004 has completed Phase I trials in the U.S. and is currently undergoing two global Phase IIb trials for obesity and type 2 diabetes, with expected completion in Q4 2025 [4] - The company also has another core product, ECC4703, which targets MASH and is expected to be a leading treatment in its category [5] Use of IPO Proceeds - The funds raised from the IPO will primarily be used for the development of core products ECC4703, ECC5004, and ECC0509, as well as for preclinical products and the ongoing development of the TRANDD platform [6] Shareholding Structure - The largest shareholder group includes Zhou Jingye, Zeccogene, Xu Jianfeng, and JFSE, with Zhou controlling approximately 38.76% of the issued shares [6][7] - AstraZeneca UK Limited holds 5.02% of the company's shares, while other investors include Jianyi Capital, TF Capital, and several others [7]

Core Viewpoint - Chengyi Biotechnology has submitted its prospectus to the Hong Kong Stock Exchange for an IPO under Chapter 18A, aiming to raise funds for the development of its core products and enhance its operational capabilities [1][12]. Company Overview - Chengyi Biotechnology was founded in 2018 by Jingye Zhou and Jianfeng Xu in Shanghai, focusing on developing new oral small molecule drugs for unmet medical needs in cardiovascular metabolic diseases and inflammatory diseases [2][3]. - The company has developed a TRANDD platform to support its research and development workflow, which includes target selection, product characteristics development, and early clinical trial design [3]. Product Pipeline - The core product, ECC4703, is an oral liver-targeting THR-β agonist aimed at treating metabolic-associated fatty liver disease (MASH) and obesity, with potential to significantly reduce liver fat and fibrosis while minimizing cardiovascular risks [4][6]. - Another key product, ECC5004, is a once-daily oral GLP-1 receptor agonist for weight management and type 2 diabetes, expected to be a best-in-class treatment [6][11]. - The product pipeline also includes ECC0509, an oral small molecule SSAO inhibitor for osteoarthritis pain, which can be used in combination with GLP-1 receptor agonists [6][11]. Financial Performance - Chengyi Biotechnology's revenue surged from $36.06 million in 2023 to $221.29 million in 2024, with a profit turnaround to $138.84 million in the same year [8][10]. - However, in the first half of 2025, revenue dropped significantly to $557,000, resulting in a loss of $20.11 million [9][10]. Funding and Valuation - The company has completed multiple funding rounds, with a post-money valuation reaching approximately $498 million after a $25 million Series C round in December 2023 [7][8]. - The exclusive collaboration agreement with AstraZeneca for ECC5004 includes an upfront payment of $185 million and potential milestone payments totaling up to $1.825 billion, which will significantly impact future revenues [11]. Use of Proceeds - The funds raised from the IPO are intended for the development of core products, including ECC4703 and ECC5004, as well as for operational expenses and further development of the TRANDD platform [12].

Core Viewpoint - Eccogene Inc. has submitted its prospectus to the Hong Kong Stock Exchange for a public listing, focusing on innovative oral small molecule drugs for metabolic diseases and inflammation [1][4]. Company Overview - Eccogene Inc. is a clinical-stage global biotechnology company established in 2018, specializing in the development of next-generation oral small molecule drugs targeting unmet medical needs in cardiovascular and metabolic diseases [4]. - The company utilizes its proprietary TRANDD platform to integrate target selection, scaffold design, biomarker screening, and data-driven clinical trials, aiming for a balanced approach in efficacy, safety, and tolerability [4]. Strategic Focus - The core strategy of Eccogene is centered around a "Weight Loss 2.0 Solution," targeting obesity, metabolic-associated fatty liver disease (MASH), osteoarthritis pain, and other cardiovascular metabolic diseases [4]. - The company aims to achieve significant weight loss effects while enhancing tolerability and minimizing lean body mass loss, providing customized treatment options for various patient groups [4]. Product Pipeline - Eccogene's lead candidate, ECC5004, is an oral small molecule GLP-1 receptor agonist, expected to be the second oral GLP-1RA approved globally, with potential for both monotherapy and combination therapy [4][6]. - The company is also developing ECC4703, a THR-β agonist targeting MASH, and ECC0509, an SSAO/VAP-1 inhibitor, both of which have the potential to be first-in-class drugs [6]. - Additional projects in preclinical stages include GIP receptor modulators and Amylin receptor agonists, aimed at creating a multi-targeted approach for metabolic disease treatments [6]. Financial Overview - Eccogene is currently in a research and development investment phase, with projected revenues of approximately $36 million in 2023, $221 million in 2024, and $5.6 million in the first half of 2025 [6][7]. - Research and development expenses are expected to be $22.47 million in 2023, $16.22 million in 2024, and $15.73 million in the first half of 2025, with net losses of $52.23 million in 2023 and $20.11 million in the first half of 2025 [6][7]. Shareholding Structure - The founder and controlling person, Dr. Jingye Zhou, holds approximately 38.76% of the voting rights through direct and indirect shareholding [8]. - Other major shareholders include Jianyi Capital, Mifang Capital, TF Capital, Sage Partners, and several others, indicating a diverse and international management team with extensive experience in pharmaceutical R&D and capital markets [8].

Core Viewpoint - The competition in the weight loss drug market is intensifying, with major pharmaceutical companies actively developing innovative treatments targeting obesity through various mechanisms [1][15]. Group 1: Market Dynamics - The recent SURMOUNT-5 study revealed that the weight loss drug Tirzepatide outperformed Semaglutide, achieving an average weight reduction of 20.2% compared to 13.7% for Semaglutide [2][5][6]. - In the SURMOUNT-5 trial, 64.6% of participants in the Tirzepatide group lost at least 15% of their body weight, while only 40.1% in the Semaglutide group achieved the same [2][5][6]. - The study included approximately 751 participants and was designed to assess the efficacy and safety of Tirzepatide versus Semaglutide in overweight adults with at least one comorbidity [5][6]. Group 2: Clinical Results - Tirzepatide demonstrated superior results in secondary endpoints, including waist circumference reduction, with an average decrease of 18.4 cm compared to 13.0 cm for Semaglutide [2][5][6]. - Both treatments improved cardiovascular metabolic risk factors, but Tirzepatide showed more significant improvements in blood pressure and lipid profiles [7][8]. - The most common adverse events for both drugs were mild to moderate gastrointestinal issues, with 6.1% of participants in the Tirzepatide group discontinuing treatment due to adverse events, compared to 8.0% in the Semaglutide group [8]. Group 3: Sales Performance - Semaglutide's sales reached 55.78 billion Danish Krone (approximately 8.37 billion USD) in Q1, marking a 32% year-over-year increase [12]. - Tirzepatide's sales for the first quarter of 2025 were reported at 3.84 billion USD, a 113% increase year-over-year, indicating strong market traction [14]. - The competitive landscape is evolving, with both companies focusing on expanding their product lines and addressing the growing demand for obesity treatments [13][14]. Group 4: Future Developments - Novo Nordisk is developing multiple pipeline products, including CagriSema, which combines two active ingredients and has shown promising results in clinical trials [16]. - Eli Lilly is also advancing its pipeline with Orforglipron, an oral GLP-1 agonist, and Retatrutide, a triple receptor agonist, both showing significant weight loss results in preliminary studies [17]. - The global market for weight loss drugs is expected to continue growing, with various companies exploring innovative formulations and delivery methods to enhance treatment efficacy and patient compliance [15][18].