Baili Tianheng (688506) disclosed the 2025 fixed increase plan on March 9, and plans to raise no more than 3.9 billion yuan, all of which will be invested in innovative drug research and development projects.

The issuance plan has been reviewed by the board of directors and is subject to the approval of the general meeting of shareholders and regulatory authorities.

Fixed increase plan: focus on three major technology platforms

According to the plan, Baili Tianheng intends to issue no more than 20.05 million shares (accounting for 5% of the total share capital before issuance) to no more than 35 specific targets, and the total amount of funds raised will not exceed 3.9 billion yuan, all of which will be used for the clinical research and development of the three major technology platforms of innovative ADC (antibody drug conjugate), GNC (multi-specific antibody) and ARC (nuclear medicine). The reserve price of the issue is 80% of the average stock price of the 20 trading days prior to the pricing reference date, and the lock-up period is 6 months.

The fundraising project involves 10 drugs under development, including BL-B01D1 and GNC-038, among which the core product EGFR× HER3 bispecific antibody ADC (BL-B01D1) has reached a global cooperation agreement of US$8.4 billion with Bristol-Myers Squibb (BMS), and the down payment of US$800 million has been recorded in 2024.

The company currently has 14 clinical-stage drug candidates, of which 5 are in Phase III clinical trials. BL-B01D1 has conducted more than 30 clinical trials in China and the United States, covering more than 10 tumor types; HER2-ADC (BL-M07D1) is advancing more than 10 Phase III trials worldwide. The R&D team has a scale of 1,006 people, accounting for 41.9% of the total number of employees, and the R&D investment in 2023 will be 746 million yuan. If successful, the private placement will accelerate the clinical progress of 8 ADCs, 4 GNCs and 2 ARC drugs.

According to the plan, 9 of the company's 14 clinical drugs are in phase I/II, and BL-B01D1 has entered phase III but has not yet been unblinded, and the plan clearly indicates that "the success of clinical trials does not guarantee approval". The global ADC drug market is expected to reach $575 billion in 2033, but companies such as Pfizer and Daiichi Sankyo have already deployed similar targets. Direct competitors of BL-B01D1 include AstraZeneca/Daiichi Sankyo's HER3-ADC (U3-1402), which has initiated a phase III non-small cell lung cancer trial.

Previous fundraising: 86% utilization rate Project adjustment appeared

According to the previous fund-raising report disclosed by Baili Tianheng at the same time, of the 884 million yuan raised in the IPO in 2022, 766 million yuan has been put into use, with a balance of 124 million yuan (including temporary replenishment of 80 million yuan). The original "Antibody Drug Industrialization Construction Project" was completed ahead of schedule, 95 million yuan of surplus funds were permanently replenished, and the balance of 23.8 million yuan of the contract was transferred to its own funds. In March 2023, the fundraising project was adjusted, and some clinical trial sub-projects were changed to phase Ib/II non-small cell lung cancer research, reflecting the dynamic adjustment of R&D strategy. The adjustment has also attracted regulatory attention, with the Shanghai Stock Exchange asking the company about the reasonableness of frequently adjusting its fundraising projects within a short period of time after listing.

"Caizhong Society" paid attention to the fact that the 3.9 billion yuan raised amounted to 102% of the net assets, and more than 10 projects were planned to be promoted simultaneously. The actual investment in the "clinical research of antibody drugs" in the previous fundraising was 504 million yuan, which was 119 million yuan less than the commitment, indicating that the research and development progress was lagging behind. The previous fund-raising of 260 million yuan was replenished, and the current idle funds of 80 million yuan are still being replenished, accounting for 64.5% of the unused funds. The plan allows its own funds to be invested before the fundraising is in place, which may exacerbate the pressure on cash flow.

Significant growth in performance: BMS down payment drove a turnaround

According to the performance express report released on February 28, the revenue in 2024 will be 5.823 billion yuan, a significant increase of 936.31% year-on-year; The net profit attributable to the parent company was 3.658 billion yuan, a reversal from the loss of 780 million yuan in the previous year. The leap in performance was mainly due to the recognition of the down payment of US$800 million (approximately 5.76 billion yuan) for BL-B01D1, which accounted for 98.4% of revenue. As of the end of 2024, the company's total assets were 7.106 billion yuan and net assets were 3.822 billion yuan, an increase of 398.64% and 2416.25% respectively from the beginning of the year.

It is worth noting that the down payment of 5.76 billion yuan will account for the absolute proportion of revenue in 2024, and subsequent milestone payments need to meet clinical, registration and sales terms. The company's cumulative loss from 2021 to 2023 will exceed 1.1 billion yuan, suggesting that "it may still face the risk of loss in the future".

The plan clearly indicates that there are risks such as clinical failure and intensified market competition in the research and development of new drugs. At present, many of the company's core products are still in the clinical stage, and although BL-B01D1 has been in phase III trials, regulatory approval is still required for final marketing. In addition, the issuance may result in dilution of earnings per share, and despite the high performance in 2024, the continued investment in innovative drugs may affect short-term earnings performance.

The issuance resolution is valid for 12 months, and the final issuance plan is subject to review by the Shanghai Stock Exchange and registered with the China Securities Regulatory Commission. The company said that the fundraising will consolidate its innovative advantages in the field of oncology treatment and accelerate its progress towards the strategic goal of a multinational pharmaceutical company (MNC).