"Dual-drive + commercialization of the three major engines," (02575) sets its sights on the new benchmark of the Biopharma industry in Hong Kong.

With the Federal Reserve announcing its first rate cut in September this year, the global trend of funds flowing into emerging markets is becoming more evident, potentially providing a significant marginal boost to the Hong Kong stock innovative pharmaceutical sector, which is currently in a valuation upgrade cycle. In addition, positive signals such as domestic encouragement of the development of innovative pharmaceuticals and the appearance of signals against "overwork" have market analysts generally predicting that the bull market for innovative pharmaceuticals in Hong Kong stocks is expected to continue. For (02575), which holds the three pillars of commercialization and innovation, now is a timely moment for it to debut in the Hong Kong market. As the core platform of SIHUAN PHARM's innovative pharmaceuticals, Xuanzhu Bio officially listed on the Hong Kong stock market on October 15th. The company's IPO issue price was HK$11.60 per share, raising a total of approximately HK$780 million. On the day of listing, Xuanzhu Bio's stock price surged to a high of HK$31, a 167% increase. Founded in 2008, Xuanzhu Bio is at the forefront of innovative pharmaceutical enterprises listed in the initial commercialization phase. After years of innovative research and development, the company has now built a comprehensive internal research and development platform to support the development of a diversified and balanced pipeline covering gastrointestinal diseases, tumors, and non-alcoholic steatohepatitis (NASH). With the three-pillar drive of its products in gastrointestinal and tumor areas, Xuanzhu Bio not only fills the clinical gap in China but also leverages its strong commercialization capabilities to continue to explore broader therapeutic markets, demonstrating the company's Biopharma essence. The funds raised from the IPO are intended to further consolidate the company's advantages in innovation research and commercialization, push its core products into the top tier of market competition, and quickly increase the company's revenue and profits. In the current backdrop of the continued bull market for innovative pharmaceuticals in Hong Kong stocks, Xuanzhu Bio is undoubtedly an important observation window for investors looking to allocate high-quality scarce innovative pharmaceutical assets. Dual-drive breeds the three pillars of commercialization With the dual drive in gastrointestinal and tumor areas, Xuanzhu Bio is poised for a commercialization breakthrough in 2025. Both its core tumor drugs, Piloci and Loratinib, have been successively approved. Combining with the previous approval of another core product, the proton pump inhibitor Anlarazol, Xuanzhu Bio has formed a product matrix of the commercial "three pillars," representing the industry and market's recognition of the company's core innovation and commercialization development strategy. In the development of innovative products, Xuanzhu Bio strategically selects large unmet medical needs and emphasizes differentiated safety and efficacy. This strategy is evident in the development of its core products. Take Piloci for example, on May 15th this year, Xuanzhu Bio's proprietary CDK4/6 inhibitor Piloci with full intellectual property rights was approved for marketing and received widespread attention in the industry. This is because Piloci's clinical trial data has significant clinical value tailored to the characteristics of breast cancer patients in China. Research data shows that the median age of breast cancer patients in China is earlier than in Western countries, with a higher proportion of Luminal B tumors, primary resistance, and chemotherapy patients, resulting in a relatively poor prognosis. Piloci's clinical research has accurately matched China's treatment status: 23.9% of patients in the study group had previously received late-stage chemotherapy, 25.6% had primary endocrine resistance, 37% were premenopausal, and 68.2% had visceral metastases. Combination therapy resulted in a median progression-free survival of 14.7 months for second-line treatment patients (investigator assessment), and 17.5 months as assessed by the Blinded Independent Review Committee (BIRC). It is worth noting that this drug has achieved groundbreaking results in single-agent treatment, with patients showing a progression-free survival of 11 months, setting a new record among similar treatments worldwide and providing a better treatment option for advanced breast cancer patients. In terms of commercial expectations, with the wave of new CDK4/6 inhibitors entering the market and being included in the National Medical Insurance Catalog, the Chinese CDK4/6 inhibitor market is expected to grow from 100 million yuan in 2018 to 3 billion yuan by 2024, with a compound annual growth rate of 78.8%, and is projected to reach 13 billion yuan by 2032. Since Piloci is not only a comprehensive solution for late-stage HR+/HER2- breast cancer across all treatment lines (including first and second lines), and is also one of the few candidate drugs being explored for postoperative adjuvant therapy for early-stage breast cancer in China, there is considerable potential for a large commercial market and development expectations. In fact, Piloci is not the only pipeline product that Xuanzhu Bio focuses on for its differentiated safety and efficacy. For example, the company's first commercial drug, Anlarazol (KBP-3571), is an innovative proton pump inhibitor (PPI) for the treatment of gastrointestinal diseases and the first and only PPI independently developed by a domestic company. The drug was approved in June 2023 for the treatment of duodenal ulcers. In terms of market demand, the number of patients with gastrointestinal ulcers in China has increased from 71.4 million in 2018 to 74.3 million in 2024, and is expected to increase to 81.2 million by 2032. Approximately 75% of peptic ulcers are duodenal ulcers. While PPIs are the most common choice for peptic ulcer patients, existing PPIs face issues such as unpredictable metabolic characteristics, a burden on liver and kidney function, slow onset, and short duration, which can significantly reduce patient compliance. In contrast, Anlarazol from Xuanzhu Bio has different metabolic characteristics, reduces the burden on the kidneys, lowers the risk of drug-drug interactions (DDI), and rapidly and persistently inhibits gastric acid secretion. In addition, in head-to-head trials, Anlarazol has shown better safety than the widely used PPI rabeprazole. Currently, the company is seeking to expand the indications of Anlarazol to treat adult gastroesophageal reflux disease and officially initiated Phase III clinical trials in the third quarter of this year. With the expansion of the indications market, Xuanzhu