Baoji Pharmaceutical (02659) differentiates its pipeline to forge a deep economic moat and unlock the "cognitive gap" market.

For Hong Kong-listed biotech companies like Baoyi Pharmaceutical, relying solely on target-following and high-energy-consuming R&D models has become unsustainable. The market urgently needs to find high-quality candidates with differentiated pipelines, clear commercialization paths, and robust financial security. Recently, Baoyi Pharmaceutical (02659) announced its performance for the first half of 2026. In this midterm report, the company not only reduced its financial losses but also entered a period of explosive growth in its commercialization and internationalization efforts. Data shows that in the first half of 2026, the companys losses narrowed to 154 million yuan, a significant reduction of 16.1% year-on-year, demonstrating excellent operational efficiency and refined management levels against the current industry backdrop. Moreover, the company ended the period with cash and cash equivalents totaling 1.042 billion yuan, providing ample funding to support the advancement of clinical pipelines and commercialization. The revenue structure continued to optimize in the first half of the year, further validating the commercial expansion capabilities of its core technology platform. Transitioning from R&D to commercialization: Shengnuo and Baoshuyi rapid growth and initial emergence of platform revenue In the first half of 2026, Baoyi Pharmaceutical welcomed a bountiful harvest in commercialization as two heavyweight products were launched onto the market, marking the company's official entry into a dual-driven fast track of commercialization and internationalization. This understanding is a key aspect of analyzing Baoyi Pharmaceutical's mid-term performance in 2026. Over the past few years, the company has established a comprehensive technological and product system focused on high-capacity subcutaneous delivery, antibody-mediated autoimmune diseases, assisted reproduction, and upgraded synthetic biology recombinant biopharmaceuticals. The 2025 annual report indicated that the company had 12 independently developed candidate products at that time, with KJ017, SJ02, and KJ103 forming the core product tier. By the first half of 2026, these three products had progressed to different stages: "market approval, commercialization preparation, and key clinical outcomes." Among them, the changes concerning KJ017 are particularly noteworthy. In March 2026, the injectable recombinant hyaluronidase KJ017, known as Baoshuyi, received approval from the National Medical Products Administration for subcutaneous infusion assistance, becoming the first domestically approved recombinant human hyaluronidase product on the market. During the reporting period, the company engaged in a strategic collaboration with Shanghai RAAS Blood Products to explore new formulations of blood products, with over 60 partners utilizing the recombinant hyaluronidase for product development, ranging from early research to clinical stages. As is well known, traditional intravenous infusion requires establishing a venous access, while hyaluronidase can temporarily alter the permeability of subcutaneous tissue, facilitating the subcutaneous delivery of large volumes of fluids and other drugs. Therefore, KJ017, which holds potential for becoming a platform product, has its true market space derived partly from its commercialization as an assistive subcutaneous infusion medication and partly from its technology platform aimed at providing new delivery routes for other biopharmaceuticals, blood products, and even some chemical drugs. Currently, this platform attribute has begun to manifest through collaborations. In January of this year, the company established a strategic partnership with Shanghai RAAS Blood Products for new blood product formulations, previously collaborating with WUXI BIO, Quanxin Biotechnology, and Shangjian. If more macromolecule drugs achieve subcutaneous delivery through hyaluronidase in the future, the value of KJ017 might expand from single product sales to a diversified revenue model encompassing "products + technical services + supply," resonating with the significant year-on-year growth trend in the company's technical service revenues. The other product already in the commercialization phase, Shengnuo, represents a different pathway for Baoyi Pharmaceuticals transformation from a research-oriented company to a commercial enterprise. SJ02 has been approved as the first long-acting recombinant human follicle-stimulating hormone in China, extending the half-life of FSH in the body through structural modification. One injection can replace the traditional short-acting FSH regimen over seven consecutive days, significantly enhancing convenience and treatment experience for patients. In terms of commercialization, Baoyi Pharmaceutical has adopted a smart strategy of strong external alliances, granting exclusive promotion and sales rights for Shengnuo in the Greater China region to Anhui Anke Biotechnology (300009.SZ), which has deep-rooted channels in obstetrics and gynecology. Under the efficient promotion of Anhui Anke Biotechnology as the exclusive contracted sales organization, by June 30, 2026, Shengnuo successfully completed online procurement platform registrations and market access across 29 provinces nationwide, covering over 70 medical institutions and fully initiating actual commercial sales, rapidly driving terminal volumes and contributing ongoing cash flow for the company's performance. At the same time, in the European