Recent policy developments have been consistently favorable for innovative drugs. This year's Government Work Report presented at the National People's Congress listed biopharmaceuticals alongside high-end equipment and new materials as strategic emerging industries for focused development, reinforcing the policy direction of supporting pharmaceutical innovation. With "innovative drugs" being mentioned in the Government Work Report for three consecutive years, the investment rationale of mainland capital has shifted accordingly, leading to a continuous re-evaluation of the medium to long-term investment value of leading companies. This is undoubtedly highly positive for XuanzhuBio-B (02565), which has successfully gained inclusion in the Stock Connect program and received approval for the first-line indication of its core innovative product.
The finalization of Stock Connect inclusion has prompted investors to position themselves early. Over the full year of 2025, the average daily turnover for the Hong Kong Stock Connect reached HKD 121.1 billion, accounting for 26.2% of the total average daily turnover in the Hong Kong market. Moving into 2026, despite a complex external environment, southbound capital continued to see significant net inflows against the trend, with cumulative historical net purchases exceeding HKD 5 trillion, demonstrating domestic capital's recognition of the long-term value of core assets. It was observed that on March 9th, despite high volatility in the Hong Kong market, the net purchase amount by southbound capital still reached HKD 37.213 billion, setting a new record for the highest single-day net purchase. This date coincided with the effective date of the latest adjustments to the Hong Kong Stock Connect eligibility list.
According to the latest adjustment notices issued by the Shanghai and Shenzhen Stock Exchanges, 42 companies were added to the Hong Kong Stock Connect list on March 9th. Generally, inclusion in the Stock Connect helps broaden the shareholder base and enhance trading liquidity, an effect that is particularly significant given the consistent role of southbound capital as a key source of incremental funds for the Hong Kong market. Taking XuanzhuBio as an example, the company's share price rose significantly by 8.30% on March 9th, with daily turnover reaching HKD 48.3875 million. This represented an increase of approximately 116% compared to the year-to-date average daily turnover of HKD 22.44 million. On the day following inclusion, the daily turnover further increased to HKD 61.9559 million, indicating early positioning by Stock Connect funds in XuanzhuBio.
The rapid recovery in secondary market trading activity and the early positioning by investors are primarily attributed to market recognition of the company's clear "innovation-to-commercialization" investment thesis. It is understood that, driven by its dual focus on gastroenterology and oncology, XuanzhuBio entered a period of commercial acceleration in 2025. Two core oncology drugs, Piroxiclib Tablets and Diloac Tablets, received approvals successively. Combined with the previously approved core product, the proton pump inhibitor Annelazole Sodium, this formed a commercial "troika" product portfolio. This signifies industry and market recognition of the company's strategy integrating robust innovation with commercialization.
Just prior to its successful Stock Connect inclusion, on March 3rd, XuanzhuBio's core commercial product, Piroxiclib Tablets (brand name: Xunyue Ning®), received approval for a new indication, strongly advancing into first-line breast cancer treatment. This approval enables coverage of the entire HR+/HER2- patient population, adding significant weight to the company's scale commercialization and long-term value prospects.
As a Class 1 new drug independently developed by the company, the CDK2/4/6 inhibitor Piroxiclib Tablets (Xunyue Ning®) received approval for use in combination with an aromatase inhibitor for the first-line endocrine initial treatment of patients with hormone receptor-positive, human epidermal growth factor receptor 2-negative (HR+/HER2-) advanced breast cancer. This is the third indication approved in China for Xunyue Ning®, following previous approvals for use in combination with fulvestrant and as a monotherapy. Consequently, the drug has become the first and only product of its kind in China to cover the entire treatment course—first-line, second-line, and later-line—for HR+/HER2- advanced breast cancer.
The strong entry of Xunyue Ning® into first-line breast cancer treatment has garnered widespread attention from the industry and the market. It is understood that Xunyue Ning® demonstrates excellent efficacy and a favorable safety profile throughout the full treatment course. The approval of this new indication also marks a significant breakthrough for China's independent innovation in the field of breast cancer treatment.
From a commercial perspective, several factors are favorable. Firstly, driven by the entry of novel CDK2/4/6 inhibitors into the market and their inclusion in the National Reimbursement Drug List (NRDL), the Chinese CDK2/4/6 inhibitor market grew from RMB 100 million in 2018 to RMB 3 billion in 2024, representing a compound annual growth rate of 78.8%, and is projected to reach RMB 13 billion by 2032. Secondly, breast cancer, being the most common malignancy among women globally, is expected to reach approximately 435,000 cases in China alone by 2032, with about 75% being the HR+/HER2- subtype, indicating a substantial unmet medical need.
Against this market backdrop, Xunyue Ning® is poised to enter a phase of significant commercial scaling, supported by NRDL access and the first-line indication approval. Its differentiating advantages include being the first and only drug in China with an approved monotherapy indication, its unique multi-target CDK2/4/6 inhibition mechanism, lower hematological toxicity, and full-course coverage from later-line to first-line treatment. It is expected to become a major revenue and profit driver for XuanzhuBio in the future.
As mentioned earlier, driven by its dual focus on gastroenterology and oncology in recent years, XuanzhuBio has established a product "troika" comprising Piroxiclib Tablets, Diloac Tablets, and Annelazole Sodium. While advancing the scaled commercialization of these three products, the company is committed to accelerating the development of its differentiated innovative pipeline, thereby further validating its transition towards a fully integrated biopharmaceutical company (Biopharma).
It is understood that on the R&D front, XuanzhuBio recognized R&D expenditures of RMB 239 million in 2023 and RMB 186 million in 2024. This sustained investment provides solid support for the company's innovation efforts. XuanzhuBio has established three core technology platforms: a small molecule drug R&D platform, a biologics R&D platform, and a clinical development platform. These platforms facilitate efficient progression through the entire R&D process, from early discovery to clinical validation. They not only support the development of the current pipeline but also provide a systematic foundation for the continuous generation of new drug candidates.
To date, XuanzhuBio has over ten drug assets under active development, covering gastrointestinal diseases, oncology, and non-alcoholic steatohepatitis (NASH). Beyond the commercialized "troika," the company's innovative pipeline includes one drug project in Phase III clinical trials, several in Phase I trials, and others that have received IND approval. This forms a product R&D structure characterized by "orderly progression, focused breakthroughs, and a multi-product portfolio."
Notably, unlike many other pre-revenue biotech companies listed under Chapter 18A or domestic innovative drug firms yet to generate revenue, XuanzhuBio, through differentiated innovation and efficient commercial execution, has successfully entered the innovation commercialization phase. Based on the results of the 2025 NRDL adjustments, XuanzhuBio's Xunyue Ning® was successfully included in the NRDL following national price negotiations. Furthermore, the company's gastroenterology product Anjiu Wei® was successfully renewed (having first entered the NRDL via negotiations in 2023, its successful renewal in this round makes it the only single-agent proton pump inhibitor in the current NRDL included via negotiation).
For innovative drug companies, NRDL inclusion is not merely a matter of price negotiation; it is a crucial link translating clinical value into market value. Within this logic, XuanzhuBio, possessing two core NRDL-listed products, stands out with significant scarcity value among the cohort of 18A-listed companies that have not yet commercialized any products. The fact that these two core products cover two major therapeutic areas—oncology and gastroenterology—also aligns with the current investment focus in Hong Kong on clinically essential innovations. As the company's scaled commercialization continues to unfold, its subsequent strong revenue and profit expectations are anticipated to provide solid support for a steady increase in its valuation.
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