Refinancing 20 billion yuan to focus on global innovative drug research and development
Baiji Shenzhou, a 100 billion pharmaceutical company, landed on the Sci-tech Innovation Board
Our reporter Yuan Lu
As a star company, BeiGene has affected the capital market's attention every time its capital "flips its wings".
Yesterday, BeiGene IPO once again struck the bell, and the first biopharmaceutical company to be listed on A-shares, Hong Kong stocks and US stocks was officially born.
Along the way, BeiGene has relied on huge R&D investment and globalization to stand on top of the wave of Chinese innovative drugs. However, the outside world has engaged in research and development of its huge amount of "burning money", and the voice of doubts about its loss-making model has been growing. BeiGene also broke on the first day of listing.
"Although the specific profit time is uncertain, with the advancement of the global strategy and the blossoming of new drug research and development, our revenue will also have breakthrough growth." BeiGene President Wu Xiaobin responded.
The first pharmaceutical company "listed in three places"
With a clear sound, BeiGene successfully landed on the Science and Technology Innovation Board of the Shanghai Stock Exchange and started trading. The world's first biotechnology company listed on the Shanghai Stock Exchange, Nasdaq and Hong Kong Stock Exchange was officially born.
Formally returned to the A-share listing on the Science and Technology Innovation Board, BeiGene's issue price is 192.6 yuan per share, and the total amount of funds raised is expected to reach 22.16 billion yuan, making it the second most expensive stock after Yiqiao Shenzhou this year.
In 2010, Wang Xiaodong, the founder and director of the Beijing Institute of Life Sciences, wanted to go to the San Francisco Bay Area to start a pharmaceutical company, but met the American Ou Leiqiang at a gathering of friends. Under the persuasion of the other party, he chose to establish Baekje in Changping, Beijing. Shenzhou takes the meaning of "100 innovative medicines, benefiting the world and benefiting the people".
At the bell ringing ceremony, Wang Xiaodong expressed emotion to reporters that Ou Leiqiang's decision to start a business in Beijing was extremely correct: "China had become the world's second largest pharmaceutical market after the United States at that time, with huge drug demand. Chinese cancer patients The demand for anti-cancer drugs is far from being met, and the anti-cancer drug market will grow larger and larger."
In the past 11 years, BeiGene has moved from a biotechnology company to a biopharmaceutical company with a complete value chain: Beijing R&D Center was established in 2011, successfully landed on Nasdaq in the United States in 2016, and the Guangzhou biopharmaceutical production base began construction in 2017. The Suzhou industrialization base was completed and listed on the American Stock Exchange in 2018.
On November 1, 2019, it reached a record-breaking cooperation with the multinational biopharmaceutical leader Amgen. 15 days later, the self-developed drug Zebutinib was approved by the US FDA, and numerous spotlights were lit.
In 2020, five conditionally approved indications of Baiyueze, Baizean and Anjiawei were included in the National Medical Insurance Drug List.
Wang Xiaodong was very excited about BeiGene’s listing on the Sci-tech Innovation Board. He woke up twice the night before the listing, and even dreamed of listing: "Beijing Shenzhou’s SSE STAR Market has raised funds for us, and it is considered very impressive among global pharmaceutical companies. This means that we can do more difficult R&D, have more trial and error opportunities, and better optimize our team."
R&D investment far exceeds similar companies
Before the IPO, in order to stabilize the stock price of new shares, BeiGene introduced a "green shoe mechanism" and granted China International Capital Corporation a 30-day over-allotment option, which can over-allot no more than 17.26 million RMB shares.
But even with the "green shoes" underpinning, BeiGene still broke and fell 8% at the opening.
As of the close of the day, BeiGene closed at 160.98 yuan per share, a decrease of 16.42%, and a total market value of 214.9 billion yuan.
BeiGene's break on the first day had early signs.
On the evening of December 7, BeiGene disclosed the results of its initial public offering and listing on the Science and Technology Innovation Board. Online investors gave up 1.0325 million shares, and online investors gave up about 199 million shares.
