In December of last year, following a profound structural reshuffle, Hong Kong's biopharmaceutical sector entered a new window for valuation recovery. As a newly listed 18A company focused on a "differentiated" path, BAO PHARMA-B (02659), which officially debuted on the Hong Kong Stock Exchange on December 10, attracted significant attention for its initial market performance. However, what caught the capital market's eye even more was a post-listing announcement from the company: on December 30, BAO PHARMA announced its intention to implement an H-share full circulation plan, applying to convert approximately 63.116 million domestic non-tradable shares into H-shares eligible for public trading. These shares represent about 19.36% of the company's total share capital. This capital move sparked discussions among investors concerning "share reduction" versus "value creation," as an expansion of the float for a Biotech firm newly arrived on the capital stage is often subject to multiple interpretations. At this critical juncture where the valuation logic for the biopharmaceutical industry is shifting from pure "project-driven" to "scenario and commercialization-driven," what is the true intent behind BAO PHARMA's decisive push for full circulation, and how will it impact this platform company dedicated to reshaping clinical scenarios?
To accurately assess the impact of BAO PHARMA's move, it is first essential to dispel a common misconception in the market: equating "full circulation" with an immediate signal for "share reduction." From the underlying logic of the system design, H-share full circulation addresses the qualification of shares for trading, not the restrictions on the timing of such trades. Prior to the implementation of the full circulation scheme, BAO PHARMA's domestic non-tradable shares, including those held by founders, core employees, and early domestic investors, could only exist as static equity certificates even after the IPO, unable to be directly monetized or traded on the Hong Kong secondary market. This significantly limited the financial attributes and pricing efficiency of these shares. By filing with the China Securities Regulatory Commission and applying for conversion to H-shares, these shares gain the right to be bought and sold on the Stock Exchange, but the exercise of this right remains strictly subject to the original lock-up commitments. For BAO PHARMA, the value of full circulation lies more in the psychological premium and financing flexibility brought by "asset liquidity."
Since the domestic shares were previously illiquid in the public market, their valuation often suffered a severe discount; full circulation allows these shares to achieve the same rights as H-shares, significantly enhancing the ability of major shareholders to engage in pledge financing, equity swaps, or to execute mergers and acquisitions. The existence of lock-up periods acts as a firewall, effectively cushioning the immediate impact of full circulation on the share price and ensuring the capital market can absorb the incremental liquidity under stable expectations. Therefore, viewing full circulation as a "signal for selling" is clearly one-sided; it is more akin to a "rite of passage" in the capital dimension, signifying that BAO PHARMA is creating space for future long-term incentives and resource integration by improving its governance structure.
The core rationale behind BAO PHARMA's push for full circulation so soon after its listing is to align shareholder interests with the company's long-term performance by enhancing share liquidity, thereby supporting its unique "scenario-driven" strategy. For a Biotech company adhering to a dual-drive model of "advanced bio-manufacturing scale industrialization + innovative R&D," capital activity is a crucial cornerstone for attracting long-term institutional investors and maintaining stable valuations. BAO PHARMA has currently established a "pyramid-shaped" pipeline layout represented by assets such as SJ02, KJ017, and KJ103. The implementation of full circulation can effectively optimize the company's shareholder structure, attracting more international capital with a deep understanding of the underlying logic of biopharmaceuticals, thus improving the market's efficiency in discovering the company's true value.
The positive impact of full circulation on the operational level is first reflected in the institutional endorsement it provides for the commercialization process of its core pipelines. Among these, BAO PHARMA's flagship product, Recombinant Human Hyaluronidase KJ017, is not only the first and only product of its kind in China to have reached the NDA stage but also a strategic platform capable of breaking global technological monopolies and enabling an "intravenous-free" revolution. This typical "pick-and-shovel" business model derives its value not from its own sales volume, but from how many multi-billion-dollar biologic drugs it can facilitate for subcutaneous administration. Simultaneously, the most disruptive asset, KJ103, as the world's first low pre-existing antibody IgG degrading enzyme, demonstrates lightning-fast onset of action for acute autoimmune diseases. The two "Breakthrough Therapy Designations" (BTD) it has received firmly establish its position as a high-value innovation engine. Advancing the full circulation plan essentially directly links the wealth incentives of the domestic founding team to the market performance of these scarce assets.
This enhances the strategic resolve of the core team in overcoming the challenges of industrializing complex protein drugs, ensuring the company can remain invincible in future market competition by leveraging its "total cost leadership" industrial moat. From a broader perspective, by implementing full circulation, BAO PHARMA has unblocked the critical channels of capital, giving it the confidence to evolve from a technology-focused Biotech into a Biopharma with mature operational capabilities. The liquidity premium brought by full circulation not only helps stabilize share price performance but also provides more flexible payment methods for future industrial mergers and acquisitions or technology licensing using equity instruments. Against the backdrop of the current global biopharmaceutical industry undergoing structural transformation and the market imposing stringent demands for profitability certainty, BAO PHARMA, supported by the cash flow "base area" provided by SJ02 and complemented by the disruptive potential of KJ017 and KJ103, is demonstrating to the market through its full circulation scheme that true value creation does not stem from short-term share reduction and cashing out.
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