Strategic Investors Inject Capital to Drive Innovation and Turnaround at YuHeng Pharma

On August 17, Yuheng Pharmaceutical (SZ: 002437) announced that its controlling shareholder intends to transfer a portion of its equity stake in Yuheng Pharmaceutical for RMB 1.275 billion, thereby introducing three strategic investors, including Tonghe YuCheng, Boyu Capital, and Yipu Suyu. In addition, the strategic investors and their affiliates will jointly inject RMB 312 million into Yuheng Bio, a subsidiary of Yuheng Pharmaceutical focused on combination therapies in tumor immunology. Upon completion of the aforementioned transactions, the strategic investors will collectively hold a 15% equity interest in Yuheng Pharmaceutical and a 51% equity interest in Yuheng Bio.

Since early 2018, concerns have arisen in the market over Yuheng Pharmaceutical due to a liquidity crisis involving its actual controller. In addition, the recent announcement terminating the acquisition of Hefei Tianmai Biotechnology has also exerted some pressure on the stock price following its resumption of trading.

The participation of these strategic investors reflects the high recognition by professional institutional investors of Yuheng Pharmaceutical and the development prospects of its biologics business. The strategic investors are all well-known investment institutions in the pharmaceutical industry, possessing extensive resources and corporate management experience within the sector. Among them, All-Stars Healthcare is a leading venture capital firm focused on the healthcare field, with significant influence in cross-border investments, talent acquisition, and industrial resource integration. Boyu Capital is a prominent private equity fund in China that has invested in numerous renowned domestic and international pharmaceutical companies. Yipu Suyu is composed of several well-known professional equity investment institutions; within this group, Suzhou Min Tou is a leading private investment holding company in China with extensive and in-depth layouts in the biopharmaceutical sector, while Shiyu Capital is a fund management company specializing in pharmaceutical investments.

Yuheng Pharmaceutical is a rare platform-based enterprise in the A-share market with a portfolio of tumor immuno-oncology combination therapies. Its subsidiary, Yuheng Biologics, has a R&D pipeline that includes multiple targeted products for tumor immuno-oncology combination therapies, encompassing both large-molecule biologics and small-molecule chemical drugs. Currently, the company’s flagship monoclonal antibody product, GLS-010 injection, has entered Phase II clinical trials for classical Hodgkin lymphoma, while several other Phase Ib expansion studies across different tumor types are also underway. However, the development of new drugs requires substantial capital investment, placing significant financial pressure on the listed company.

Meanwhile, new drug development involves significant uncertainties, and bearing such risks solely by the listed company would pose substantial challenges to its existing risk control system. Following this capital increase, Yuheng Biopharma has diversified its funding sources, ensuring sustained investment in ongoing clinical trials, while also facilitating the attraction of top-tier market-oriented talent both domestically and internationally. In the future, it can collaborate on products with global oncology drug R&D enterprises invested by strategic investors such as Tonghe Yucheng and Boyu Capital, leveraging Yuheng Pharmaceutical’s commercialization team for domestic sales. At that point, Yuheng Pharmaceutical will transform into a leading integrated platform in China for the R&D and commercialization of novel oncology drugs.

According to the semi-annual report recently disclosed by Yuheng Pharmaceutical, the adverse impact of the “Two-Invoice System” and restrictions on adjuvant drugs on the company’s performance is gradually dissipating, with results showing signs of stabilization and recovery: net profit attributable to shareholders in the first half of the year reached RMB 226 million, a year-on-year increase of 3.09%. A further analysis of the performance composition reveals that oral products in the chronic disease segment, such as Zinc Calcium Special (Xingaitе) and Clopidogrel, have made increasingly significant contributions, indicating that the company’s strategy to actively adjust its product structure has begun to yield results. The strategic investors introduced by Yuheng Pharmaceutical will undoubtedly help the company expand into new sales categories, which will further mitigate the short-term impact of macroeconomic policy changes in the industry on Yuheng Pharmaceutical.

Following this investment, strategic investors will be able to participate in the Company’s major operational decisions, which will further enhance Yuengheng Pharmaceutical’s corporate governance, strategic decision-making capabilities, and international professional management standards, thereby attracting more top-tier talent to join the Company during its business transformation and growth phase. With the infusion of fresh perspectives and a global outlook, Yuengheng Pharmaceutical will transform from a marketing-oriented enterprise primarily focused on traditional domestic pharmaceuticals into a professionally operated biopharmaceutical industrialization platform. It aims to achieve integrated research and development, manufacturing, and sales in the two most promising markets—chronic disease management and oncology treatment—and is poised to become an industry leader with independent core competitive advantages, aligning with the supply-side reforms in the pharmaceutical sector.