Reporter Yan Guowen and Cao Xueping report from Beijing.
A few days ago, Zhejiang Tongyuankang Pharmaceutical Co., Ltd. *** hereinafter referred to as "Tongyuankang") disclosed its prospectus on the Hong Kong Stock Exchange. Tongyuankang is a small molecule innovative drug company focusing on the research and development of ** cancer and autoimmune diseases.
At present, there are 11 products in Tongyuankang's product R&D pipeline, and no products have been commercially sold. Tongyuankang's core product is TY-9591 for lung cancer, which is currently in Phase II and Phase III. In addition, the two key products are TY-302 for breast cancer and prostate cancer, and TY-2136B for **related solid tumors.
In the field of high-risk new drug research and development, Tongyuankang is in a long-term loss state. As of the end of September 2023, Tongyuankang's cumulative loss reached 76.7 billion yuan. Shortly before the submission of the Hong Kong stock IPO prospectus, Tongyuankang temporarily solved the urgent need for funds through Series D financing and ** assets.
In December 2023, Tongyuankang completed Series D 18.5 billion yuan financing, post-investment valuation of 30$8.4 billion.
As an innovative drug company that is still in the clinical research stage, Tongyuankang's financial situation has attracted more attention from the outside world. As of September 30, 2023, Tongyuankang's total assets were 4$7.2 billion, while total liabilities amounted to $1.23.9 billion yuan.
In addition, in December 2023, Tongyuankang entered into an equity transfer agreement with a third party, and Shanghai Yabao Biotechnology***, a subsidiary of **, hereinafter referred to as "Shanghai Yabao"), has all the shares. Shanghai Yabao has not yet carried out substantive business activities, mainly in Songjiang District, ShanghaiThe right to use a plot of 20,000 square meters. The original total price of the land was 29.2 million yuan. The total equity of Shanghai Yabao is 34.9 million yuan, and the transaction is currently underway.
In response to questions related to the product pipeline and the company's finances, a reporter from China Business News contacted Tongyuankang, but did not receive a response as of press time.
"May be subject to liquidity and financial risks".
Tongyuankang is an innovative drug research and development company established in November 2017 and in the clinical research stage, with its registered and principal places of business in Huzhou, Zhejiang Province and Shanghai.
In terms of finance, in the first nine months of 2022 and 2023, Tongyuankang's revenue will be 44.24 million yuan and 0.0 million yuan respectively; Losses of 31.2 billion and 26.6 billion yuan. As of the end of September 2023, the cumulative loss reached 76.7 billion yuan.
In 2022, Tongyuankang's revenue of 44.24 million yuan mainly came from the project cooperation authorization fees charged to Livzon Pharmaceutical. In August 2020, Tongyuankang entered into a patent transfer and technology exclusive license agreement with Livzon Pharmaceutical, whereby Tongyuankang will grant Livzon Pharma the rights to develop, manufacture and commercialize TY-2136B in Greater China.
For the amount of authorized cooperation for the project, Tongyuankang's prospectus did not disclose it in detail. According to the official website of Taiji Hongnuo Pharmaceutical, the major shareholder of Tongyuankang, it was previously disclosed that according to the relevant agreement, Tongyuankang will receive 1Milestone payments of 5.9 billion yuan and market share of 6%-12%.
Since its establishment, Tongyuankang has received 5 rounds of financing, including angel round 0200 million yuan, A round 0300 million yuan, B round and B+ round 38.9 billion yuan, round C 32.5 billion yuan, D round 18.5 billion yuan, totaling about 94.9 billion yuan. Tongyuankang's valuation at each stage of financing continues to be **, mainly due to the progress of clinical trials of its core product TY-9591.
In December 2023, Tongyuankang completed Series D financing and raised 18.5 billion yuan. Huiyu Pharmaceutical(688553.)SH), Huzhou Zhongjin Qihe Equity Investment Partnership, Changxing Xinsheng Equity Investment Partnership, and Huzhou Talent Innovation Equity Investment ** Partnership invested 100 million yuan and 0500 million yuan, 0300 million yuan and 00.5 billion yuan, each obtained the same source of health97% and 016% equity.
In the latest list of shareholders of Tongyuankang, Taiji Hongnuo Pharmaceutical is the largest shareholder, holding 3096% of the shares, Huiyu Pharmaceutical is the sixth largest shareholder, holding 324% of the shares.
In 2022 and the first 9 months of 2023, Tongyuankang's R&D cost will be 2300 million yuan, 1$8.9 billion.
As there is no product commercialization to generate revenue, and at the same time continues to generate high R&D investment, Tongyuankang is facing greater financial pressure.
