Dizal Pharmaceutical Secures $2.56 Billion RMB Private Placement Approval to Advance Global Innovative Drug Pipeline

On February 7, Dizal announced that its private placement plan on the STAR Market had received registration approval from the China Securities Regulatory Commission (CSRC). Through this private placement, Dizal plans to raise no more than RMB 1.848 billion. After deducting issuance expenses, approximately RMB 1.04 billion is expected to be invested in new drug research and development projects, RMB 610 million will be used for the industrialization of innovative drugs meeting international standards, and the remaining RMB 200 million will supplement working capital.

A portion of the funds raised from this private placement of shares will be used to supplement working capital, which will help alleviate Dizal’s working capital pressure. By leveraging the role of the capital market in resource allocation, Dizal will enhance its capital strength, optimize its capital structure, expand its business scale, and improve its risk resistance and sustainable operating capabilities, thereby promoting the company’s continuous and stable development.

Dizal stated to the STAR Market Daily that the approval of its private placement plan reflects the China Securities Regulatory Commission’s support and encouragement for technological innovation and the development of new quality productive forces, further underscoring the STAR Market’s positioning as a hub for “hard technology.”

Notably, this private placement plan marks the first time since the release of the China Securities Regulatory Commission’s (CSRC) “Eight Measures on Deepening the Reform of the STAR Market, Serving Scientific and Technological Innovation, and Fostering New Quality Productive Forces” (abbreviated as the “STAR Eight Measures”) that a non-profitable company listed on the Shanghai Stock Exchange has obtained CSRC review approval and registration consent for follow-on financing.

Although Dizal has not yet turned a profit, it has experienced rapid growth in recent years.The approval by the China Securities Regulatory Commission (CSRC) serves as a testament to Dizal’s strength. Established in 2017, Dizal was listed on the STAR Market at the end of 2021. Its predecessor was AstraZeneca’s only global oncology translational science research center, which made outstanding contributions to multiple blockbuster products for AstraZeneca worldwide. In 2017, Dizal was jointly founded by its management team, SDIC Innovation, and AstraZeneca Global. Dizal possesses an independent and comprehensive R&D team, core technologies, and R&D capabilities, enabling it to independently conduct new drug development, manufacturing, and commercial operations. SDIC Innovation and AstraZeneca Global serve solely as strategic investors in the company.

In terms of R&D,Dizal possesses ample technological reserves, providing robust technical support for the implementation of projects funded by the capital raised in this offering. The company has established an integrated R&D platform, with independent capabilities spanning all stages of innovative drug development, from early discovery to late-stage development. These capabilities include drug target identification and mechanism validation, translational science research, compound design and optimization, preclinical studies, chemistry, manufacturing and controls (CMC), and clinical trial design and execution. To date, Dizal has six drugs in global clinical trials for multiple indications, maintains a pipeline of several candidate innovative drugs in preclinical development, and has achieved milestone progress across multiple products.

In terms of commercialization,Dizal has two approved and marketed drugs, sunvozertinib and golidocitinib, both of which have been included in the updated National Reimbursement Drug List, with commercial production and sales currently being rolled out.

Sunvozertinib, the company’s core product, is the first domestically developed innovative drug in the lung cancer field to receive “Breakthrough Therapy Designation” from both China and the United States. It is also the only drug worldwide for the treatment of EGFR Exon20ins-mutated non-small cell lung cancer (NSCLC) to have received a total of four “Breakthrough Therapy Designations” from Chinese and U.S. authorities across all lines of therapy, and the first such drug approved as a national innovative drug in China. In August 2023, sunvozertinib was approved for marketing by the Center for Drug Evaluation (CDE). In November 2024, a New Drug Application (NDA) for sunvozertinib was submitted in the United States, making it the first China-originated targeted lung cancer therapy to file an NDA with the U.S. Food and Drug Administration (FDA). In January 2024, its NDA was accepted by the FDA and granted Priority Review status.

