Pharmaceutical and Biotech Firms Withdraw IPOs in 2024 Amid Regulatory Tightening

　　【Pharmaceutical Network Industry DynamicsRecently, the Shanghai Stock Exchange announced that Hanyu Medical terminated its STAR Market IPO on January 16. The reason for the termination was that Hanyu Medical and its sponsor voluntarily withdrew the application for issuance and listing. This decision marks another termination of a listing attempt by the company, following its abandonment of a Hong Kong Stock Exchange listing in 2021 and the suspension of its STAR Market IPO attempt in 2023 due to expired financial documents.
 

It is reported that the company originally planned to raise approximately 1.722 billion yuan, of which 252 million yuan was for the production base construction project, 856 million yuan for the R&D center construction and registration trial project, 214 million yuan for the marketing network construction project, and 400 million yuan for supplementing working capital. With the termination of the company’s STAR Market IPO, it means that the 1.722 billion yuan fundraising plan has failed.
 

Data shows that Hanyu Medical is a medical device company, mainly engaged in the research and development, production, and commercialization of interventional devices for structural heart disease and electrophysiology products.
 

As of March 2023, the company's R&D pipeline includes five innovative medical devices for the repair of mitral regurgitation, tricuspid regurgitation, and congenital atrial septal defects, two innovative replacement medical devices targeting mitral regurgitation and tricuspid regurgitation respectively, and two electrophysiology products. Among them, the ValveClamp product has already submitted an application for marketing registration.
 

Since no products have been approved for marketing, the company has not yet achieved profitability as of now. In March 2023, the company's disclosed prospectus revealed that its revenue for 2019, 2020, 2021, and the first three quarters of 2022 was 0 yuan, 490,300 yuan, 3,405,400 yuan, and 2,166,600 yuan, respectively; net profit attributable to parent company shareholders was -49,192,400 yuan, -157 million yuan, -191 million yuan, and -58,842,000 yuan, respectively.
 

Since 2024, there has been a continuous stream of news about pharmaceutical companies halting their IPOs. In addition to Hanyu Medical, on January 8, 2024, ArkBio also terminated its STAR Market IPO. The reason was that ArkBio and its sponsor, CITIC Securities, applied to withdraw.
 

According to reports, ArkBio has also suspended its listing for the second time. In June 2021, ArkBio submitted an application for an H-share listing to the Hong Kong Stock Exchange, and in October 2021, it received approval from the CSRC for the issuance of foreign investment shares for overseas listing. However, unfortunately, at the beginning of 2022, ArkBio voluntarily chose to terminate its listing on the Hong Kong stock market.
 

Public information shows that ArkBio mainly focuses on drug research and development in the fields of antiviral, respiratory diseases, fibrosis diseases, and pediatrics.
 

Similar to Hanyu Medical, the company also does not yet have a commercialized product. Its core product is AK0529 (Cynvasse, Ziresovir Enteric-Coated Capsules), a novel respiratory syncytial virus (hereinafter referred to as RSV) fusion protein inhibitor used to treat RSV infections in infants, young children, and adult patients. The drug's marketing authorization application was accepted by the National Medical Products Administration in December 2022 and has been included in the priority review. ArkBio previously estimated in its prospectus that the drug would receive approval for market launch in 2023, after which it would achieve commercial sales and quickly generate revenue through channel coverage.
 

Notably, in preparation for the commercial production of Aiswei, in May 2023, ArkBio also entered into a collaboration with HuaQuan Pharmaceuticals, under which the latter will be responsible for the commercial production and supply of Aiswei after its approval and market launch in China. Previously, HuaQuan Pharmaceuticals had provided customized formulation development and production services for Aiswei.
 

However, it is obvious that the listing and commercialization progress of Aiswei has fallen short of expectations. On April 20, 2023, ArkBio's IPO on the STAR Market was accepted, planning to raise nearly 2 billion yuan. Of this amount, 1.337 billion yuan was intended for innovative drug research and development projects, 210 million yuan for marketing network construction projects, and another 450 million yuan to supplement the company’s working capital. Now, with the termination of its IPO, it means that the fundraising plan will also be shelved.
 

In the industry's view, the Sci-Tech Innovation Board (STAR Market) has brought hope for financing to companies that are not yet profitable, but the overall IPO market is currently tightening, and companies that can successfully enter the IPO process need to have certain capabilities. For companies with core products that have not yet been marketed and whose IPOs have been terminated, the challenge will be how to ensure normal business operations moving forward.
 

Disclaimer: In any case, the information or opinions expressed in this article do not constitute investment advice to any person.