The controlling shareholder of a major innovative pharmaceutical company with a market cap in the billions has been thrust into the spotlight following a decision related to a criminal investigation.
According to a recent announcement by Bioray Pharmaceutical Inc (referred to as Bioray), its actual controller, Yuan Jiandong, has been issued a "Decision on Release Pending Trial" by the Suzhou Public Security Bureau due to his alleged involvement in a case of securities market manipulation.
It is understood that Yuan Jiandong, who is now subject to this measure, concurrently holds the key positions of Chairman and General Manager of the listed company and is also acting as the Chief Financial Officer and Board Secretary. The company stated that the aforementioned incident will not affect its daily production and operational activities.
Public records show that since 2020, Bioray and its executives have received multiple warning letters from the Jiangsu Securities Regulatory Bureau for reasons including "inaccurate information disclosure," "dissemination of misleading statements," and "failure to fulfill deliberation procedures and information disclosure obligations."
In terms of financial performance, for the first quarter of this year, Bioray achieved revenue of 325 million yuan, a year-on-year increase of 30.52%. However, it recorded a net profit attributable to shareholders of 9 million yuan, a decrease of 28.29% year-on-year, and a non-GAAP net profit of 4 million yuan, a sharp decline of 47.58% year-on-year.
Bioray attributed the decrease in non-GAAP net profit primarily to increased expensed R&D investment for innovative drugs such as the oral BGM0504 tablets in US clinical trials compared to the same period last year. Additionally, the introduction of minority shareholders to its profitable Taixing subsidiary led to an increase in minority shareholder profit compared to the previous year.
It is worth noting that Yuan Jiandong's family was listed on the "2026 Hurun Global Rich List" released in March this year, with a fortune of 7.5 billion yuan.
However, as of the close on June 24, Bioray's share price was 36.39 yuan per share, having halved from its peak in early May this year. Its latest market capitalization stands at 15.859 billion yuan.
Controlling Shareholder Under Investigation, Two Senior Executives Departed Earlier
On the evening of June 18, Bioray urgently announced that it had received notice from its actual controller, Yuan Jiandong. Due to his alleged involvement in a securities market manipulation case, the Suzhou Public Security Bureau issued him a "Decision on Release Pending Trial" in accordance with relevant provisions of the Criminal Procedure Law.
Currently, Yuan Jiandong holds the dual key roles of Chairman and General Manager at the company and is also acting as the CFO and Board Secretary.
Bioray emphasized that the company's daily operations are managed by its various functional departments. This matter does not involve the company's stock and will not impact its daily production and operational activities. The company is currently operating normally with work being carried out in an orderly manner.
Bioray also stated that to ensure a sound corporate governance structure, it will move to fill the positions of CFO and Board Secretary within one month and will promptly fulfill its information disclosure obligations regarding the selection process.
Public information indicates that Bioray's former CFO and former Board Secretary both left their positions ahead of schedule recently.
On March 30, Bioray announced that its board had received the resignation report from Director and CFO Zou Yuanlai. Citing health reasons requiring treatment and rest, which might affect his ability to perform his duties as a director and senior executive, he applied to resign from the aforementioned positions, concurrently stepping down from his role on the Fourth Board of Directors' Strategy Development and ESG Committee.
On May 26, Bioray issued another announcement stating that Director and Board Secretary Ding Nan had applied to resign from his positions due to personal work adjustments. He also resigned from his roles on the Fourth Board of Directors' Strategy Development and ESG Committee and the Fourth Board of Directors' Nomination Committee.
The announcements showed that the original terms for both individuals were set to expire on September 27, 2027. In other words, both left their positions over a year early.
However, both will continue to work at the company. Zou Yuanlai will serve as General Manager of the Strategic Investment and Financing Department, and Ding Nan will serve as Deputy Head of Direct Investment in the Strategic Investment Department.
Bioray emphasized that the departure of these two senior executives would not affect the normal operation of the board of directors nor have an adverse impact on the company's daily operations.
On June 24, Bioray announced that, upon nomination by the company's General Manager and following review by the Board Nomination Committee and Audit Committee, the board agreed to appoint Zhan Chunlei as the Chief Financial Officer.
Simultaneously, to ensure the smooth progress of board work, and upon nomination by the company's board and qualification review by the Board Nomination Committee, the board agreed to elect Xie Daosheng as a non-independent director for the Fourth Board of Directors. This matter still requires approval at the company's shareholders' meeting.
It is noteworthy that on June 12, Bioray's fourth-largest shareholder, the Advanced Manufacturing Industry Investment Fund (Limited Partnership) (hereinafter referred to as the "Advanced Manufacturing Fund"), announced a reduction plan citing "its own capital needs."
