New stock preview | After losing 1.2 billion in two and a half years, Jinfang Pharmaceuticals is under heavy pressure from high debt as it "braves the Hong Kong Stock Exchange with injuries".

In the global biopharmaceutical industry, with the surge of innovation, new technologies and new concepts constantly emerging, the trend of overcoming difficult-to-treat diseases and bringing new hope to patients has become the core drive of the industry's development. Areas such as tumors, autoimmunity, and inflammatory diseases, due to their serious threat to human health and unmet medical needs, have become battlegrounds for many pharmaceutical companies. Jinfa Medical Technology (Shanghai) Co., Ltd. (hereinafter referred to as "Jinfa Medical") has established a complete system covering from drug development to clinical development in the fields of tumors, autoimmunity, and inflammatory diseases through its innovative research and development, and has made a name for itself in the field of biopharmaceuticals. At the same time, Jinfa Medical has embarked on a journey of capital operation, submitting an application for listing on the Hong Kong Stock Exchange on January 10, attempting to utilize the power of the capital market to further promote the development and expansion of its product research and development. However, the development path of Jinfa Medical is by no means smooth. The company not only faces inherent high risks and costs in the process of developing innovative drugs, but also is deeply immersed in the whirlpool of fierce market competition, while also facing significant financial pressure. These challenges, like the sword of Damocles, add uncertainty to the future development of Jinfa Medical. A commercial-stage biopharmaceutical company The prospectus shows that Jinfa Medical was established in 2017 and is a commercial-stage biopharmaceutical company focusing on innovative and effective treatment solutions in the fields of tumors, autoimmunity, and inflammatory diseases. As of December 21, 2024, Jinfa Medical has established a continuously updated product pipeline, including eight candidate drugs, five of which are in the clinical development stage. The company has two core products: GFH925 and GFH312. Among them, GFH925 (fulzerasib, trade name Dabot) is an innovative drug discovered by the company itself, which has been commercially approved in China for the treatment of advanced non-small cell lung cancer (NSCLC). It is the first selective Kirsten rat sarcoma (KRAS) G12C inhibitor approved in China and the third globally. According to the product information for GFH925 approved in China, as of the data cut-off date on December 13, 2023, among 116 patients, the confirmed objective response rate (ORR) was 49.1%, and the disease control rate (DCR) was 90.5%. The median progression-free survival (PFS) was 9.7 months, and the median overall survival (OS) was 13.3 months. The median duration of response (DoR) has not been reached. Although there have been no head-to-head clinical trials, the data showed better performance than the other two FDA-approved selective KRASG12C inhibitors (sotorasib and adagrasib) in the treatment of NSCLC. The company is advancing the overseas clinical development of GFH925 to unleash its therapeutic potential, including conducting a Phase Ib/II clinical trial of combined therapy with cetuximab (a targeted antibody drug against epidermal growth factor receptor (EGFR)) as first-line treatment for advanced NSCLC in countries within the EMA regulatory region. GFH312 is a highly efficient small molecule inhibitor developed by the company, which targets the kinase activity of receptor-interacting serine/threonine protein kinase 1 (RIPK1). The company has completed Phase I clinical trials of GFH312 in healthy subjects in Australia and China and received FDA approval for an IND to conduct Phase II clinical trials in the United States to evaluate its safety and efficacy in patients with peripheral arterial disease (PAD) accompanied by intermittent claudication (IC). At the same time, the company also plans to study GFH312 for the treatment of PBC in China, and has submitted a Phase II clinical trial application in November 2024. In addition to the company's core products, Jinfa Medical is building a comprehensive and differentiated RAS product matrix, including GFH375, an orally bioavailable small molecule inhibitor of KRASG12D. In addition to the innovative RAS matrix, Jinfa Medical is also committed to further enriching the product pipeline, such as GFS202A, a dual-specific antibody developed by the company targeting GDF15 and IL-6. The diversified product pipeline combination is a natural output of Jinfa Medical's proven integrated research and development platform, which covers target discovery, molecular discovery and evaluation, translational science, and global clinical development, complemented by the company's professional expertise in key chemistry, manufacturing, and controls (CMC) areas including formulation research and quality analysis. Over 1.2 billion accumulated losses in two and a half years In terms of performance, the revenue of Jinfa Medical was approximately 105 million yuan, 73.734 million yuan, and 0 in the fiscal years 2022, 2023, and the first half of 2024, respectively. The accumulated losses in the same periods were approximately 275 million yuan, 508 million yuan, and 449 million yuan, totaling about 1.23 billion yuan. One of the main reasons for Jinfa Medical's long-term losses is the high research and development investment. In 2022, 2023, and the first half of 2024, the company's research and development costs were 319 million yuan, 313 million yuan, and 186 million yuan, respectively, with a total research and development cost of about 820 million