Loss exceeds 1 billion! Leading innovative pharmaceutical company BaiLi TianHeng with a market cap of hundreds of billions, the "breakthrough" journey continues

The R&D phase for innovative drugs has passed, and performance realization will become the mainstream direction for pharmaceutical companies in the future.

On February 27th, a disappointing earnings report pushed “innovative drug star stock” BaiLi TianHeng into the spotlight.

The earnings report shows that in 2025, the company achieved revenue of 2.52 billion yuan, a 56.72% decrease year-over-year; net loss of 1.051 billion yuan, an increase of 128.34% year-over-year.

Looking at the past three years’ performance, from 2023 to 2025, BaiLi TianHeng’s revenue was 562 million yuan, 5.823 billion yuan, and 2.52 billion yuan respectively; net profit was -780 million yuan, 3.708 billion yuan, and -1.051 billion yuan. Behind this rollercoaster performance lies the core issue that BaiLi TianHeng has yet to develop stable, core drugs and lacks “self-sustaining” capabilities.

Currently, BaiLi TianHeng’s operations mainly revolve around iza-bren.

In 2024, BaiLi TianHeng secured an $800 million non-revocable, non-deductible upfront payment through intellectual property licensing for iza-bren, which helped turn the company’s 2024 performance from loss to profit.

However, it is noteworthy that in 2025, milestone payments for iza-bren’s intellectual property licensing sharply dropped to $250 million, causing significant fluctuations in the company’s performance.

In fact, despite market expectations that BaiLi TianHeng will become a world-class MNC, the road ahead is not smooth.

On one hand, innovative drug R&D is essentially a “bottomless money pit.” Founder Zhu Yi mentioned that supporting the company to become an entry-level MNC requires at least $1 billion in capital reserves. As of the end of Q3 2025, BaiLi TianHeng’s cash reserves stood at 6.086 billion yuan. While substantial, this amount still puts pressure on innovative drug R&D. On the other hand, as competition intensifies, pharmaceutical giants like Pfizer and Roche are beginning to tighten their lines of defense. If their related expenditures decrease, it could negatively impact companies like BaiLi TianHeng that rely heavily on BD.

From a capital market perspective, the BD boom has passed, and the market is now valuing innovative drug companies more rationally. BaiLi TianHeng has also been affected. As of the latest close, its stock price was 264.6 yuan per share, with a total market value of 109.2 billion yuan. Compared to the historical high of 414.02 yuan per share in September 2025, the stock has shrunk by about 35%, evaporating nearly 600 billion yuan in market value.

Performance rollercoaster

BaiLi TianHeng’s predecessor was BaiLi Pharmaceutical, founded in 1996 in Wenjiang, Chengdu. It initially focused on traditional Chinese medicine and generic drugs, a typical traditional pharmaceutical company.

In 1998, BaiLi launched its first generic drug—the antiviral ribavirin granules (Xinbolin). During the SARS outbreak in 2003, demand for Xinbolin surged, with sales exceeding 100 million yuan that year. It was from this year that BaiLi gradually developed into a small leader in the southwestern region’s generic drug sector, and a few years later, BaiLi TianHeng was officially established.

While generic drugs provided stable cash flow, BaiLi TianHeng did not choose to stick solely to generics. Founder Zhu Yi early on recognized the hidden risks behind generics. He believed that generics lack a moat, and as marketization deepens, companies will find it difficult to maintain profits amid fierce competition. Therefore, in 2010, Zhu Yi led BaiLi TianHeng to shift towards innovative drug R&D.

In an era when innovative drugs were not yet mainstream, BaiLi’s decision to enter this field was essentially a “high-stakes gamble.”

Of course, to stabilize profit structures and fund innovative drug R&D, BaiLi TianHeng adopted a “dual-track” approach. On one side, it maintained stable cash flow from the less-growth-oriented chemical and Chinese medicine formulations, with over 200 chemical formulation registration approvals and dozens of Chinese medicine approvals, covering areas like anesthesia, parenteral nutrition, and pediatrics. On the other side, it focused on the promising innovative biologics, mainly in oncology, including antibody-drug conjugates (ADC), T-cell engagers (GNC), and radiolabeled antibody drugs (ARC).

This business structure is not without issues. While imitation followed by innovation is a common industry path, potential risks will be amplified at critical transition points.

It should be noted that although the prospects for innovative drugs are bright, the failure rate remains high. Currently, BaiLi TianHeng’s pipeline is extensive, but only iza-bren (BL-B01D1) has genuine core competitiveness.

