Since hitting a peak of HK$17.98 in early September last year, the share price of HBM HOLDINGS-B (02142) has experienced continued volatility and decline. By early February this year, it had fallen to a low of HK$10.61, representing a drop of over 40% during that period. As of March 13, HBM HOLDINGS-B's share price stood at HK$12, corresponding to a PE ratio of 18.18 times, which is slightly below the industry average of 18.29 times. This performance in the secondary market has left many investors perplexed.
Regarding its innovative drug business, HBM HOLDINGS-B has been a standout example of successful out-licensing (BD) among domestic biopharma firms in recent years. After securing a major BD deal valued at $7 billion for 2025, the company has now secured its first NewCo deal of the Year of the Horse. Financially, the company's annual profit alert indicates an expected full-year 2025 profit between $88 million and $95 million (approximately HK$7 billion), demonstrating a clear and improving ability to generate profits from its core operations. However, the weak stock price presents a stark contrast to these strong fundamental indicators.
Is positive BD news being interpreted as a signal to sell? Observations show that since February, the Hong Kong stock market has underperformed within the global financial landscape. The Hang Seng Index fell 2.8% for the month, while the Hang Seng Tech Index dropped 10.1%, significantly trailing behind other major global indices. More recently, escalating conflict in the Middle East triggered a sharp rise in crude oil prices, with both Brent and WTI futures briefly surpassing $110 per barrel, causing ripple effects across global secondary markets.
From a capital flow perspective in Hong Kong, strengthening risk aversion has led to a stronger US dollar, prompting global institutional investors to reduce their allocations to risk assets. This has resulted in capital outflows from the Hong Kong market. As a highly open market, these outflows can put downward pressure on indices. The Hang Seng Index recently fell below the key psychological level of 25,000 points. Data on market sentiment for the second week of March shows the average daily turnover on the HKEX was HK$293.426 billion, a decrease of HK$48.159 billion from the previous week. The average daily short-selling amount was HK$37.365 billion, down HK$6.048 billion week-on-week. However, the ratio of short-selling to total turnover increased slightly by 0.08 percentage points to an average of 12.82% daily. Challenges in overall market liquidity suggest the market may exhibit more structured characteristics.
According to Kaiyuan Securities, data from February showed mixed performance across primary sectors in Hong Kong. The software and consumer services sectors experienced significant pullbacks, while the pharmaceutical sector also saw a correction of around 5%. This indicates a defensive shift in market style, favoring lower-risk assets over high-growth ones. Against this backdrop of changing market sentiment and phased foreign capital withdrawal, typical market gaming behavior has emerged in the Hong Kong biotech sector. Some early investors are choosing to cash out and realize gains after companies announce strong results or secure BD deals, opting to "sell the news."
Taking HBM HOLDINGS-B as an example, before the market opened on February 23, the company announced it had licensed the global rights (excluding Greater China) for its next-generation CTLA-4 antibody, HBM4003, to Solstice Oncology. The deal involves an upfront payment exceeding $105 million, including a $50 million cash payment, a $5 million near-term payment, and company equity valued over $50 million. Additionally, HBM HOLDINGS-B is eligible for up to $1.1 billion in milestone payments, plus tiered royalties on sales.
From a market perspective, the disclosure of this substantial BD deal undoubtedly attracted significant bullish attention from retail and institutional investors alike, leading to active trading and ample liquidity. The trading volume for HBM HOLDINGS-B that day reached 5.884 million shares, significantly higher than previous levels. However, against this backdrop, substantial selling pressure emerged from existing shareholders within the company's stock. This large-scale selling by holders quickly overwhelmed the incoming buy orders, causing the stock price to open high, then reverse and close lower. The daily candlestick chart for HBM HOLDINGS-B showed a distinct long upper shadow, visually indicating strong resistance above and weak support below. This occurred near the peak of the stock's rebound in February. The exhaustion of buying momentum, coupled with technically overbought signals, quickly triggered a price correction, completing a cycle where existing shareholders "sold into the strength" of the positive news.
