Recently, Suzhou Wangshan Wangshui Biopharmaceutical Co., Ltd. (hereinafter referred to as "Wangshan Wangshui") has launched another attempt at a Hong Kong Stock Exchange IPO. In January this year, Wangshan Wangshui submitted its prospectus to the Hong Kong Stock Exchange for the first time.
In fact, the name Wangshan Wangshui has twice sparked heated discussions in the pharmaceutical industry through different channels. The first time was when Wangshan Wangshui gained extraordinary prominence with its anti-COVID drug VV116 during the most critical moments of the COVID pandemic - its collaboration with Junshi Biosciences brought it unprecedented recognition amid the capital market's frenzied speculation on "COVID miracle drug" concepts. The second time is currently happening with the approval of its ED (erectile dysfunction) new drug "Angweida" (TPN171), leveraging this naturally topic-generating field to once again become a focal point of attention.
However, research reveals that while the outside world labels it as a "domestic Viagra," the IPO prospectus presents a rather complex picture of intertwined opportunities and risks.
According to the prospectus, Wangshan Wangshui was established in 2013 as a comprehensive integrated biopharmaceutical company dedicated to discovering, developing, and commercializing innovative small molecule drugs, focusing on three major areas: antiviral, neuropsychiatric, and reproductive health.
Examining Wangshan Wangshui's products and pipeline reveals a common characteristic: the company has essentially bet on areas with high social attention and enormous market potential. For instance, the former star drug VV116 is a typical case. This small molecule drug brought Wangshan Wangshui an astounding 196 million yuan in revenue from licensing alone in 2023, accounting for 98% of the company's total revenue that year, making it notably attractive during the capital winter.
However, the speed at which the halo faded was equally "topic-worthy." As the COVID pandemic subsided, VV116's revenue-generating ability rapidly evaporated, with licensing income dropping to only 5.38 million yuan, directly causing the company's 2024 revenue to plummet 94% to 11.83 million yuan.
Wangshan Wangshui has attempted to find new lifelines for VV116, pivoting toward respiratory syncytial virus (RSV) treatment. The prospectus discloses that its pediatric dry suspension formulation has entered Phase II/III clinical trials, targeting China's RSV drug market, which is projected to reach 1.067 billion yuan by 2035. However, whether this indication development can succeed and replicate the commercial brilliance of the COVID period remains highly uncertain and requires significant time and investment.
Similarly, Wangshan Wangshui's potential first-in-class drug LV232 in the neuropsychiatric field also targets a deeply painful and promising depression market (projected to reach 18.8 billion yuan by 2035). However, this blue ocean has long been a battleground for giants and emerging players. According to Frost & Sullivan data, China already has 24 innovative small molecule antidepressant drugs on the market, with another 16 in Phase II or later clinical development. Although LV232 is currently the only investigational product specifically targeting this dual target, its Phase II clinical trial won't start until 2025, expected to complete in the second half of 2026, leaving a long and variable path to potential approval and commercial profitability.
The recently approved "Angweida" is viewed as key to the company achieving short-term commercialization breakthrough and supporting valuation. This ED new drug, positioned as a potential best-in-class PDE5 (phosphodiesterase 5) inhibitor, aims to leverage its differentiated selling points of "30-minute onset, can be taken with alcohol" to penetrate China's male health market worth over 10 billion yuan annually, which has long been monopolized by imported drugs from Pfizer, Bayer, and others. Frost & Sullivan predicts this market will grow from 9.3 billion yuan in 2024 to 15 billion yuan in 2035.
However, this market is already a highly competitive red ocean. MINET data shows that anti-ED drug terminal sales exceeded 8 billion yuan in both 2023 and 2024, but domestic competition is fierce, with 26 and 50 products approved for sildenafil and tadalafil generics respectively. Pioneer Guangzhou Baiyunshan's "Jinge" saw sales exceed 1 billion yuan in 2023 but declined to 879 million yuan in 2024, demonstrating the intensity of market competition and difficulty in maintaining market share.
Wangshan Wangshui acknowledges in its prospectus that for products like "Angweida" without current medical insurance plans, pricing must balance multiple factors including costs, competitors, technical advantages, and patient burden.
The driving factors behind these characteristics of Wangshan Wangshui's product pipeline may be related to the background of its founding team. The story began in 2013 in Suzhou Industrial Park. That year, 51-year-old Shen Jingshan stood at a crossroads in his life. This doctoral supervisor at the Shanghai Institute of Materia Medica, Chinese Academy of Sciences, who held the title of "State Council Government Special Allowance Expert" and had over thirty years of small molecule drug development experience, resolutely removed his lab coat and co-founded Wangshan Wangshui with his wife Jin Jie. He staked his personal reputation and 5 million yuan in savings, establishing the company in a corner of Suzhou Biomedical Industry Park.
The early entrepreneurial period was extremely difficult, with a team of only about ten people and laboratory equipment mostly purchased from second-hand markets. For the next six years, the company was almost completely isolated from external capital, focusing on early exploration of antiviral and nervous system drugs.
