IPO outlook | High R&D investment meets cash flow test, Mingyu Pharmaceutical's IPO faces a critical battle

According to Insight Consulting data, since 2020, a total of about 300 ADC mergers and acquisitions and licensing transactions have been reached around the world. The total value of the transactions has been disclosed, with a total value of over US$215 billion, of which Chinese innovators contribute about 44%. China has become the core innovation source for global ADC research and development.

As an uncommercialized biotechnology company that is deeply involved in the field of antibody-conjugated drugs (ADC) and advanced immunotherapy, Mingyu Pharmaceutical recently submitted another listing application to the main board of the Hong Kong Stock Exchange.

The Zhitong Finance App learned that the company was founded in 2018 by Dr. Cao Guoqing, a former senior biologist and research consultant of Lilly and former vice president of Hengrui Pharmaceuticals, and received endorsements from first-tier biomedical investment institutions such as Aobo Capital and Qiming Venture Capital. After completing Series C financing, the valuation reached about RMB 3,936 billion.

With the “dual engine” of combination oncology therapy and post-clinical autoimmune assets, Mingyu Pharmaceutical successfully confirmed hundreds of millions of yuan of revenue in advance through external licensing (BD) transactions without officially commercializing the product. However, the financial data and pipeline details disclosed in the prospectus also clearly indicate that Mingyu Pharmaceutical is in a painful period of transformation from a pure R&D enterprise to commercialization.

In the context of no official sales of self-produced drugs, high R&D consumption, extreme reliance on a single authorized partner, and a tight cash flow rhythm made this IPO not only a financing opportunity, but also an aggressive battle for the company to ensure the smooth progress of late-stage clinical trials and verify its business logic.

ADC and autoimmune dual-line layout, BD cooperates to take the lead in realizing non-commercial monetization

The Zhitong Finance App learned that currently, Mingyu Pharmaceutical's R&D pipeline includes 11 self-developed candidate products, and its post-clinical projects in China and internationally form the company's core assets.

In the field of oncology, Mingyu Pharmaceutical has adopted a differentiated combination drug strategy of “ADC+ advanced immunotherapy”. Its core product, MHB036C, is an ADC candidate targeting trophoblastic cell surface antigen 2 (TROP-2). Compared with similar products currently on the market, Mingyu Pharmaceutical optimized MHB036C using its proprietary SuperTopoi technology platform.

Judging from the market potential, TROP-2 ADC faces an extremely broad market. It is estimated that by 2035, the global breast cancer and non-small cell lung cancer drug market will reach 99 billion US dollars and 115.8 billion US dollars, respectively. Currently, MHB036C has completed phase I trials and is currently working with another key immunotherapy asset, MHB039A (PD-1/VEGF bispecific antibody), for first-line and later phase II combined drug studies for non-small cell lung cancer and breast cancer.

Another core product, MHB018A, which supports the company's “autoimmune” growth engine, is a novel subcutaneous injectable insulin-like growth factor 1 receptor (IGF-1R) VHH antibody for thyroid eye disease (TED). Currently, the global TED treatment market is mainly dominated by Amgen's intravenous drug tepezza, which generated sales of approximately $1.9 billion in 2025.

However, according to the company's prospectus, intravenous products such as Tepezza face the convenience bottleneck of requiring multiple long-term infusions for each course of treatment, and are associated with the risk of adverse events such as known infusion-related reactions, hearing, and metabolism. In contrast, Mingyu Pharmaceutical's MHB018A uses a subcutaneous injection and is administered every four weeks, reducing the burden of clinical care on patients.

In addition to these two core products, Mingyu Pharmaceutical also owns MH004, a key topical JAK inhibitor that submitted an NDA for atopic dermatitis (AD) indications in China in March 2026. The product is expected to be approved in the first half of 2027 and contribute the company's first sustainable commercial product sales revenue.

Furthermore, at the stage where no self-produced drugs have been marketed and sold, Mingyu Pharmaceutical has successfully achieved non-commercial monetization through external licensing (BD) transactions. In March 2025, the company reached an exclusive license agreement with Qilu Pharmaceutical for the development and commercialization of its key product MHB088C in Greater China.

According to the agreement, Mingyu Pharmaceutical granted exclusive rights to Qilu Pharmaceutical in the authorized region, and received a non-refundable advance payment of RMB 280 million, as well as subsequent R&D, registration and sales milestone payments of up to RMB 1,065 million, and the ability to withdraw tiered royalties, contributing its sole revenue in 2025.

However, what needs to be viewed rationally is that the revenue brought about by this BD model is extremely uncertain and phased. If subsequent clinical events fall short of expectations, or if the cooperation agreement is terminated due to force majeure or default, Mingyu Pharmaceutical will face the risk of losing subsequent milestone payments.