Genuine BD or "Selling the Future"? In recent years, the value of pharmaceutical BD has been repeatedly packaged and calculated, from traditional License-out agreements to衍生出的 NewCo and Co-Co models, and even speculative "pre-announced BD" forms. This has led to concept exhaustion, compounded by the recent focus on the "selling the future" critique, forcing the market to carefully assess the true substance behind each BD deal and analyze whether a company's BD represents a genuine partnership or an early, potentially undervalued, asset sale. The continuously rising bar for value assessment in the secondary market is undoubtedly a significant factor affecting HBM HOLDINGS-B's market performance.
First, examining the drug asset involved in this deal: the core asset licensed is HBM4003, a fully human heavy-chain-only antibody targeting CTLA-4. CTLA-4, a classic immune checkpoint, was once considered somewhat outdated in the era of PD-1 inhibitors. The core challenge in previous CTLA-4 research has been its very narrow therapeutic window. Positioned upstream in the immune activation cascade, blocking CTLA-4 can lead to broader and more intense immune activation. However, the downside of this "broad-spectrum" activation is that T cells may indiscriminately attack healthy tissues. Compared to PD-1 inhibitors, which typically have grade 3 or higher adverse event rates around 10-15%, CTLA-4 inhibitors, either as monotherapy or in combination, often see side effect rates soaring above 50%. Companies like Bristol Myers Squibb and MacroGenics have faced setbacks in earlier research on this target.
In contrast, HBM4003,经过差异化改造 by HBM HOLDINGS-B, has a reduced molecular weight of approximately 76 kDa, making it significantly lighter than traditional IgG antibodies (around 150 kDa). This "slimming down" allows it to penetrate dense tumor stroma more easily, reaching the core of the lesion. It also has a shorter serum half-life, thereby substantially reducing systemic immune-related side effects. Furthermore, unlike traditional CTLA-4 antibodies that primarily work by blocking the interaction between CTLA-4 and its B7 ligands to relieve T-cell inhibition, HBM4003 has an additional mechanism: it can directly deplete regulatory T cells (Tregs) within the tumor microenvironment. By engineering its Fc region to enhance Antibody-Dependent Cellular Cytotoxicity (ADCC), HBM4003 can precisely target and eliminate these Tregs, which highly express CTLA-4, thereby fundamentally alleviating immune suppression.
Clinical data shows that in a Phase II trial combining HBM4003 with tislelizumab (a PD-1 inhibitor) for treating refractory colorectal cancer patients, the objective response rate (ORR) reached 34.8%, and the disease control rate (DCR) was 60.9%. Importantly, the vast majority of treatment-related adverse events were mild (Grade 1-2), and no Grade 4 or higher serious adverse events were observed in the clinic. In short, HBM4003 manages to maintain the potent anti-tumor activity associated with CTLA-4 inhibition while keeping safety risks within a controllable range. This is a core factor enabling HBM HOLDINGS-B to secure this $1.2 billion BD deal.
Returning to the "selling the future" concern. Essentially, the domestic worry about Chinese biotech firms "selling the future" stems from a fear that companies are giving away the future value and market potential of their innovative assets too early. However, examining the specific terms of this NewCo agreement with Solstice Oncology reveals that HBM HOLDINGS-B's collaboration is not merely a one-time licensing out of HBM4003's ex-China rights. The upfront consideration of over $105 million includes equity in Solstice Oncology valued at over $50 million. This means that beyond the potential $1.1 billion in milestone payments and sales royalties, HBM HOLDINGS-B, as a shareholder, stands to benefit further from potential capital events like an IPO or acquisition of Solstice Oncology. This creates a deep alignment of interests with the partner company. Furthermore, holding equity allows HBM HOLDINGS-B future involvement in strategic decisions regarding HBM4003's development, clinical trial design, and commercialization plans outside Greater China, thereby accumulating valuable international commercialization experience—benefits that clearly go beyond a simple "sell the future" transaction.
Whether judged by business progress or financial performance, HBM HOLDINGS-B's current fundamentals appear relatively robust. The persistently volatile stock price seems more deeply correlated with the broader fluctuations in the Hong Kong market and the specific biotech sector. Therefore, for HBM HOLDINGS-B, currently trading below the industry average valuation, whether its stock performance represents a sustained "collapse" or a temporary "pullback offering a buying opportunity" is likely subject to differing interpretations among investors.
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