"The price of BeiGene issuance is relatively high, and the amount of payment required for the first sign is nearly 100,000 yuan. In addition, the Hong Kong stocks have a clear valuation anchor, and investors' worries are relatively normal." Industry analysts believe.
High pricing is one aspect, and the bigger voice of doubt is that BeiGene has “burned money” for research and development, and has been losing money year after year.
In 2018, 2019, and 2020, BeiGene's R&D expenses were 4.596 billion yuan, 6.588 billion yuan, and 8.942 billion yuan, respectively, reaching 3.5 times, 2.23 times, and 4.21 times the revenue of the same period, and net profit was -4.748 billion. Yuan, -6.928 billion yuan, -11.407 billion yuan.
This money-burning model is related to the high investment, long cycle, and high risk characteristics of innovative drug R&D. However, among innovative drug companies, such large R&D investment like BeiGene is also rare.
The reporter noticed that Hengrui Pharmaceuticals, which is also involved in the field of innovative drugs and has a market value of over 500 billion yuan, has basically controlled its research and development expenses as a percentage of revenue within 20% in recent years.
Junshi Bio, also as an innovative pharmaceutical company, has year-round losses that are not in the same order of magnitude as BeiGene.
Why does BeiGene have such high R&D expenses?
This is closely related to the simultaneous promotion of hundreds of global clinical trials and the establishment of a large-scale global clinical development team.
Wang Lai, senior vice president of BeiGene, once revealed that in a global phase III head-to-head clinical trial of zebutinib, the purchase of the control drug ibrutinib alone may cost a patient US$100,000 a year, and the patient may take the drug. As long as 3 to 4 years, the cost of a study per person is as high as 300,000 to 400,000 US dollars, and there are 400 patients worldwide.
"A lot of investment thinking in China is still at the generic drug stage, hoping to get a return in the short term. However, the research and development cycle of new drugs is long and the risk is high. It takes about 10 years on average. However, if it goes on the market, the return will also be large in the later period. Continue to do it. , The pipeline blowout will also be an inevitable trend." Wang Lai said.
Focus on innovative drugs and continue to release "stamina"
BeiGene's massive investment has been exchanged for international recognition of the quality of medicines, and innovations are gradually being harvested.
At present, BeiGene has successfully launched 3 blockbuster self-developed drugs.
Among them, Baiyueze has achieved a "zero breakthrough" in the overseas market of domestic anti-tumor innovative drugs. At present, its commercialization layout has covered about 40 countries and regions around the world, and it is used to treat multiple B-cell malignant hematological tumor indications.
This has also allowed BeiGene's product revenue to continue to grow, and "stamina" continues to be released.
In the third quarter of 2021, BeiGene's product revenue reached US$192.5 million, a year-on-year increase of 111%; as of September 30, 2021, the company's total operating income for the first three quarters was US$962 million, a year-on-year increase of 360.93%.
It is worth mentioning that, stepping on the east wind of the policy, BeiGene's Baizean has three new indications, Baiyueze has one new indication, and Baihuize's new drug is included in the new version of the national medical insurance drug list.
Reduced prices and increased volume have brought substantial growth in performance.
The financial report shows that BeiGene's product revenue in the third quarter was 192.5 million U.S. dollars, and revenue from these three drugs reached 189 million U.S. dollars, accounting for more than 98%.
"At present, the new drugs of many large companies are on the market, and the price factor makes it possible that only one-sixth of the patients in the world can use it." Wang Xiaodong said, which is different from the business logic of traditional multinational pharmaceutical companies that sell innovative drugs at high prices to obtain more profits to support R&D. BeiGene hopes to break this situation and develop more valuable new drugs to cover more patients around the world, which will naturally bring more commercial benefits to balance R&D investment.
However, in the process of commercialization of new drugs, BeiGene is also facing the risk of squeezing similar products and increasing competition.
"We have a very clear understanding of this, and we are not afraid of competition. We hope to subvert the global pharmaceutical landscape with our own efforts." Wang Xiaodong said, following the approval of 3 self-developed products for marketing, 11 self-developed preclinical drug candidates After advancing to the clinical trial or commercialization stage, BeiGene will enter the third wave of research and development this year, embarking on a new journey of "being the best anticancer drug in the world".