yuan. Jinfa Medical has a comprehensive research and development platform, including target discovery, molecular discovery and evaluation, translational science, and global clinical development, as well as expertise in chemistry, manufacturing, and controls (CMC). The company's research and development team consists of 85 employees, accounting for 77% of the total staff, with 61 members of the research and development team holding advanced degrees. In the CMC area, the team includes 24 professionals with an average of about 11 years of experience. A strong talent system provides a powerful guarantee for the company's innovative research and development, but even so, it is difficult to avoid the inherent risks in the research and development process. For example, developing innovative drugs is time-consuming and costly, and many of Jinfa Medical's candidate drugs have not yet been approved. Other candidate drugs besides GFH925 are still in various stages of research and development, and there is uncertainty about whether they can successfully complete clinical development, obtain regulatory approval, and achieve commercialization. The clinical development process is long and the results are uncertain, and early research and trialsTest results cannot predict future test results. Many factors such as changes in clinical trial design, difficulties in recruiting participants, and drug adverse reactions can all lead to delays, failures or increased costs in clinical trials. In addition, the development of therapies targeting members of the RAS family that the company is focusing on is extremely challenging. In the past, RAS proteins were considered "undruggable", and although the company has made some progress, inherent development risks in this area may still result in delays, overspending in clinical development, regulatory approval, or commercialization.In terms of finances, Jinfang Pharmaceuticals has primarily supported the company's product research and development through financing in the past, leading to a continuous increase in the company's debt pressure. By the first half of 2024, the company's total current liabilities reached 2.2 billion yuan, with a net current liabilities of 1.668 billion yuan, and a total net liabilities of 1.736 billion yuan. In the future, the improvement of Jinfang Pharmaceuticals' business performance and the optimization of its debt structure will greatly depend on the commercialization process of the company's core products. The successful commercialization of core products is expected to not only bring stable and substantial cash flow to the company, alleviate funding pressure, but also enhance the company's market competitiveness and brand influence, providing strong support for the adjustment of debt structure and rational planning of fund utilization, thereby laying a good foundation for the company's sustainable development. Core products face significant competitive pressure According to the prospectus, as of December 21, 2024, Jinfang Pharmaceuticals holds a total of 68 authorized patents and 89 pending patent applications, some of which are related to core products, providing legal protection for its technology and products. At the same time, the company has reached cooperation agreements with INNOVENT BIO, Verastem, SELLAS, and others. For example, the company has signed licensing and option agreements for GFH925 with INNOVENT BIO, granting them the rights to develop and commercialize in Greater China; and cooperation and option agreements with Verastem, granting them the choice of developing and commercializing select candidate products. Jinfang Pharmaceuticals mentioned in the prospectus that as GFH925 has been approved for commercialization in China, the company expects to generate revenue from the sale of GFH925 according to the agreement with INNOVENT BIO. According to Frost & Sullivan's report, the global oncology drug market is expected to continue growing. The market for KRASG12C inhibitors is projected to rapidly increase from $319 million in 2023 to $2.748 billion in 2032. In the RIPK1 inhibitor field, although there are currently no approved drugs worldwide, the market prospects are broad, with the PAD and PBC drug markets expected to continue expanding. However, Jinfang Pharmaceuticals faces intense market competition. In the field of KRASG12C inhibitors, several competitors have been approved and launched, such as adagrasib, sotorasib, and garsorasib. In addition, as of December 8, 2024, more than 20 candidate KRAS G12C inhibitors are currently in clinical development globally. In the RIPK1 inhibitor market, there are no approved RIPK1 inhibitors globally, although GFH312 is the only candidate drug for treating PAD and PBC, there are seven candidate RIPK1 inhibitors in clinical development worldwide. Competitors may have stronger resources and capabilities in research and development, production, marketing, etc., and may obtain regulatory approval faster than Jinfang Pharmaceuticals, launch more competitive products, seize market share, posing a threat to the company's market position and business opportunities. In summary, Jinfang Pharmaceuticals has shown certain strength and potential in the field of innovative drug research and development, with its core products and research layout having certain advantages. However, the company faces various risks and challenges in research and development, finance, and market competition. In the future, the company needs to rationally use funds raised, improve research and development efficiency, strengthen intellectual property protection, optimize partnership relationships, to address challenges and achieve sustainable development, establishing a foothold in the fiercely competitive biopharmaceutical market.