As of December 31, 2022 and September 30, 2023, Tongyuankang's net liabilities were 5., respectively0.1 billion and 76.7 billion yuan, net current liabilities were 68.8 billion and 94.1 billion yuan. Tongyuankang's prospectus said: "Net debt and net current liabilities may expose us to liquidity and financial risks. This may require us to seek financing from external sources (such as debt issuance and bank borrowings) that may not be available on terms favourable or commercially reasonable for us, or at all. ”
In 2022, the cash used in operations before the change in working capital of Tongyuankang was 2$1.8 billion. Cash used in operations before changes in working capital for the first nine months of 2022 and the first nine months of 2023 was 13.4 billion yuan and 18.7 billion yuan.
As of December 31, 2022, Tongyuankang's cash and cash equivalents were 09.1 billion yuan, 0800 million yuan, 0500 million yuan.
For matters related to the company's long-term operations, the prospectus mentions that the average cash burn ratio in the future is assumed to be 15 times and included in the net proceeds received from Series D financing1$4.3 billion, "We estimate that cash and cash equivalents, as well as financial assets at fair value through profit or loss, as at September 30, 2023, will enable us to maintain our financial viability for more than 27 months from September 30, 2023".
The product is expected to be commercialized by the end of 2025
Tongyuankang has 11 drugs in its R&D pipeline, 7 in clinical research and 4 in preclinical research. The three main products are TY-9591, TY-302 and TY-2136B.
The R&D progress of TY-9591 is the fastest, and there are three main indications, namely **NSCLC (non-small cell lung cancer) brain metastasis, **EGFR (epidermal growth factor receptor) L858R NSCLC, and **NSCLC.
According to the prospectus, Tongyuan Kang TY-9591 is expected to submit a new drug application (NDA) in the first quarter of 2025 and NDA in the second half of 2026 for the first two indications, respectively, and is expected to enter the registrational clinical stage in the second half of 2024 for the third indication, and submit a new drug application to the NMPA in the second half of 2028.
In terms of product commercialization, Tongyuankang expects to launch TY-9591 in China in the fourth quarter of 2025.
According to Frost & Sullivan, in 2022, EGFR was the most common driver mutation in NSCLC in China, accounting for 50% of the incidence of NSCLC2%。As EGFR-TKI becomes the leading option for patients with EGFR mutation-positive NSCLC, the EGFR-TKI market in China is growing at 34The compound annual growth rate of 8% increased from 3.1 billion yuan in 2017 to 13.8 billion yuan in 2022. Osimertinib is the third-generation and best-selling EGFR-TKI, with global sales of $5.4 billion in 2022 and a global market share of approximately 84%.
Tongyuankang's prospectus said that the relevant study results showed that compared with osimertinib, the exposure of the metabolite TY-9591-D1 after administration of TY-9591 was reduced by about 50%, indicating that TY-9591 may have a better safety profile than osimertinib. Tongyuankang said it believes TY-9591 will be approved within the existing development timeline and unlock clinical value and commercial potential.
According to Tongyuankang's prospectus, there are currently 12 third-generation EGFR-TKI drug candidates for NSCLC in the clinical development stage, of which TY-9591 is the most clinically leading EGFR-TKI drug candidate. At the same time, TY-9591 is currently the only EGFR-TKI currently undergoing a head-to-head pivotal trial (to directly compare its efficacy to osimertinib) and is the most effective third-generation EGFR-TKI to date.
TY-302 is a potent and selective oral CDK4 6 inhibitor developed for advanced solid tumors such as breast cancer and prostate cancer. Tongyuankang expects that the clinical trials of TY-302 for two indications will enter the registrational clinical stage in the first quarter of 2025 and Phase II in the second half of 2024, respectively. According to the prospectus, there are 26 CDK inhibitor drug candidates in China that are in the process of research and development. TY-302 is the only CDK4 6 inhibitor indicated for prostate cancer.
TY-2136B is a potential best-in-class, oral ROS1 NTRK inhibitor independently developed by Tongyuankang for the treatment of ** solid tumors. According to the prospectus, the clinical trials of the two indications of TY-2136B are in phase IB and phase I respectively.
In terms of product production and commercialization, Tongyuankang has laid out and established TY-9591 and TY-302 production plants. According to the prospectus, "In terms of the commercialization expectation of TY-9591 and TY-302, we are establishing an internal CGMP compliant production plant in Huzhou City, Zhejiang Province, which has completed construction and is expected to be put into operation in the first quarter of 2025. The construction area of the production plant is about 380,000 square meters, and its designed annual production capacity is expected to be about 1500 million tablets. ”
Editor: Cao Xueping: Proofreader: Yan Jingning).