development sector, the company plans to submit a clinical trial application (IND) for Shengnuo to the European Medicines Agency (EMA), fully unlocking its global commercial value. This transformation indicates that Baoyi Pharmaceutical is no longer merely a biotech waiting for product approvals; rather, it is beginning to advance into more complex commercialization stages involving hospital access, physician education, patient recognition, and the establishment of commercial channels. Particularly for assisted reproduction products, product efficacy represents just one part of the competition; the familiarity of doctors with new products, patient recognition of medication convenience, and the establishment of hospital procurement and prescription systems are equally vital factors influencing product volume. From this perspective, while the reduction in losses in the first half of 2026 is certainly positive, what deserves real attention is that the company now possesses two commercialized products, with KJ103 emerging as the third growth curve with the most potential. The three core products correspond to "subcutaneous delivery platform," "assisted reproduction," and "antibody-mediated autoimmune diseases." Interestingly, these products are not merely parallel entities; they are forming certain synergies in underlying capabilities such as recombinant proteins, synthetic biology, and innovative delivery methods. The value of the synthetic biology platform is becoming increasingly apparent, filling clinical voids with blue-ocean indications If the approvals of Shengnuo and Baoshuyi set the "foundation" for Baoyi Pharmaceutical's commercial revenue in the coming years, then the breakthroughs with KJ103 and the advancement of the synthetic biology upgrade platform may very well define the company's valuation ceiling. Mid-2026 saw a milestone clinical success for Baoyi Pharmaceutical's core product KJ103, which achieved the primary endpoint in a phase III registration clinical trial for desensitization treatment in highly sensitized kidney transplant patients. Data shows that in this trial, the success rate of desensitization therapy for highly sensitized patients prior to kidney transplantation reached 100%, and the subsequent kidney transplant success rate also reached 100%, with no cases of hyperacute rejection recorded. In May 2026, the company formally submitted an NDA application for KJ103 to the National Medical Products Administration and received a prioritization in the same month. In June of the same year, the application for marketing authorization was officially accepted, with expectations for approval in 2027. The acceptance and prioritization by the National Medical Products Administration signify that KJ103 has transitioned from "technical feasibility validation" to "countdown to commercialization approval." Notably, from a market space perspective, desensitization for kidney transplantation has been a long-neglected urgent need. According to data from Tongji Medical College of Huazhong University of Science and Technology, about 15% to 30% of registered end-stage kidney disease patients in China are in a "high-sensitized state" due to pre-existing antibodies. The presence of high-sensitized antibodies makes matching extremely difficult, and forcible transplantation may lead to devastating hyperacute rejection, thus being classified as "non-transplantable patients," who can only maintain life through long-term dialysis. From an overall supply-demand perspective, there is a significant clinical gap in this market. The National Health Commission's Human Organ Transplant and Medical Big Data Center reports that as of October 2024, about 171,000 organ failure patients are waiting for transplants nationwide, with 144,700 waiting for kidney transplants, resulting in an organ supply-demand ratio of 1:8.36. Earlier published data from Yunnan's Health Commission noted that over 1 million uremic patients require dialysis, while the total number of kidney transplants in 2023 was just over 13,000. Therefore, the significance of KJ103 lies beyond merely participating in a limited kidney transplant drug market; it addresses the most critical link in the kidney transplantation industry chain providing more transplant opportunities for patients who previously could not find suitable donors due to antibody issues. For highly sensitized patients, effective desensitization therapy that can lower pathogenic antibody levels may expand the acceptable donor pool and shorten waiting times. In other words, KJ103 solves the problem of "having donors but patients cannot undergo successful acceptance," with both its clinical and economic value significantly surpassing that of standard assistive treatment drugs. Before KJ103, there were no approved desensitization treatment drugs in the domestic market, and clinical standards for desensitization were lacking. Given KJ103's absolute leading advantage and breakthrough therapy designation (BTD) in this indication, the product is expected to quickly fill this substantial clinical and market gap upon its launch. Even more noteworthy, KJ103 is not limited to kidney transplantation as an indication; its advancements in fields such as anti-glomerular basement membrane (GBM) disease and other pathological autoimmune diseases are making great strides as well. Anti-GBM disease represents another typical "small disease, large value" market. This disease is a rare but rapidly progressing autoimmune disease characterized by the body's anti-GBM antibodies attacking the glomerular basement membrane and potentially causing