Beta Pharma Invests RMB 50 Million in Biostar's RMB 100 Million Financing Round at a Pre-Money Valuation of RMB 850 Million

Biopharmaceuticals, with their lengthy development cycles and inherent uncertainties in the development process, pose a significant challenge for R&D-focused pharmaceutical companies. To mitigate the risks associated with R&D investment, pharmaceutical companies often engage in drug development through acquisitions or investments.

VCBeat (WeChat: vcbeat) reported. Beta Pharma announced on the morning of May 2 that it will participate in a new round of RMB 100 million financing for Beijing Huahao Zhongtian Biotechnology Co., Ltd. Beta Pharma plans to invest RMB 50 million using its own funds, valuing the company at RMB 850 million.

Meanwhile, Beta Pharma will transfer 15% of its shareholding free of charge to a company controlled by Hua Hao Zhong Tian’s technical and management team, as incentive equity for the technology and senior executive teams.Upon completion of the transfer, Beta Pharma will hold a 4.4737% equity interest in Huahao Zhongtian.

Beta Pharma’s announcement disclosed that Huahao Zhongtian is a company founded by a team of PhD holders who studied in the United States, dedicated to developing products with independent intellectual property rights.New Class I DrugA national high-tech enterprise with its core business, the company has a registered capital of RMB 22.23286 million. As of March 31, 2017, Huahao Zhongtian had total assets of RMB 168 million, liabilities of RMB 30.81 million, and net assets of RMB 137 million. The announcement also disclosed that Huahao Zhongtian’s full-year revenue for 2016 was RMB 175,000, with an operating loss of RMB 185,000 and a net loss of RMB 188,000.

In terms of products, Huahao Zhongtian has pioneered the development of epothilones as novel anticancer drugs in China by leveraging its proprietary combinatorial biosynthesis and molecular breeding technologies, creating a series of innovative products with independent intellectual property rights. Huahao Zhongtian’s lead productUTD1 (You Ti Di)It is the first epothilone-based new drug in China to receive approval for clinical trials. Phase III clinical trials are currently being conducted at 26 clinical research centers across China. Existing results demonstrate that UTD1 has a definitive therapeutic effect on advanced metastatic breast cancer, with no serious toxic side effects—particularly, it exhibits virtually no myelosuppressive toxicity, outperforming agents with similar mechanisms of action.Paclitaxeland similar productsIxabepilone。

Other candidates include Demethilone, an innovative anti-tumor drug that has completed pilot-scale production and preliminary efficacy studies in animal models, as well as a tumor stem cell inhibitor for which clinical trial applications are planned. Data from the Center for Drug Evaluation (CDE) also indicates that Huahao Zhongtian currently has three drugs under development, including UTD1. Furthermore, according to public announcements, Huahao Zhongtian is actively expanding into the production and sales markets for core intermediates and active pharmaceutical ingredients (APIs) of new drugs.

Huahao Zhongtian has previously received multiple rounds of capital increases, includingIn 2015, Zhongguancun Development Group was introduced as an investor, followed by Fortune Capital and others in February 2016.. It can be determined that as new drug development progresses into later stages, the willingness to embrace external capital becomes stronger. The current introduction of Beta Pharma may lead not only to capital investment but also to potential collaboration after the approval of clinical trial applications for the drugs.

According to the announcement disclosed by Beta Pharma, the shareholding structure of Huahao Zhongtian after the completion of this round of financing is as follows.

Beyond this round of investment, Betta Pharmaceuticals has been actively engaged in numerous investment activities recently. These include the acquisition in February this year for RMB 370 million ofKanangi 77.4%equity in the company, which is also a new drug R&D startup founded by returnee entrepreneurs. It is primarily engaged in the research and development of CM082, a small-molecule targeted novel drug against VEGFR and PDGFR targets, with oral tablets as its clinical dosage form.

Beta Pharma also subscribed through its wholly-owned subsidiary, Beta Hong Kong Investment Co., Ltd.Tyrogenex (US)Preferred shares, with an investment amount of $10 million, representing a 7% equity stake. Tyrogenex holds the global rights (excluding China) for the development and commercialization of the ophthalmic indications of the X-82 compound.

Meanwhile, BETA Pharma and Tyrogenex jointly established Equinox Science, LLC (Chinese name: Yikenuo Biotechnology Co., Ltd.), with Tyrogenex contributing assets related to the oncology indications of X-82 as its capital contribution.Betta Pharmaceuticals Invests $15 Million, with each party holding a 50% equity stake; Equinox holds the global rights to develop and commercialize the oncology indications of compound X-82 outside China.

External commentators have noted that Betta Pharmaceuticals’ frequent investments in new drug R&D companies are closely linked to its own operational performance. Amid sluggish growth of its flagship drug, icotinib (Conmana), and an influx of competitors,Beta Pharma Urgently Needs to Establish a New “First-Mover Advantage”, the use of tumor-targeted drugs is a natural extension of its existing business, and external investments have followed this logic.

Annual report data shows that Beta Pharma’s full-year operating revenue reached RMB 1.035 billion, a year-on-year increase of 13.26%; net profit amounted to RMB 369 million, representing a year-on-year growth of 6.81%;Conmana contributed 99.98% of Beta Pharma’s sales revenue, amounting to RMB 1.035 billion.

In 2016, Betta Pharmaceuticals invested RMB 162 million in research and development (R&D), with the R&D expenditure accounting for 5.4% of its revenue. This figure placed the company at a median level among more than 130 pharmaceutical listed companies on the A-share market.

Beida Pharmaceutical closed at 30.30 yuan per share in early trading today, up 0.58%, with a total market capitalization of 24.18 billion yuan.