BrightGene Bets on Innovative Drugs to Forge a Second Growth Curve as Core R&D Remains a Marathon | Shareholder Meeting Highlights

The Science and Technology Innovation Board Daily, December 2nd, by reporter Shi ShiyunDecember 1st, in the afternoon,Borui Pharmaceutical(Maintain Rights)(688166.SH) Held the Second Special Shareholders' Meeting in Suzhou.

The meeting reviewed and approved one proposal on "Foreign Investment and Related Transactions", which is that BrightGene Bio-Medical (Suzhou) Co., Ltd. plans to increase its investment in Suzhou Geek Gene Technology Co., Ltd. ("Geek Gene") by 50 million yuan, of which 437,100 yuan will be paid as Geek Gene's newly increased registered capital, and the remaining part will be included in Geek Gene’s capital reserve fund. Before this increase in capital, BrightGene held 4.0816% of Geek Gene's equity, and after the increase in capital, it holds 12.8015% of the equity.

Suzhou Geek Gene Technology Co., Ltd. is a cell drug development company specializing in the regulation of cell fate through high-throughput omics data. It mainly engages in single-cell sequencing services and the development of immune cell therapies. Its Class 1 new drug, GK01 cell injection for advanced malignant solid tumors, has been approved for clinical trials in China.

This shareholders' meeting was chaired by Yuan Jiandong, chairman of CQP, and adopted a combination of on-site and online voting for decision-making. Among them, there were 5 shareholders and authorized representatives present on-site, holding approximately 137 million voting shares.

▌Performance Continues to Be Under Pressure, Increasing Investment in Innovative Drug R&D

CQP was established in 2001 and listed on the STAR Market in 2019. It initially started with active pharmaceutical ingredients (API) and intermediates businesses and has now gradually expanded into a pharmaceutical enterprise covering three major sectors: APIs, generic drugs, and innovative drugs.

At this stage,Borui Pharmaceutical's revenue mainly relies on APIs and formulations business, but due to the impact of centralized procurement price cuts and intensifying market competition, its performance has started to come under pressure, and profitability has begun to decline continuously.

Data shows that from 2021 to 2024, CQP's revenue was 1.052 billion yuan, 1.017 billion yuan, 1.18 billion yuan, and 1.283 billion yuan respectively, while the net profit attributable to parent company for the same period was 244 million yuan, 240 million yuan, 202 million yuan, and 189 million yuan respectively, showing an obvious trend of "increased revenue but not increased profit".

Entering 2025, the performance of CQP has not improved. In the first three quarters of this year, its operating revenue decreased by 10.50% year-on-year to 874 million yuan, and the net profit attributable to shareholders plummeted by 71.64% to 50.32 million yuan.

In this regard, CQP stated that the decline in performance was mainly affected by two aspects:1. The trend changes in influenza and intensified market competition have led to a simultaneous decline in the demand and price of oseltamivir active pharmaceutical ingredients and formulations; 2. High-margin antifungal products experienced fluctuations in customers' periodic commercial demands, resulting in a decrease in revenue compared to the same period last year.

The pillar business has shown signs of decline, and CQP has started to bet on its second growth curve in innovative drugs. Among them, the metabolic disease field is its key focus, and BGM0504 is the core product that CQP is currently pushing forward.

BGM0504 is a GLP-1 (glucagon-like peptide 1) and GIP (glucose-dependent insulinotropic polypeptide) receptor dual agonist independently developed by CQP, which gained attention when the chairman "tested the drug on himself."

Currently, CQP is simultaneously advancing the development of BGM0504 for diabetes and weight loss indications. According to information obtained by The Science and Technology Innovation Board Daily from the shareholders' meeting, the phase III clinical trials in China for the two indications of BGM0504 injection—type 2 diabetes and weight loss—have completed full enrollment and are currently in the dosing and follow-up stages.Among them, the data for the weight loss indication is expected to be available as early as the second quarter of next year, while the data for the blood sugar reduction indication is expected to be available by the end of next year.

