A legal battle between two pharmaceutical companies over a contract worth just 5.58 million yuan has ended with a first-instance judgment of 150,600 yuan in damages, while the plaintiff bears more than 99% of the court acceptance fees. The case, involving a hot GLP-1/GIP dual-target drug, saw the plaintiff express shock at the outcome and confirm it is communicating internally about a potential appeal.

The dispute stems from a technology service contract signed in December 2020 between Hongxu Biotechnology (Beijing) Co., Ltd. and Medicilon Preclinical (Shanghai) Co., Ltd., a wholly-owned subsidiary of Shanghai Medicilon Inc. (688202.SH). Under the agreement, Hongxu commissioned Medicilon Preclinical to conduct non-clinical safety evaluation studies for a Class I biological drug (peptide) to support investigational new drug applications to both China's National Medical Products Administration and the U.S. Food and Drug Administration. The contract value was 5.576 million yuan, and Medicilon Preclinical ultimately delivered the Chinese-language safety evaluation report by the end of December 2022, a delay Hongxu alleges was substantial relative to the agreed eight-month timeline for both Chinese and English versions.

Hongxu initially filed a lawsuit in December 2023 but withdrew it after Medicilon Preclinical delivered the English report in 2024. The case was refiled in 2025, with Hongxu seeking approximately 159 million yuan in total compensation. This included 3.5154 million yuan in late-performance penalties calculated from August 31, 2021, at a daily rate of 0.05% of the paid amount of 5.0184 million yuan, the return of the 5.0184 million yuan service fee, and a combined 150 million yuan in alleged losses. On September 18, the Beijing Shijingshan District People's Court ruled that Medicilon Preclinical must pay 150,600 yuan in breach-of-contract damages to Hongxu, while dismissing all other claims. The court also approved the withdrawal of Medicilon Preclinical's counterclaim, which had sought payment of the remaining 557,600 yuan contract balance.

The court acceptance fee of 408,400 yuan was allocated almost entirely to Hongxu, which bears 405,100 yuan, while Medicilon Preclinical owes just 3,311 yuan. A preservation fee of 5,000 yuan was assigned to Medicilon Preclinical. Both parties retain the right to appeal to the Beijing Intellectual Property Court within fifteen days of receiving the judgment, and the case may proceed to second-instance review.

Hongxu told reporters on September 20 that the company is "very shocked" by the judgment and is currently discussing the appeal process internally, noting that no announcement will be made until a decision is confirmed. Meanwhile, a representative from Shanghai Medicilon's securities department stated that the first-instance ruling is relatively clear and indicates the plaintiff's claims were unreasonable, adding that the company will make further decisions based on the counterparty's potential appeal.

The underlying project relates to Hongxu's HX-100101-1 injection, which received clinical trial approval from the NMPA on December 14, 2023, for research into treating type 2 diabetes. This drug belongs to the increasingly popular class of GLP-1/GIP dual-target therapies, which have drawn significant industry attention for their potential in metabolic disease treatment.

Shanghai Medicilon, recognized as a "Shanghai Technology Little Giant" enterprise, is a professional preclinical CRO providing integrated research services covering drug discovery, pharmaceutical research, and preclinical studies. Medicilon Preclinical, its primary wholly-owned subsidiary, contributes nearly half of the parent company's revenue through pharmacokinetics services and drug safety evaluation. In the first half of 2025, Shanghai Medicilon reported revenue of approximately 761 million yuan, up 40.91% year-over-year, with net profit attributable to shareholders of 51.6 million yuan, marking a return to profitability. Medicilon Preclinical alone generated about 344 million yuan in revenue and 65.14 million yuan in net profit during the same period, compared to 6.25 million yuan in net profit in the prior-year period.

Medicilon stated publicly that it had fully and appropriately fulfilled its contractual obligations, noting that the project received its NMPA clinical trial approval in December 2023. The company also pointed out that Hongxu had failed to pay the 557,600 yuan final installment owed under the contract. With the first-instance judgment now issued and the possibility of an appeal, both companies face continued legal proceedings, and investors are advised to monitor developments in this ongoing dispute.