pulmonary hemorrhage. Traditional treatments rely mainly on plasma exchange, corticosteroids, and cyclophosphamide, with one of the treatment goals being to quickly eliminate pathogenic antibodies from circulation and inhibit their further production. However, the real issue is that anti-GBM disease is not a condition to be treated "slowly"; once patients enter severe renal failure or even require dialysis, the potential for kidney function recovery significantly decreases. Previous studies indicate that patients who are already reliant on dialysis at onset have a one-year survival rate of approximately 65%, with a kidney survival rate of only about 8%. This means that for anti-GBM disease, "rapidly lowering pathogenic antibodies" itself constitutes an essential part of the treatment value. KJ103s phase II data has precisely addressed this clinical pain point. The research findings reported by the company show that after three months of treatment with KJ103, the overall survival rate was 100%, with 66.7% of patients not requiring dialysis and preserving kidney function; after six months of treatment, the overall survival rate remained at 100%, with 75% of patients not requiring dialysis and retaining kidney function. In contrast, the historical standard intensified treatment data indicates that the overall survival rate after three months is 81.2%, with those not requiring dialysis and retaining kidney function at only 30.6%. Relevant results were presented at the 63rd Annual European Renal Association Congress in June 2026. Of course, it must be emphasized that historical comparisons do not equate to randomized controlled clinical trials, and one cannot simply conclude that KJ103 has fully surpassed existing standard treatments; the forthcoming phase III results will still be crucial in determining the product's ultimate clinical value. However, from the perspectives of mechanism, clinical demand, and early data, KJ103 certainly may have the potential to develop differentiated treatment approaches. In addition to desensitization for kidney transplantation and anti-GBM disease, KJ103 is also advancing in GBS, namely Guillain-Barr syndrome, and other pathogenic IgG-mediated diseases. In August 2026, the company further submitted an orphan drug designation application for GBS to the FDA. This signifies that the company is attempting to transform KJ103 from a singular kidney drug into a platform therapeutic product targeting "pathogenic IgG." Equally worth noting is that in June 2026, the company facilitated the IND approval of recombinant ulinastatin BJ044 by the National Medical Products Administration. BJ044 is positioned as the only recombinant ulinastatin developed using synthetic biology in China and possibly worldwide. Ulinastatin itself is not a strange drug; existing products are already used in emergency treatment of acute pancreatitis, chronic relapsing pancreatitis, and acute circulatory failure, and are included in medical insurance. Industry data reveals that the market size of ulinastatin in China was about 1.16 billion yuan in 2023. The logic behind Baoyi Pharmaceuticals entry into this market lies in "recombinant alternatives to extraction." In the past, critical drugs such as serine protease and ulinastatin have long relied heavily on biochemically crude extraction methods from animal tissues or human urine. This production method poses risks of animal-derived viruses or urine contamination and results in considerable inconsistencies in batch quality, leading to serious clinical allergic reactions and biosafety risks. Baoyi Pharmaceutical, through its chassis cell reconstruction platform, has sidestepped the inherent risks associated with traditional processes. Among them, ulinastatin has a vast and mature market foundation in clinical applications, being a "star drug" for treating acute pancreatitis, septicemia, acute circulatory failure, severe heat stroke, and serious injuries in intensive care units, with its clinical efficacy being well substantiated. The BJ044 recombinant product can not only provide extremely high purity and excellent consistency for pharmaceutical-grade products but also thoroughly eliminate viral contamination risks, circumventing medical ethical issues. Due to the ample clinical recognition and vast market capacity of this indication, the IND approval for BJ044 marks the companys imminent entry into this ready-made multi-billion market with a safer recombinant product, with its substitution effects and exclusivity potential being immeasurable. For an established clinical-use basis of an older drug market, this technological upgrade may not necessarily mean the creation of new market demand, but rather the potential to reshape the product structure. Another pipeline in the "recombinant alternatives to extraction" domainrecombinant human serine protease (KJ101)also welcomed a series of catalysts in the first half of 2026. The phase II clinical trial for wound healing completed successfully in June this year, and the IND for the new indication of dissolving gastric mucus during gastroscopic examinations also received approval from the NMPA, expected to represent another showcase of the companys strategic layout utilizing synthetic biology technology to replace biochemically extracted formulations. From the product mechanism perspective, serine protease is a classic serine proteolytic enzyme that has been in clinical application for over 60 years, capable of selectively degrading necrotic tissue, fibrin, and mucus, while having nearly no impact on normal live tissue. Consequently, it has accumulated long-term