Recently, Zhenxiang Pharma (Nanjing) Group Co., Ltd. (referred to as Zhenxiang Pharma) submitted an application to the Hong Kong Stock Exchange to pursue a listing, with China International Capital Corporation Limited acting as the exclusive sponsor.
As is widely known, the biopharmaceutical industry typically features characteristics such as high R&D investment and prolonged periods of non-profitability, and Zhenxiang Pharma is no exception. Under consistently high levels of various expense outlays, the company's profitability is notably weak. Furthermore, due to sustained losses, the company faces financial issues including insolvency and significant debt repayment pressure.
1. Revenue of 355k and Accumulated Loss of 290 Million According to the prospectus and public records, Zhenxiang Pharma was established in 2018. It is a commercial-stage biopharmaceutical company dedicated to discovering, developing, and commercializing innovative therapies to address unmet medical needs in the fields of viral infectious diseases, oncology, and inflammatory diseases.
Zhenxiang Pharma's core product, Maseloxavir Tablets, is an inhibitor targeting the influenza virus polymerase acidic protein (PA) endonuclease. It received NDA approval from the National Medical Products Administration for treating adult influenza in July 2025 and was launched in October of the same year. The company is expanding its indications to adolescent patients and post-exposure prophylaxis.
In addition to Maseloxavir, Zhenxiang Pharma's pipeline includes four other drug candidates: ZX-8177 in the clinical stage, ZX-12042B in the IND initiation stage, and ZX-15002 and ZX-14000 in the preclinical stage.
During the track record period, Zhenxiang Pharma's revenue was generated from pharmaceutical registration assistance services provided under the MENA License and Distribution Agreement, which included assisting Cigalah Medpharm in obtaining regulatory approvals within the region. For the periods of 2024 and the first nine months of 2025 (hereinafter referred to as the reporting periods), the company's revenue was 0 and 355,000 yuan, respectively.
As part of its core strategy for Maseloxavir Tablets, Zhenxiang Pharma has invested substantial financial resources in recent years to advance the clinical, non-clinical, and drug discovery research and development of its candidates. Currently, the company's R&D activities primarily involve drug discovery, preclinical studies, clinical trials, and CMC for its candidates. The company's R&D costs mainly include trial and testing expenses, employee costs, depreciation and amortization, and other items.
However, the clinical drug development process is lengthy, costly, and fraught with uncertainty. Simultaneously, the company has indicated that as it seeks new indications and formulations for its core product and advances its candidate pipeline, R&D costs are expected to continue rising in the foreseeable future.
During the reporting periods, Zhenxiang Pharma's R&D costs were 100 million yuan and 81.6 million yuan, accounting for 82.9% and 83.2% of the total operating expenses (including R&D costs, sales expenses, and administrative and other operating expenses) for the respective periods.
Additionally, the company's sales expenses for the periods were 6.531 million yuan and 5.066 million yuan, while administrative and other operating expenses were 14.073 million yuan and 11.412 million yuan, respectively.
Due to its high levels of investment, Zhenxiang Pharma has inevitably incurred losses. During the reporting periods, the company recorded losses of -145 million yuan and -145 million yuan, resulting in a cumulative loss totaling 290 million yuan.
2. Continuous Cash Outflow and Departure of 13 Directors Pre-Listing Since its establishment, Zhenxiang Pharma's operations have consumed significant cash, with the company consistently experiencing negative cash flow from operations. At the end of each reporting period, the net cash flow from operating activities was -106 million yuan and -90.868 million yuan, respectively.
Zhenxiang Pharma stated that in 2024, the net cash used in operating activities was 106 million yuan, primarily attributable to a loss before income tax of 145 million yuan, adjusted for non-cash and non-operating items. These items mainly included a remeasurement of redemption liabilities of 50.9 million yuan; depreciation of property, plant, and equipment of 3.4 million yuan; financial costs of 2.6 million yuan; and net realized and unrealized gains on financial assets at fair value through profit or loss of 2 million yuan. This amount was further adjusted for changes in several working capital accounts, primarily including an increase in inventory of 8.3 million yuan and a decrease in trade payables of 6 million yuan.
As of September 2025, the net cash used in operating activities was 90.9 million yuan, primarily attributable to a loss before income tax of 145 million yuan, adjusted for non-cash and non-operating items. These items mainly included a remeasurement of redemption liabilities of 48.1 million yuan; net realized and unrealized gains on financial assets at fair value through profit or loss of 2.2 million yuan; financial costs of 1.8 million yuan; and depreciation of right-of-use assets of 1 million yuan. This amount was further adjusted for changes in several working capital accounts, primarily including a decrease in prepayments, deposits, and other receivables of 8.2 million yuan; an increase in inventory of 4.2 million yuan; and an increase in trade payables of 1.3 million yuan.