At the same time, the US bridging clinical study for the weight loss indication of BGM0504 injection conducted in the United States has been completed. It will skip Phase II and directly enter Phase III clinical trials. Representatives from CQP told reporters at The Science and Technology Innovation Board Daily that they would submit the Phase III clinical trial protocol to the US FDA by the end of this year at the earliest.

Notably, CQP revealed to the reporter of The Science and Technology Innovation Board Daily,Affected by the adjustment of relevant clinical trial regulations in the U.S., the enrollment population for the clinical trial of BGM0504 injection in the U.S. is expected to reach approximately 6,000 cases, which has significantly driven up the company's R&D costs. The investment required for this clinical study is projected to be at least 500 million U.S. dollars.

In addition, the hypoglycemic indication of BGM0504 injection has also entered phase III clinical research in Indonesia. When discussing the considerations for entering this market, CQP stated that Indonesia, as an easily overlooked emerging market, is not only a populous country with significant pharmaceutical demand and considerable purchasing power, but also has a relatively high incidence of diabetes.The company expects that the approval process for BGM0504's diabetes indication in Indonesia may proceed faster than in China.

CQP is also developing an oral formulation of BGM0504 during the same period. Its third-quarter report shows that the IND application for this formulation targeting weight loss indication has been submitted in China, and the IND application submitted in the United States has been approved.

▌Alleviate Financial Constraints, Terminate Private Placement and Shift to HKEX Financing

The advancement of BGM0504 has also propelled CQP to become a highly regarded "GLP-1 concept stock" in the secondary market, with its stock price continuously strengthening.

Especially in July and August this year, the stock price of CQP once climbed to a hundred-yuan stock. Later, due to a significantly declining semi-annual earnings report, its stock price continued to fall. Nevertheless, from the beginning of this year to the end of November, the increase in its stock price has exceeded 76%. Due to the relatively high rolling P/E ratio, CQP has issued several announcements regarding severe abnormal fluctuations in stock trading, reminding investors to be aware of investment risks.

However, the highlights in the secondary market cannot alleviate the financial difficulties of CQP. The R&D investment in innovative drugs is high in cost, high in risk, and long in cycle, and the company's cash on hand is being rapidly depleted.

According to the half-year report data, in the first half of this year, CQP's R&D investment reached 348 million yuan, surpassing the total of 312 million yuan for the whole year of 2024, with a year-on-year increase of 144.07%. The proportion of R&D investment to operating income was 64.83%. Of the R&D investment, over 91% was directed towards innovative drugs and inhalation preparations, with investment in innovative drugs surging by 604.93% compared to the same period last year.

As of the third quarter of this year, CQP's ending cash and cash equivalents balance was approximately 600 million yuan, compared to 731 million yuan in the semi-annual report, indicating that the company’s single-quarter cash burn has exceeded 100 million yuan. Meanwhile, non-current liabilities due within one year increased by 23.09% year-on-year to 661 million yuan, with total current liabilities amounting to 1.157 billion yuan.

Facing financial pressure, CQP continues to broaden its financing channels. It previously launched a private placement plan with a total fundraising amount of 500 million yuan. This private placement was entirely undertaken by the actual controller Yuan Jiandong, with the issue price at 22.36 yuan per share.

However, in mid-October this year, the private placement was announced to be terminated. CQP stated that this decision was made after comprehensively considering the current market environment, as well as the company's actual situation and development plans. In fact, the private placement had previously also raised market concerns about potential interest transfers.

At the end of October, CQP officially announced that it had submitted its listing prospectus to the Hong Kong Stock Exchange, aiming to diversify its financing channels through international placements and enhance the company's overseas financing capabilities.

At the shareholders' meeting, a relevant person in charge of CQP frankly told the reporter of The Science and Technology Innovation Board Daily,The company has been preparing for its Hong Kong stock listing plan for some time. Compared to a private placement financing of 500 million yuan with uncertainties, the company prefers to seize the financing window of the Hong Kong stock listing, thus adjusting its financing arrangements. Referring to the conventional issuance rhythm of "A+H" shares in the market, the company expects to complete the Hong Kong stock issuance by the second quarter of next year.