On December 2, Beijing Hotgen Biotech Co.,Ltd. (688068.SH) announced multiple investment plans, including a ¥371 million capital injection into ShunJing Pharma at ¥26.5 per registered capital unit, along with acquiring 400,000 additional shares. Post-investment, Hotgen's stake will rise from 43.18% to 50.23%, granting control through board restructuring. ShunJing Pharma also plans a ¥40 million equity incentive scheme.
Concurrently, Hotgen pledged ¥24 million to YaoJing Gene to expand genetic technology capabilities. These moves fueled a 2.52% stock surge to ¥183.3/share on December 3, capping a 900% rally since September 2024.
**Doubling Down on Innovative Drugs** Founded in 2005 as an IVD specialist, Hotgen went public on Shanghai's STAR Market in 2019. While its core business covers diagnostic tests for hepatitis, cardiovascular diseases, and cancer, the company has pivoted to a "diagnostics + innovative drugs" dual strategy since 2024, investing in antibody and nucleic acid drug developers like ShunJing Pharma and YaoJing Gene.
Industry analysts attribute this shift to IVD sector headwinds and long-term technological positioning. ShunJing Pharma's pipeline shows promise: its AMI therapeutic antibody SGC001 received FDA Fast Track designation in March 2025 as the world's first potential disease-modifying AMI drug. Another candidate, bispecific antibody SGT003, demonstrated superior tumor suppression over existing PD-1/CTLA-4 inhibitors in preclinical studies.
**Core Business Under Pressure** Hotgen's financials reflect sector-wide challenges. Q1-Q3 2025 revenue fell 19.8% YoY to ¥310 million, with net losses widening 168.12% to ¥109 million. This follows a dramatic post-pandemic decline from 2021's peak revenue of ¥5.37 billion to ¥511 million in 2024—marking its first annual loss since 2016. China's IVD sector contracted 13.94% in 2025 amid pricing reforms, with 70% of firms reporting losses totaling ¥5.6 billion.
**High-Risk Transformation** Despite ballooning losses, Hotgen continues funding preclinical-stage biotechs. YaoJing Gene, though developing a breakthrough liver-targeted RNAi platform, posted ¥13.59 million revenue against ¥8.635 million losses in 2025 H1. Meanwhile, Hotgen's R&D spending has declined annually from ¥191 million (2022) to ¥113 million (2024).
**Investor Concerns Mount** The stock's 900% rally contrasts sharply with fundamentals. Some attribute this to speculative interest in Hotgen's biotech holdings, including ZhiYuan Bio's Alzheimer's drug candidate AA001 (currently in Chinese clinical trials). However, insiders have been cashing out: controlling shareholder Lin Changqing's affiliates sold ¥214 million worth of shares April-June, followed by another ¥319 million divestment by major shareholder Zhou Xin in July-August.
While Hotgen bets heavily on innovative drugs, analysts caution about unsustainable cash burn and unproven pipelines. With core operations deteriorating and secondary growth drivers years from commercialization, the company's valuation appears increasingly disconnected from its financial reality.
Comments