and substantive clinical value in wound debridement, sputum clearance, and anti-inflammatory swelling scenarios. However, traditional serine protease products have long relied on animal tissue extraction from sources like bovine or porcine pancreas, presenting inherent risks of animal-derived virus contamination and significant activity discrepancies across batches, with raw material supply constrained by livestock breeding cycles. KJ101 uses a yeast fermentation recombinant expression process, realizing "higher purity, better consistency, and more controllable safety" in pharmaceutical-grade production, representing another practical realization of Baoyi Pharmaceutical's strategic logic of upgrading traditional biochemical extraction using synthetic biology. Public data shows that more than 20 million gastroscopic procedures are performed annually in China, additionally, with the increased awareness of early gastric cancer screening and the advancement of related screening projects, this number continues to rise. Within gastroscopy, gastric mucus and foam are major interference factors that diminish mucosal visibility, directly limiting the detection rate of small lesions and early cancers; serine protease enhances the visibility of the mucosa by dissolving gastric mucus proteins, effectively shortening examination times and improving lesion detection rates, its clinical value is being increasingly validated by evidence-based data. Currently, there are no approved recombinant serine protease products in the Chinese market, and once KJ101 is launched, it is expected to share and potentially reshape this market with "safer recombinant quality + first-mover advantage." Wound healing also represents another undervalued growth curve for KJ101. The number of diabetes patients in China has surpassed 140 million, with an annual incidence of diabetic foot ulcers ranging from 8% to 12%. Coupled with the significant and rigid debridement needs of pressure ulcers and postoperative incisions, chronic wound management is becoming a persistent clinical challenge facing the Chinese healthcare system. The traditional enzymatic wound debridement market has long been dominated by animal-derived products; recombinant serine protease, with its superior purity and safety, is poised to achieve rapid penetration in this "large patient base and rigid demand" arena. The two indications anchor "screening increments" and "existing rigid demand," endowing KJ101 with valuation elasticity that far exceeds that of singular indication products. To support the full pipeline explosion and commercialization supply, Baoyi Pharmaceuticals GMP production base, constructed in Shanghai, covering approximately 63,000 square meters, is operating efficiently, while a newly established 37,000 square meter production base is expected to complete construction and come online by the end of 2026. The company's production capacity is set to achieve a quantum leap, facilitating the end-to-end closed loop of "R&D - clinical - large-scale green biological manufacturing - global commercialization," propelling it into a fast lane of high-quality development. This is precisely where Baoyi Pharmaceutical deserves a fresh evaluation from the capital markets. The company's core capability lies not in merely replicating an existing drug but in independently building a synthetic biology upgrade platform aimed at achieving "large-scale gene engineering replacing traditional biochemical extraction," attempting to reformulate products with clear clinical needs but significant limitations in traditional solutions through synthetic biology, recombinant proteins, and novel delivery technologies. Among them, KJ017 addresses the convenience issue of intravenous administration, KJ103 tackles the swift removal of pathogenic IgG, and BJ044 seeks to resolve the production and quality consistency issues of traditionally extracted ulinastatin. In summary As a biopharmaceutical newcomer established in 2019 that successfully landed on the Hong Kong Stock Exchange in December 2025, Baoyi Pharmaceuticals current valuation logic in the capital market has yet to be fully tapped. The core reason behind this is that Baoyi Pharmaceutical is not following the typical path of homogeneous competition but is strategically focused on four major areas: high-capacity subcutaneous delivery, antibody-mediated autoimmune diseases, assisted reproduction, and synthetic biology upgrade recombinant biopharmaceuticals. The company's product pipeline predominantly features disruptive industry innovation characteristics, such as utilizing synthetic biology technology to upgrade alternatives to traditional safety-limited animal-based or human urine-derived biochemical extraction drugs, or developing globally innovative de-venous subcutaneous delivery excipients and new formulations. Due to the pioneering nature of these products and indications in clinical application, the current market and medical communities' understanding of these innovative mechanisms and potential clinical value is not yet fully adequate. However, from a business logic standpoint, this "insufficient recognition" precisely constitutes a significant valuation gap and first-mover barrier for Baoyi Pharmaceutical. With two core products successfully achieving commercial sales or approvals in the first half of 2026, and core pipelines meeting major clinical endpoints while entering the NDA stage, Baoyi Pharmaceutical is solidifying its market's cognitive barriers with robust data and industrial progress, ushering in a critical turning point for valuation restructuring.