High R&D investment has entered the payout period, and financial pressure needs to be resolved

Judging from the financial data disclosed by Mingyu Pharmaceutical, it shows the typical financial characteristics of biotech companies in the uncommercialized stage, especially high R&D investment, no continuous commercial sales revenue, and extreme dependence on a single authorized project.

According to the Zhitong Finance App, in terms of revenue, the company's revenue in 2024 was zero. In 2025, as a result of confirming the down payment and phased milestone revenue in the licensing agreement with Qilu Pharmaceutical, the company achieved operating income of 264 million yuan, gross profit of 264 million yuan, and gross margin of 99.7%. However, in the five months ending May 31, 2026, Mingyu Pharmaceutical's operating income once again plummeted back to zero.

In terms of R&D expenditure, in 2024 and 2025, the company's R&D expenses reached RMB 281 million and RMB 230 million, respectively. By the first five months of 2026, R&D spending had surged from 6.06 million yuan in the same period in 2025 to 120 million yuan, doubling the previous year.

The surge in R&D expenses is mainly due to the full launch of a number of late-stage clinical trials, including phase III registered clinical trials of active and chronic TED of the core product MHB018A in China, and phase II co-drug studies of MHB036C and MHB039A.

Among them, outsourced pre-clinical and clinical expenses occupy an absolute dominant position in total R&D expenses, with outsourcing costs as high as 99.7 million yuan for the first five months of 2026. At the same time, as the company's structure expands and preparations for listing advance, its administrative expenses also increased from 13.54 million yuan in 2024 to 37.05 million yuan in 2025, and reached 14.83 million yuan in the first five months of 2026.

In terms of profitability, Mingyu Pharmaceutical has continued to lose money since its establishment. The company's net loss in 2024 was 283 million yuan. In 2025, although authorized revenue of 264 million yuan was confirmed on the book, due to the fair value change loss of up to 928 million yuan of convertible preferred shares issued by the company in previous equity financing, the loss due to the company's owner surged sharply to 919 million yuan during the year.

Although this fair value loss of nearly 1 billion yuan is a non-cash, non-operating accounting account, and the preferred stock will automatically be converted to common stock after the company is successfully listed, thereby eliminating the impact of this debt and subsequent fair value fluctuations on the income statement, after excluding this non-recurring profit and loss, Mingyu Pharmaceutical's actual operating loss is still high.

In this context of “just not being able to get in,” Mingyu Pharmaceutical's cash flow situation and living space are particularly urgent. In terms of operating cash flow, in addition to the net inflow of 154 million yuan recorded in the first five months of 2025 due to the receipt of a down payment from Qilu Pharmaceutical, the company's net cash outflows from operating activities in the first five months of 2024, 2025, and 2026 were $146 million, 183 million yuan, and 181 million yuan, respectively.

As of May 31, 2026, the balance of cash and cash equivalents on Mingyu Pharmaceutical's books was RMB 605 million, mainly from Series C financing of US$131 million completed in July 2025. Based on the annualized pace of operating cash consumption of 181 million yuan in the first five months of 2026, the company's current capital can maintain operation for about 16 to 18 months without considering any new external financing or milestone payments.

This serious financial red line highlights the urgency of Mingyu Pharmaceuticals' IPO in Hong Kong. Apart from facing cash consumption pressure, Mingyu Pharmaceuticals' potential risks do not only come from the financial side.

First, it faces a very high “risk of dependency on a single cooperation.” If Qilu Pharmaceutical deviates in the subsequent clinical promotion of MHB088C, or if there is a dispute between the two parties, Mingyu Pharmaceutical's financial expectations will be severely damaged. Second, the company does not have any manufacturing facilities, and product production is completely dependent on a third-party CDMO. In the context of an increasingly complex geopolitical environment, changes in external regulatory policies may pose a potential threat to the stability of the CDMO supply chain on which the company depends.

Furthermore, the fields of TROP-2 ADC and TED therapy are also facing Red Sea competition. In a context where the valuation of biomedical assets in the Hong Kong stock market tends to be rational, whether Mingyu Pharmaceutical can successfully replenish ammunition through an IPO and successfully obtain approval and sales fulfillment of the first product, MH004, within the cash red line will determine whether it can stand out in this long-distance race of innovative drugs with high R&D and high consumption.

Overall, with the layout of tumor combination therapy and post-clinical autoimmune assets, Mingyu Pharmaceutical showed corresponding technical value and forward-looking BD monetization during the uncommercialized stage. However, the financial level is extremely dependent on hard indicators such as a single project, a doubling of R&D expenses, and tight cash flow, which also reflects the systemic survival considerations commonly faced by uncommercialized pharmaceutical companies. What Mingyu Pharmaceutical will face in the future is an extreme rally between the speed of technological breakthroughs and the pace of cash consumption.