Specifically, at the end of each reporting period, the company's inventory was 8.928 million yuan and 13.095 million yuan; prepayments, deposits, and other receivables were 13.907 million yuan and 5.326 million yuan; financial assets at fair value through profit or loss were 89.074 million yuan and 152 million yuan; and fixed deposits were 3.954 million yuan and 4.107 million yuan, respectively.
During the same periods, the company's trade payables were 12.791 million yuan and 14.071 million yuan; other payables and accruals were 8.234 million yuan and 47.841 million yuan; bank borrowings were 84.88 million yuan and 39.812 million yuan; and redemption liabilities were 781 million yuan and 1.092 billion yuan, respectively.
As of the end of each reporting period, Zhenxiang Pharma's net liabilities were -806 million yuan and -956 million yuan, with current ratios of 0.1 and 0.2 for the respective periods, indicating long-term insolvency and pressure on short-term debt repayment capacity.
As of the same periods, Zhenxiang Pharma's cash and cash equivalents, primarily consisting of bank cash, were 10.063 million yuan and 118 million yuan, mainly due to proceeds received from Series D and D+ financing rounds in 2025.
As of November 30, 2025, the company held cash and cash equivalents of 52.258 million yuan, fixed deposits of 14.092 million yuan, and financial assets at fair value through profit or loss of 217 million yuan.
As of the prospectus signing date, Yang Jinfu, Chairman and CEO of Zhenxiang Pharma, Executive Director and Chief Scientific Officer Hao Xiaolin, and Zhenxiang Jiwan (an employee incentive platform) are acting in concert. Yang Jinfu and Hao Xiaolin directly hold approximately 10.34% and 8.61% of the company's total share capital, respectively. Additionally, Yang Jinfu is the general partner of Zhenxiang Jiwan, which holds 3.81% of the company's total share capital. Therefore, Yang Jinfu, Hao Xiaolin, and Zhenxiang Jiwan collectively have the right to exercise approximately 22.76% of the voting rights in the company.
It is important to note that Zhenxiang Pharma also faces risks related to redemption liabilities. At the end of each reporting period, the remeasurement of the company's redemption liabilities was 50.9 million yuan and 48.1 million yuan, respectively.
The prospectus reveals that during earlier financing rounds, Zhenxiang Pharma entered into valuation adjustment agreements with external investors that included share redemption clauses. The agreements stipulated that if specific repurchase events were triggered, the shares held by investors could be redeemed by the company and specific shareholders. Triggering events primarily included the company's failure to complete a qualified IPO within the stipulated timeframe, as well as material defaults by the company, its subsidiaries, or management. The share redemption price was calculated based on the investor's actual contributed capital, plus an annualized interest rate of 8% or 10%.
On October 27, 2025, Zhenxiang Pharma, together with all prior investors and relevant shareholders, re-executed a shareholders' agreement. Accordingly, the company and all investors signed a new shareholders' agreement, permanently terminating all preferred share redemption rights, listing-related valuation adjustment terms, and performance compensation clauses.
An industry expert stated that from the perspective of IPO review rules, the company's thorough cleanup and permanent termination of historical valuation adjustment and share redemption clauses before application, with no hidden agreements for subsequent reinstatement, not only eliminates potential large repayment pressures and equity structure change risks but also aligns with the Hong Kong listing requirements for clear equity, operational stability, and financial compliance. Overall, this should not pose a substantive obstacle to the company's IPO process.
Furthermore, on the eve of the IPO, a total of 13 directors and 1 supervisor resigned from Zhenxiang Pharma's board list. Occurring during the critical period of application submission, this large-scale personnel change has raised external concerns about significant internal instability within the company, potentially affecting investor confidence.
Zhang Chuanbao resigned as a director on December 31, 2025, and Xu Ming was appointed as an executive director on the same day. Zhou Chenjun resigned as a non-executive director on December 31, 2025, and Yu Haonan was appointed as a non-executive director on the same day. Cheng Yilang resigned as a supervisor on December 31, 2025. Cheng Qibin, Wang Ying, Zhang Jingyu, Li Yanpei, Zou Hua, Yuan Quanhong, Zhang Xieyi, Jiang Zhangke, Yu Haonan, and Yang Wenkai resigned as non-executive directors on January 21, 2026. Lin Jiade, Ma Dawei, and Wang Zhengping were appointed as independent non-executive directors on January 21, 2026, effective immediately.
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