Golidocitinib, the core product, is the world’s first and only approved selective JAK1 inhibitor for T-cell lymphoma. It received FDA “Fast Track Designation” in February 2022 for the treatment of relapsed or refractory peripheral T-cell lymphoma (r/r PTCL) and was approved for marketing in China in June 2024. International multicenter registration clinical trials have demonstrated that golidocitinib exhibits significant efficacy in patients with r/r PTCL, with a favorable safety and tolerability profile, highlighting its potential as a novel and more effective targeted therapeutic agent.

However, sunvozertinib and golidocitinib applied for market approval based on the results of Phase II single-arm registration clinical trials, having received agreement from the Center for Drug Evaluation (CDE) and the U.S. Food and Drug Administration (FDA) for accelerated review. For these products granted conditional marketing approval, Dizal is still required to conduct international multicenter Phase III confirmatory trials, which will entail substantial subsequent R&D investment. In addition, other pipeline candidates independently developed by Dizal are at various stages of development and all require significant R&D expenditure.

Following this private placement, Dizal plans to construct an international-standard industrialization project for innovative drugs in Wuxi, Jiangsu, focusing on preclinical R&D, clinical development, and commercial manufacturing of novel therapeutics. The implementation of the projects funded by the private placement will help alleviate Dizal’s working capital pressure, enhance its R&D and production capabilities for innovative drugs, strengthen its risk resilience and sustainable operational capacity, and thereby promote the company’s continuous and stable development.

In recent years, an increasing number of biotech companies that have not yet achieved profitability have gone public through initial public offerings (IPOs). However, as these companies expand in scale and broaden their R&D pipelines, their research and development expenditures continue to rise year by year. According to data from PharmaCube, many listed companies on the STAR Market have been continuously increasing their R&D investment. In 2023, R&D spending amounted to RMB 156.1 billion, and in the first three quarters of 2024, it reached RMB 103.9 billion, both figures being more than twice the net profit attributable to shareholders during the corresponding periods. Due to its low entry barriers, flexibility, substantial fundraising capacity, and ability to attract strategic institutional investors, private placement has gradually gained prominence among listed companies, particularly among unprofitable science and technology innovation enterprises.

It is expected that Dizal will choose to raise additional capital through a private placement after its listing. In terms of funding, Dizal has been committed to the research and development of original innovative drugs, with cumulative R&D investments exceeding RMB 3.6 billion. According to the third-quarter report of 2024, Dizal recorded a net loss attributable to shareholders of RMB 558 million for the first three quarters of 2024. As Dizal advances its pipeline and its marketed products gradually enter the stage of scaled production and sales, the demand for funds across various aspects, including R&D, procurement, production, and operational management, will increase significantly. A private placement is indeed an effective way for Dizal to secure a large amount of capital at once and alleviate financial pressure on the company.

We also have reason to believe that Dizal’s financial pressure will gradually ease as its products are commercialized one after another. In 2023, Dizal generated RMB 91.2886 million in revenue from its first commercialized product, sunvozertinib tablets. In 2024, with the approval and commercial launch of golidocitinib capsules, Dizal’s revenue for the first three quarters rose rapidly to RMB 338 million. According to forecasts by Industrial Securities, the peak annual sales of sunvozertinib in China are expected to reach RMB 2 billion, while those of golidocitinib could reach RMB 500 million. In addition, Dizal has several drug candidates in its pipeline; if business development (BD) deals are struck at appropriate times, these assets could also generate substantial cash flow for the company.

Innovative drug development is inherently fraught with challenges, including high technical barriers, long development cycles, complex clinical trials, and capital intensity. Furthermore, as all of Dizal’s products hold full global rights and are developed under a simultaneous global development model, the company must meet the stringent clinical trial regulatory requirements of both domestic and international authorities. This inevitably leads to even higher R&D costs, making it unsurprising that its existing cash reserves are insufficient to sustain the rapid advancement of its R&D pipeline. We look forward to Dizal leveraging market-based financing to accelerate the R&D, clinical development, and commercialization of its drugs, thereby bringing more accessible treatments to patients at an earlier stage.

References:

1. “Refinancing Registration Approved, Internationalization Accelerates: Dizal Enters Era 2.0”

2. “RMB 1.85 Billion! An Innovative Drug Company’s Private Placement Financing Approved”