The turning point came between 2018 and 2019. In 2018, when domestic innovative drug company valuations were still at low points, renowned entrepreneur Zhou Hongyi, founder of 360 Group, injected 20 million yuan in angel investment into Wangshan Wangshui through his controlled Gongqingcheng Qihu Zhongcai Investment Co., Ltd., bringing market attention to the company.
In 2019, Shen Jingshan's student Tian Guanghui joined Wangshan Wangshui. Shen Jingshan transferred his 750,000 yuan registered capital to Suzhou Nanbo Wan for 750,000 yuan, with the latter held 80% and 20% by Tian Guanghui and Jin Qing (Jin Jie's sister) respectively.
According to available information, Tian Guanghui not only holds a PhD in medicinal chemistry from the Chinese Academy of Sciences but also has experience as Shanghai Tehua Laboratory manager and senior executive at Yunnan pharmaceutical companies. He was appointed as an industry professor by Soochow University and awarded the title of "Key Industry Talent in Short Supply" by Suzhou government departments.
The prospectus shows that Tian Guanghui currently holds 9.54% equity in Wangshan Wangshui and serves as chairman of the board, executive director, CEO, and general manager. Notably, as the company's valuation soared, Tian Guanghui earned an annual salary of 15.51 million yuan in 2023 (including 14.74 million yuan in equity incentives), making him one of the industry's most notable "most expensive CEOs."
The prospectus discloses that in January 2025, Wangshan Wangshui's employee shareholding platform transferred 222,800 shares to multiple executives including Shen Jingshan, Tian Guanghui, Hu Wenbo (executive director and deputy general manager), and Jin Qing (deputy manager) at 6 yuan per share, while the company's Series C financing in May 2024 was priced at 29.67 yuan per share. Among them, Shen Jingshan acquired 5.21% equity.
Notably, deputy manager Jin Qing received 1.18% equity, while chairman Tian Guanghui and executive director/deputy general manager Hu Tianwen, despite holding higher positions, received lower equity percentages at 0.45% and 0.45% respectively. As of the filing, Jin Qing personally holds 3.68% equity.
Through these arrangements, Shen Jingshan and Jin Jie's direct holdings plus family member holdings give their family collective control over shares worth approximately 2.678 billion yuan (based on a 4.45 billion yuan valuation). If Wangshan Wangshui's IPO succeeds, the Shen Jingshan family will share in this capital feast.
However, whether the Shen Jingshan family can enjoy the capital feast still faces some challenges. The prospectus shows that as a biopharmaceutical company still in its R&D investment phase, during 2023, 2024, and the first four months of 2025 (hereinafter referred to as "the reporting period"), Wangshan Wangshui's R&D expenses were 131 million yuan, 135 million yuan, and 64 million yuan respectively, accounting for approximately 70%, 66%, and 53% of total operating expenses.
During the reporting period, Wangshan Wangshui's net profits were 6.4 million yuan, -217 million yuan, and -112 million yuan respectively. Notably, Wangshan Wangshui's net profit in the first four months of 2024 was -73 million yuan, meaning this year's loss rate exceeds the same period last year.
Additionally, Wangshan Wangshui's cash flow situation is not optimistic. As of April 30, 2025, the company's cash and cash equivalents were only 72.833 million yuan, while as of April 30, 2024, this financial figure was still 122 million yuan.
More noteworthy is its short-term debt servicing ability. During the reporting period, the company's current ratios were 0.6x, 0.5x, and 0.3x respectively, showing a straight declining trend with current assets insufficient to cover short-term debts. The company states that the decline in current ratio mainly stems from reduced bank balances and cash, increased borrowings, and partial offset by decreased trade and other payables.
The prospectus also shows that Wangshan Wangshui's asset-liability ratio is gradually climbing. During the reporting period, the company's asset-liability ratios were 72.18%, 80.66%, and 88.10% respectively.
For this Hong Kong IPO, Wangshan Wangshui plans to use fundraising proceeds for core product R&D, factory expansion, and supplementing working capital. The prospectus shows the company is establishing a new production base in Qingdao according to international GMP (Good Manufacturing Practice) standards. This factory has a building area of approximately 11,200 square meters for producing more oral and topical dosage forms, including sublingual tablets, orodispersible tablets, and other non-conventional tablets. It is expected to be completed by the end of 2026, with initial designed capacity of 200 million tablets and 7.5 million topical preparations.
Notably, the company's newly built Lianyungang factory, which was completed and put into production in June last year, has an annual designed capacity of 100 million capsules and 600 million tablets. As of the end of 2024, the capacity utilization rates for tablets and capsules at this production line were 1.3% and 0.7% respectively, while in the first four months of 2025, tablet capacity utilization remained at 1.3% with no capsule production.
Wangshan Wangshui states that since products are in the early commercialization stage, it expects utilization rates to gradually improve as commercialized products establish and expand their market share and as more future drug candidates enter commercialization stages.
Regarding the relevant questions raised in this report, on August 18th, inquiries were sent to the email address disclosed on Wangshan Wangshui's official website, but no response has been received as of publication.
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