As of June 12, the Advanced Manufacturing Fund held 13.31 million shares of Bioray, accounting for 3.05% of the company's total shares. It plans to reduce its holdings by no more than 3% of the total shares (approximately 13.07 million shares) within three months through centralized bidding or block trading.
Based on the closing price of 44.03 yuan per share on the announcement date, the Advanced Manufacturing Fund could realize a maximum of approximately 576 million yuan. If it reduces its holdings at the upper limit, its shareholding ratio would drop to 0.05%, directly falling out of the top ten shareholder list.
In fact, from June 30 to September 22 last year, the Advanced Manufacturing Fund had already reduced its holdings in the company by 5.3 million shares (1.25% of total shares), with a price range of 53.08 to 122.01 yuan per share, totaling a reduction amount of 441 million yuan.
Public records show that the Advanced Manufacturing Fund was established in May 2015 and is a national-level industrial investment fund. The fund focuses on key strategic areas outlined in "Made in China 2025," primarily investing in advanced manufacturing sectors such as rail transit equipment, high-end ships and marine engineering equipment, industrial robots, new energy vehicles, modern agricultural machinery, high-end medical devices and pharmaceuticals, and new materials.
Bioray and Its Executives Have Previously Faced Regulatory Scrutiny
Prior to the current investigation involving the actual controller Yuan Jiandong, Bioray and its senior management have been subject to regulatory attention on multiple occasions.
As early as March 2020, Bioray received a warning letter from the Jiangsu Securities Regulatory Bureau. The regulatory review found that the company's previous announcement claiming it had "mass-produced the active pharmaceutical ingredient for remdesivir" actually referred to small-scale and pilot-scale experimental production during drug development, rather than completed approval and commencement of formal, large-scale, commercial production and sales of the remdesivir API and finished dosage forms.
The regulator pointed out that Bioray's disclosure of "mass production" did not consider the general semantic understanding and failed to provide specific clarification, thus not accurately describing the progress of antiviral drug development, constituting inaccurate information disclosure.
The Jiangsu Securities Regulatory Bureau determined that the company's then Board Secretary, Wang Zhengye, as the specific person responsible for information disclosure, bore primary responsibility.
Ultimately, the Jiangsu Securities Regulatory Bureau decided to take administrative supervision measures against the company and Wang Zhengye by issuing a warning letter and recording the incident in the securities and futures market integrity archive.
In October 2023, Yuan Jiandong received a warning letter from the Jiangsu Securities Regulatory Bureau. The bureau's review found that Yuan Jiandong, as Chairman and General Manager, released information about his personal trial use of the company's investigational product BGM0504 injection during a teleconference titled "Expert Interpretation of the GLP-1 Full Industry Chain Series Exchange Meeting" held on the afternoon of October 12, 2023.
According to reports, Yuan Jiandong claimed at the time that after personally using the company's investigational weight-loss drug BGM0504 injection for nearly two months, his weight "dropped from 91 kilograms to 76 kilograms, a very obvious effect." These remarks quickly caused a market sensation, with Bioray's stock price hitting the 20% daily limit up the following day.
The Jiangsu Securities Regulatory Bureau considered that at the time, the BGM0504 injection for weight loss was still in the clinical trial stage, and its efficacy was not yet clear. Yuan Jiandong's related remarks about the drug's effects were misleading and violated relevant provisions of the "Administrative Measures for Information Disclosure of Listed Companies."
Ultimately, the Jiangsu Securities Regulatory Bureau decided to take administrative supervision measures against Yuan Jiandong by issuing a warning letter and recording the incident in the securities and futures market integrity archive.
In June last year, Bioray and its then CFO Zou Yuanlai received another warning letter from the Jiangsu Securities Regulatory Bureau.
The warning letter stated that in November 2019, Bioray held a board meeting and passed a resolution agreeing to use up to 380 million yuan of temporarily idle raised funds for cash management, with a usage period not exceeding 12 months. However, a year later, the company did not promptly redeem the cash management products involving the idle raised funds.
The Jiangsu Securities Regulatory Bureau determined that the company did not convene a board meeting to review the cash management quota for the next 12 months until December 11, 2020. For the cash management situation that existed between November 27, 2020, and December 10, 2020, the company failed to fulfill the deliberation procedures and information disclosure obligations.
In this matter, Zou Yuanlai, as the company's CFO, failed to perform his duties diligently and conscientiously by not urging the company to use raised funds in a standardized manner and ensuring timely information disclosure, violating relevant provisions of the "Administrative Measures for Information Disclosure of Listed Companies."