Why has iza-bren attracted the attention of multinational pharmaceutical companies?

Data shows that in 2023, BaiLi TianHeng announced clinical data for BL-B01D1 at the American Society of Clinical Oncology (ASCO), causing a global sensation. On that day, 8 of the top 20 global pharmaceutical companies engaged with BaiLi TianHeng, including BMS. In December of that year, BaiLi TianHeng reached an agreement with BMS, signing an exclusive licensing and collaboration deal worth up to $8.4 billion, including an $800 million upfront payment, up to $500 million in near-term payments, and $7.1 billion in milestone payments.

This collaboration led to a significant turnaround in BaiLi TianHeng’s performance, with 2024 net profit soaring to 3.708 billion yuan, a 575.02% increase year-over-year.

In 2025, BaiLi TianHeng achieved related milestones. According to a public announcement in October last year, the global Phase II/III pivotal clinical trial IZABRIGHT-Breast01 reached a milestone, triggering the first $250 million near-term or contingent payment under the collaboration agreement. The gap with the $800 million upfront payment from the previous year is substantial, and this is a major reason for the large fluctuations in BaiLi TianHeng’s performance.

Currently, BaiLi TianHeng is almost “all-in” on iza-bren. Financial reports show that in 2024, most of the company’s revenue came from intellectual property licensing income, accounting for 91.57%, with overseas revenue also at 91.61%. This heavy reliance on a single product and business significantly amplifies operational risks. Whether the clinical progress of iza-bren is smooth, the speed of milestone achievement, and ultimately whether it can be successfully marketed and generate sales revenue will determine BaiLi TianHeng’s future.

The “game” of breaking through continues

Despite performance pressures, BaiLi TianHeng remains a sought-after star in the capital markets.

The reason for this enthusiasm is partly due to the huge BD deal sizes and partly due to its vision of becoming a “world-class MNC.”

Becoming an MNC (multinational corporation) does not mean simply selling drugs in multiple countries, but rather having a global R&D, manufacturing, and commercialization network capable of continuously launching leading therapies worldwide, like Eli Lilly, Johnson & Johnson, Merck & Co., and GlaxoSmithKline. These MNCs are industry rule-makers and the ultimate embodiment of a pharmaceutical company’s comprehensive strength.

Of course, becoming a truly global MNC is no easy feat.

First, from a financial perspective, innovative drug R&D is a “big investment, high risk, long cycle” game—continuous heavy spending is unavoidable. BaiLi TianHeng currently lacks “self-sustaining” capabilities; supporting large-scale R&D costs is challenging. As of Q3 2025, R&D expenses reached 1.772 billion yuan, while cash reserves were only 6.086 billion yuan.

To support such R&D demands, BaiLi TianHeng has been actively raising funds. In September 2025, the company completed a private placement of over 3.7 billion yuan, attracting numerous public funds, securities firms, and insurance institutions. Among them, China Europe Fund subscribed for 679 million yuan, with others like E Fund, GF Securities, Wanguo Fund, and Huatai Securities also participating. Shortly after, BaiLi TianHeng filed for a Hong Kong listing for the third time, accelerating its H-share listing process.

Beyond financial pressures, BaiLi TianHeng must also face an increasingly competitive market environment.

In ADC, Daiichi Sankyo and AstraZeneca’s Enhertu have established leading positions; in SCLC, Amgen’s Tarlatamab and other bispecific antibodies show strong potential. To join the ranks of global MNCs, BaiLi TianHeng must compete head-on with these industry leaders. As competition intensifies, R&D investment among global MNCs is diverging—Pfizer, Roche, and others are becoming more conservative, terminating some pipelines and shrinking R&D footprints.

Additionally, the domestic innovative drug market is also becoming increasingly competitive. Since 2019, domestic companies have flocked to promising ADC targets. According to “Yiyao,” for example, the domestic pipeline’s share of global ADC candidates targeting HER2, TROP2, and CLDN18.2 is 63.6%, 76.5%, and 85.7%, respectively. The influx of many companies into the same track is mainly due to the relatively shallow foundation of domestic innovation drugs. In this highly competitive environment, even industry leaders like BaiLi TianHeng face challenges.

Looking at industry trends, BaiLi TianHeng’s story of becoming a “world-class MNC” remains attractive, but market patience is limited. The company must accelerate the commercialization of core products. As of now, iza-bren has seven indications listed as breakthrough therapies by the National Medical Products Administration (NMPA), and one indication designated as a breakthrough therapy by the U.S. FDA.