After a prolonged period of valuation adjustment and structural reshaping, Hong Kong's 18A biopharmaceutical sector is reaching a critical inflection point, shifting from "PPT-driven" narratives to "performance verification." While investors were once willing to bet on forward-looking presentations, the market's preference has fundamentally changed as popular fields like PD-1 and ADC therapies became mired in low-level repetition and price competition. Companies that demonstrate a clear path to commercialization, possess unique clinical applications, and can achieve self-sustaining growth are now leading the latest wave of valuation recovery.
Against this backdrop, BAO PHARMA-B (02659) has reached a significant milestone with its core product, recombinant human hyaluronidase (brand name: Bao Shu Yi®, project code KJ017), officially approved by China's National Medical Products Administration (NMPA). This marks the entry of China's first and only recombinant human hyaluronidase into the market. The approval not only signifies the commercialization of BAO PHARMA-B's second key product but also represents the company's successful transformation from a research-focused biotech firm into a self-sustaining biopharmaceutical enterprise.
As the biopharmaceutical industry moves toward reducing intravenous administration, KJ017's market entry raises the question of how it will elevate the valuation potential for both BAO PHARMA-B and the broader subcutaneous drug delivery market.
KJ017: A Disruptive "Infrastructure Enabler" Redefining Large-Molecule Drug Delivery
The approval of KJ017 goes beyond the introduction of a typical new drug—it serves as a revolutionary foundational technology that addresses long-standing challenges in the clinical administration of large-molecule drugs. As a recombinant human hyaluronidase, KJ017 works by temporarily breaking down hyaluronic acid in the subcutaneous tissue, significantly increasing permeability. This allows large-volume biologic drugs—such as monoclonal antibodies, bispecific antibodies, ADCs, and immunoglobulins, which traditionally require hours of intravenous infusion—to be administered via subcutaneous injection in just minutes.
This shift away from intravenous delivery not only shortens treatment time for patients and improves medication adherence and quality of life but also alleviates pressure on hospital infusion facilities, aligning with the global trend toward more convenient, home-based care.
Moreover, unlike traditional animal-derived hyaluronidase products, KJ017 is developed using a synthetic biology platform, eliminating the risk of animal-derived viral contamination. It offers high consistency and safety, with minimal immunogenicity, eliminating the need for skin testing and simplifying clinical use. This effectively addresses the "last-mile" challenge of drug administration for patients with difficult venous access.
From a market perspective, KJ017 embodies a rare "pick-and-shovel" business model. Following the path of global leader Halozyme and its ENHANZE® platform, which enabled blockbuster drugs like trastuzumab and rituximab to transition from IV to subcutaneous delivery, KJ017 is positioned to replicate and enhance this model in China. It can be used as a standalone treatment for subcutaneous fluid delivery and fluid loss management, but its greater potential lies in its platform-enabled applications.
BAO PHARMA-B has established deep strategic partnerships with leading pharmaceutical companies such as WuXi Biologics (02269), QuanSheng Biological (02509), and Shanghai RAAS (002252.SZ) to jointly develop subcutaneous formulations of antibodies and immunoglobulins. This positions KJ017 as a strategic hub in China's subcutaneous drug delivery revolution, capable of extending the lifecycle of various large-molecule drugs and improving patient adherence through combination therapies.
This "piggyback effect" means KJ017's commercial potential is not limited to its own sales but is tied to the broader trend of subcutaneous administration in China's biologic drug market, offering greater certainty and risk resilience compared to single-target innovative drugs. As more combination therapies advance through clinical and commercial stages, BAO PHARMA-B will benefit from a diversified revenue model including product sales, technology licensing, and sales royalties, securing a share of the growing subcutaneous drug delivery market.
According to Frost & Sullivan, China's recombinant human hyaluronidase and related formulations market is projected to reach approximately RMB 7 billion by 2033. As the only approved product of its kind in China, KJ017's first-mover advantage and platform barriers are expected to support long-term valuation growth.
From R&D to Harvest: Dual-Engine Growth Model Positions BAO PHARMA-B for Valuation Recovery
With KJ017's approval, BAO PHARMA-B now operates under a dual-core commercial strategy, alongside SJ02 (recombinant human long-acting follicle-stimulating hormone). SJ02, China's first approved long-acting FSH product, addresses the need for daily injections in assisted reproduction by significantly reducing dosing frequency, improving patient experience. It is already penetrating the multi-billion-yuan reproductive medicine market through an exclusive distribution agreement with Anke Biotechnology.
KJ017 adds a second growth driver, targeting high-frequency, broad-based clinical applications. The commercialization of both core products redefines BAO PHARMA-B's position within the 18A sector—it is no longer a startup reliant on funding and early-stage R&D, but a growth-stage pharmaceutical company with a robust industrial foundation and the ability to generate consistent cash flow from high-barrier products.
This transition from external funding to self-sustaining operations sets a strong example for the post-downturn 18A market and represents a key valuation anchor for investors. It signals the company's potential to achieve breakeven and provide stable internal financial support for future innovative pipelines, such as KJ103 (recombinant IgG-degrading enzyme).
As revenue figures begin to appear in 2025 financial reports and KJ017's sales ramp-up is expected by 2026, BAO PHARMA-B may experience a "Davis double click"—improving valuations alongside rising earnings. Growing revenue certainty could reduce the risk discount typically applied to 18A companies, while KJ017's status as a unique asset may command increasing premiums as partnership pipelines expand.
KJ017's approval acts as a catalyst for BAO PHARMA-B's value reassessment in the Hong Kong market. The synergistic advancement of SJ02 and KJ017 also offers a sustainable growth model for the biopharmaceutical sector—demonstrating a successful shift from technology-driven to scenario-driven growth, and from funding-dependent to performance-led development.
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