Ultimately, the Jiangsu Securities Regulatory Bureau decided to take administrative supervision measures against the company and Zou Yuanlai by issuing a warning letter and recording the incident in the securities and futures market integrity archive.
Entrepreneurial Journey of a 'Chemistry Prodigy' and Bet on Weight-Loss Drug Transformation
Public records show that Bioray Pharmaceutical (Suzhou) Co., Ltd. was established in October 2001.
The company focuses on the research, development, and production of high-end generic drugs and original new drugs. It primarily provides high-tech-barrier pharmaceutical intermediates, active pharmaceutical ingredients, and finished dosage forms. Its core business covers the R&D and industrialization of antibody drugs, vaccines, nucleic acid drugs, and cell therapy products.
Public information indicates that Bioray's founder, Yuan Jiandong, was born in 1970. Displaying remarkable talent from a young age, he was called a "chemistry prodigy." During middle school, his exceptional chemistry aptitude earned him direct admission to the Chemistry Department of Peking University. He later pursued a Ph.D. at the State University of New York in the United States.
After completing his doctorate, Yuan Jiandong immediately joined a US company, primarily engaged in research and development related to antiviral drugs, gene sequencing, and gene chips.
However, in 2001, Yuan Jiandong made a bold decision. He resigned from what he described as a job where he could "see the end at a glance for a lifetime" and decided to return to China to start a business, thus founding Bioray.
Initially, Yuan Jiandong positioned the company in the manufacturing of pharmaceutical APIs and intermediates. After 2006, under his leadership, Bioray utilized a new synthetic route to circumvent the original patent for the "effective hepatitis B virus drug" entecavir, embarking on the path of generic drug development.
In recent years, Yuan Jiandong has been actively promoting the company's transformation from high-end generics to innovative drugs. The first product in this transformation is the weight-loss drug BGM0504 mentioned earlier.
After being reprimanded by regulators, Bioray did not halt the continued development of BGM0504.
On June 11, Bioray announced that the New Drug Application (NDA) for the weight-loss indication of its wholly-owned subsidiary's self-developed BGM0504 injection had been accepted by the Center for Drug Evaluation (CDE) of the National Medical Products Administration (NMPA).
However, Bioray also stated in the announcement that after acceptance, the NDA for the weight-loss indication of BGM0504 injection still requires review and approval by the NMPA before it can be produced and marketed. In the short term, this will not have a significant impact on the company's business operations.
In terms of financial performance, Bioray's results in recent years have been less than stellar. Data shows that in 2021, the company's revenue broke through the 1 billion yuan mark for the first time, reaching 1.052 billion yuan. However, since then, the company's revenue has largely hovered between 1 billion and 1.3 billion yuan.
In 2025, Bioray's annual revenue was 1.224 billion yuan. Meanwhile, the company's profits have been continuously shrinking. Last year, it recorded a net profit attributable to shareholders of only 55 million yuan, a sharp decline of 71.18% year-on-year, and nearly 200 million yuan less than the 244 million yuan recorded in 2021.
For the first quarter of this year, Bioray's revenue increased by 30.52% year-on-year to 325 million yuan. However, the net profit attributable to shareholders decreased by 28.29% year-on-year to 9 million yuan, and the non-GAAP net profit decreased by 47.58% year-on-year to 4 million yuan.
During the same period, the net cash flow from operating activities decreased from 107 million yuan in the same period last year to -111 million yuan.
Furthermore, in the first quarter, the company's R&D investment decreased by 40.53% to 137 million yuan. The proportion of R&D investment to operating revenue significantly decreased by 50.51 percentage points to 42.27%.
Bioray explained that the decrease in non-GAAP net profit was mainly due to increased expensed R&D investment for innovative drugs such as the oral BGM0504 tablets in US clinical trials compared to the same period last year. Additionally, the introduction of minority shareholders to its profitable Taixing subsidiary led to an increase in minority shareholder profit compared to the previous year.
The change in operating cash flow was mainly attributed to the impact of collections at the end of the quarter, resulting in a decrease in cash inflows from operating activities compared to the same period. Concurrently, increased R&D expenses from projects like the oral BGM0504 tablets US clinical trial, BGM1812 injection, and BGM2102 injection, coupled with a year-on-year increase in operating cash outflows for raw material procurement, contributed to the change.
Regarding the decrease in R&D investment, it was mainly due to the progression of the BGM0504 project, leading to a year-on-year decrease in Phase III clinical trial R&D investment.
The future development of Bioray will continue to be monitored.
Comments