Bio is expected to deeply cultivate the domestic billion-dollar oral PPI market and continuously tap into commercial growth. As the third core product of Xuanzhu Bio to be approved, Loratinib is a new generation ALK inhibitor independently developed by the company, focusing on the treatment of ALK-rearranged advanced non-small cell lung cancer (NSCLC). According to Zhiknowledge Consulting data, the number of ALK-positive NSCLC patients increased from 68,400 in 2018 to 91,200 in 2024, with a compound annual growth rate of 4.9%, expected to reach 121,700 by 2032, and the corresponding market size is poised to approach billions. It is worth noting that the 5-year survival rate of ALK-positive advanced NSCLC patients has exceeded 60%, making durability and safety critically important. As one of the few candidate ALK inhibitors being explored in China for the potential treatment of postoperative NSCLC, Loratinib has a higher selectivity and stronger binding in its molecular structure compared to the first-generation ALK inhibitor (crizotinib), effectively targeting sensitive mutations and covering some resistance mutation sites of second-generation drugs. Additionally, the drug has good central nervous system penetration and has shown outstanding efficacy in controlling brain metastases. Therefore, the future sales growth potential of Loratinib is also considerable. Strengthening the integrated innovation loop to bolster development foundation In addition to building the scale of commercialization with the "three pillars," Xuanzhu Bio has also been committed to improving its integrated innovation loop of "research and development-commercialization" to continuously strengthen its development foundation. At the research and development end, Xuanzhu Bio confirmed research and development investments of 239 million yuan and 186 million yuan in 2023 and 2024, respectively, providing steady support for the company's innovative research and development. The company is accelerating differentiated innovation, further validating its Biopharma value. Xuanzhu Bio has established three major technical platforms, including small molecule drug research and development, biopharmaceutical research and development, and clinical development, to facilitate the efficient advancement of the entire research and development process from early discovery to clinical validation. These three innovative technology platforms not only support the development of the company's existing pipeline but also provide systematic assurance for the continuous output of innovative candidate drugs. To date, Xuanzhu Bio has more than ten drug assets actively in development, covering gastrointestinal diseases, tumors, and NASH, in addition to the commercially available "three pillars." The company's innovative pipeline includes one drug project in the NDA registration stage, one drug project in Phase III clinical trials, four drug projects in Phase I clinical trials, and five projects with IND approval, forming a development pattern of "step-by-step, focused breakthroughs, and diverse product reserves." At the commercial layout level, Xuanzhu Bio excels in formulating flexible and targeted commercial strategies based on pipeline products to maximize the advantages of each product and target market. As of March 31, 2025, the company has more than 90 distribution partners, covering over 1,500 hospitals nationwide. The company manages its distributors through distribution agreements, policies, and measures to ensure that their sales reflect genuine market demand and comply with distribution agreement terms and conditions. It is understood that since its commercialization, Anlarazol has achieved sales of 48 million yuan until June 30, 2025, preliminarily proving the company's commercial capabilities and the significant clinical value of the drug that is gradually gaining recognition in the end market. In recent years, many domestic innovative pharmaceutical support policies have mentioned the establishment of a tilted innovative drug medical insurance payment policy mechanism to increase the scale of innovative drug use. This is undoubtedly a great benefit for companies like Xuanzhu Bio that hold major innovative drugs. Since entering the commercialization stage, Xuanzhu Bio has actively laid out the national medical insurance channels, with Anlarazol being approved for marketing in June 2023 and included in the national medical insurance catalog in December of the same year, showcasing the company's efficient commercialization execution. This sets a solid foundation for the inclusion of the company's future commercialized innovative products into medical insurance. Refinement management improves safety margin With the efficient execution of commercialization and the continued expansion of channels, the commercial achievements of Xuanzhu Bio are gradually reflected in the company's financial reports. It is understood that in the first half of 2025, the company achieved revenue of 178.9 million yuan, an increase of approximately 12% year-on-year. In fact, an important milestone for an innovative pharmaceutical company to evolve into Biopharma is to switch the company's cash flow pillar from financing cash flow to operational net cash flow. This not only requires the company to have blockbuster products but also requires daily refinement management. For Xuanzhu Bio, in 2023 and 2024, the company's operating expenses reached 341 million yuan and 588 million yuan, respectively. However, since 2025, Xuanzhu Bio has achieved a steady decline in operating expenses under refined management. In the first half of 2025, the company's operating expenses were only 125 million yuan. On the research and development front, the company's overall research and development expenditures were 401 million yuan and 239 million yuan in 2022 and 2023, respectively, with these expenditures dropping to 186 million yuan and 83.7 million yuan in the first half of 2025. This trend indirectly reflects that Xuanzhu Bio's innovative research and development has turned into fruitful commercial results. With the continued strong commercialization of core products, the company is poised to quickly surpass the breakeven point and move towards profitable scalability. Conclusion Unlike many 18A companies and numerous domestic innovative pharmaceutical companies that have yet to generate revenue, Xuanzhu Bio has successfully entered the innovative commercialization stage, confidently generating abundant cash flow and showcasing significant growth certainty. With the continued deployment and scaling of its core products, Xuanzhu Bio is expected to continue unleashing its Biopharma value, further breaking through valuation ceilings, and enjoying a valuation premium as a "dark horse" in the Hong Kong stock innovative pharmaceutical sector during the ongoing bull market for innovative pharmaceuticals.