Another Pharma Company Halts IPO: Nearly 30 Biopharma Firms Have Aborted Listings This Year

　　【Pharmaceutical Network | Pharmaceutical Stock Market] Amid the trend of increasingly stringent IPO reviews, terminations of pharmaceutical companies’ IPO applications have become frequent. Statistical data shows that since the beginning of this year, 29 companies in the biopharmaceutical sector have terminated their IPOs. Notably, since September, multiple pharmaceutical companies have halted their IPO processes.
 

On September 11, Jingjie Biotech’s initial public offering (IPO) on the ChiNext Board of the Shenzhen Stock Exchange was terminated. As Jingjie Biotech and its sponsor withdrew the application for issuance and listing, the Shenzhen Stock Exchange decided to terminate the review of its issuance and listing in accordance with Article 62 of the “Shenzhen Stock Exchange Rules for Reviewing Stock Issuance and Listing (Revised 2024).”
 

According to available information, Jingjie Bio focuses on protein analysis technology and serves basic life science research, drug development, and clinical diagnosis and treatment by providing proteomics technical services and antibody reagent products. The company originally planned to raise RMB 514 million for the provincial-level project of a proteomics technology service platform, the production project of high-end scientific research and diagnostic antibody reagents, and the comprehensive R&D platform project based on proteomics technology.
 

From a financial perspective, Jingjie Biology achieved revenues of approximately RMB 116 million, RMB 153 million, RMB 221 million, and RMB 89.3254 million in 2019, 2020, 2021, and as of June 30, 2022, respectively; during the same periods, its net profits were approximately RMB 23.1767 million, RMB 41.3278 million, RMB 68.1545 million, and RMB 9.4471 million, respectively.
 

It is worth noting that Jingjie Bio had a relatively small operating scale during the reporting period, with its net profit after deducting non-recurring gains and losses amounting to RMB 33.2039 million, RMB 52.7779 million, RMB 61.4543 million, and RMB 16.3128 million in 2020, 2021, 2022, and January–June 2023, respectively. However, the new listing requirements for the ChiNext Board mandate that a company’s net profit in the most recent fiscal year shall be no less than RMB 60 million.
 

In terms of R&D investment, Jingjie Bio’s R&D expenditure as a percentage of revenue was 10.61%, 14.49%, 16.12%, and 14.35% in 2019, 2020, 2021, and the first half of 2022, respectively. This is primarily because the proteomics and antibody reagent industries are rapidly emerging sectors characterized by a relatively late start in scientific research and constantly evolving research hotspots, necessitating continuous R&D investment and proactive technological positioning by Jingjie Bio. After designating antibody reagent products as a key focus for future business development in 2020, Jingjie Bio significantly increased its R&D spending on these products. However, alongside this heightened R&D investment, the company’s R&D team expanded rapidly, resulting in substantial fluctuations in personnel numbers.
 

In addition to Jingjie Bio, pharmaceutical companies such as Bestcomm Pharmaceutical and Branden also terminated their IPOs this September.
 

Among the reasons for the termination of Shandong Bestcomm Pharmaceutical Company Limited’s IPO were: ① The rapid growth in revenue from its R&D achievement transformation business raised questions from the stock exchange regarding the rationality and sustainability of the significant increase in net profit attributable to shareholders; ② In terms of its positioning on the ChiNext Board, Bestcomm Pharmaceutical’s technical strength was reflected in the number of drug approval certificates. However, with 14 Class II innovative drugs and over 100 generic drug products still under development, coupled with significant fluctuations in net profit during the reporting period, the company’s technological capabilities and the growth potential of its core business were called into question; ③ During the reporting period, Bestcomm Pharmaceutical’s R&D expenses consisted primarily of employee compensation. However, given the relatively low remuneration for R&D personnel and the high volume of materials consumed in R&D activities, the stock exchange issued inquiries concerning the consistency between the content and quantity of R&D projects and the various subcategories of R&D expenditures.
 

Data shows that Bestcomm Pharmaceutical is mainly engaged in providing one-stop solutions for pharmaceutical R&D and production services to customers, including CRO businesses such as contracted R&D services and the transformation of R&D achievements, CMO businesses, andActive Pharmaceutical Ingredient (API)Its business operations span the entire lifecycle of drug research, development, and manufacturing. The company initially planned to raise RMB 1 billion in funds, which were intended for the construction of a drug development technology and digitalization platform, the establishment of a drug research center, and the supplementation of working capital, among other purposes.
 

Regarding the abrupt halt of Branden’s IPO journey, industry insiders stated that this decision was not accidental, but rather a carefully considered move made by the company amid the interplay of multiple factors, including drastic changes in the policy environment, intensifying market pressures, and internal strategic adjustments.
 

According to available data, Branden is a company dedicated to applying medical material modification technologies to implantable and interventional medical devices. The company originally planned to raise approximately RMB 760 million through an initial public offering (IPO), with the funds primarily allocated to projects such as the industrial upgrading of medical catheter production, construction of research and development centers, establishment of marketing service networks and information systems, and supplementation of working capital.
 

Industry experts pointed out that in August 2023, the China Securities Regulatory Commission (CSRC) website released multiple documents and proposed a “phased tightening of the IPO pace,” aiming to alleviate the supply-demand imbalance in the market and promote dynamic equilibrium between the primary and secondary markets by slowing down the speed of new share issuances. Since then, a number of companies that had passed the listing committee review have failed to complete their registration process. So far this year, 29 biopharmaceutical-related companies have terminated their IPOs, including many that had previously passed the listing committee review. Notably, nucleic acid testing-related companies have suffered concentrated setbacks. Data shows that as of August 7, among the nucleic acid testing concept companies that had passed the listing committee review, DaKeWei, Feipeng Biology, MicroStrategy Biology, ZhiShan Biology, Ruiboao, and Kaishi Biology have also terminated their IPOs.
 

Disclaimer: Under no circumstances shall the information contained herein or the opinions expressed constitute investment advice to any person.