Following a cumulative 35.88% plunge in its share price throughout 2025, CUTIA-B (02487) appears to have yet to find the key to unlocking a rebound in 2026. As of January 19, the company's Hong Kong stock price has risen over 7% year-to-date. However, this seemingly improved performance compared to the full-year 2025 level is primarily due to a sharp 5.02% drop on the last trading day of 2025, closing at a low of HK$4.54. This low base effect has made the early 2026 gains appear more favorable. In reality, CUTIA's stock price has not escaped its downward trajectory, with the overall trend remaining one of volatile decline. On January 19, CUTIA announced positive topline results from its Phase III clinical trial in China for its key pipeline asset, CU-20101 (Botulinum Toxin Type A for Injection), aimed at improving moderate to severe glabellar lines. Boosted by this positive news, the company's stock price surged intraday, offering a glimmer of hope for a potential stabilization and halt to the decline.

The challenges associated with being delisted from the Stock Connect program are becoming apparent, raising the question of when the "liquidity难题" will be resolved. After being removed from the Hong Kong Stock Connect list in March last year, CUTIA's stock price rapidly fell to its annual low of HK$3.64 within a month. However, following the disclosure of its annual report on April 22, the company swiftly halted its decline, buoyed by the solid fundamentals showcased in its financials. Driven by a combination of market undervaluation and a bull market for Hong Kong's innovative drug stocks, CUTIA's stock price skyrocketed approximately 2.5-fold over the next two months. For Stock Connect funds, unless there is a strong desire to accumulate shares, investments in eligible stocks typically follow a contrarian strategy—buying on dips and selling on rallies. For stocks that have been delisted ("出通" stocks), only sell orders are permitted. Consequently, the rapid price surge after CUTIA's delisting accelerated the sell-off by Stock Connect capital. According to statistics, on the day after CUTIA's confirmed delisting last year, Stock Connect holdings accounted for 10.09% of its shares, representing 32.3194 million shares worth a total of HK$195 million. From March 12 to June 13, a three-month period, Stock Connect funds reduced their holdings on all but four trading days, where the holding percentage remained unchanged. In stark contrast, during the period of price consolidation from June 17 to September 10, the outflow of Stock Connect funds from CUTIA slowed significantly, with the number of days where holdings remained unchanged increasing substantially to 28, and the holding ratio standing at 2.87%. Subsequently, Stock Connect holdings underwent another round of sell-offs in October and November last year, dropping to 2.45% by November 11. Since then, the pace of outflows has slowed again, with the holding ratio remaining at 2.29% as of January 16.

While the accelerated sell-off by Stock Connect funds has, to some extent, alleviated selling pressure on CUTIA, it has also made the phenomenon of rapidly diminishing liquidity increasingly evident. From a technical perspective, since CUTIA's stock price hit the upper Bollinger Band on September 3 last year, market sentiment has remained persistently weak during the subsequent downtrend. The stock price has primarily exhibited a volatile decline, fluctuating between the middle and lower Bollinger Bands. In terms of trading volume, over the four and a half months from September 3 to the present, CUTIA saw its trading volume exceed 1 million shares on only four trading days, a sharp contrast to its performance in the first half of 2025. Reflecting on the stock price movement in the first half of last year, investors can observe that even after being delisted from Stock Connect, the recovery in the Hong Kong healthcare sector, coupled with the solid fundamentals demonstrated in the company's annual report, were key factors supporting the rapid price surge and increased daily trading volume. On April 22, 2025, CUTIA officially disclosed its 2024 annual report. The financial report showed that the company's total revenue increased by approximately 103% year-on-year, while gross profit rose by about 102.0%. Simultaneously, the net loss narrowed by 77.91% year-on-year. According to the report, the revenue growth in 2024 was primarily driven by increased sales of its hair disorder and care products, as well as daily skincare products. The improvement in gross margin for the skincare brand line was attributed to gradual adjustments and maturation. The narrowing net loss resulted from further cost reduction and efficiency improvements. Combined with the sales expectations disclosed at the time for three prescription drugs, this provided ample room for market imagination, which was ultimately reflected in the substantial stock price increase over the two months following the annual report release.

So, the question arises: can CUTIA's stock price replicate last year's performance in the first half of 2026 and successfully escape the "liquidity trap"? The extent of fundamental recovery may become the key factor supporting the stock price. On August 28 last year, CUTIA disclosed its interim results for H1 2025. During the reporting period, the company's revenue decreased by 30.6% year-on-year to approximately RMB 66.3 million, while the net loss widened by about 19.1% to approximately RMB 239 million. The significant challenges faced in H1 2025 stemmed from the company's strategic decision to terminate its distribution agreement with the American skincare brand Obagi and reallocate resources towards the commercialization preparations for new products like CU-40102 (Topical Finasteride Spray) and CU-10201 (Topical 4% Minocycline Foam), which had already received regulatory approval. In connection with this, CUTIA announced a proposed placement of 28.904 million shares at HK$8.40 per share, representing a discount of approximately 12.04% to the previous closing price of HK$9.55. The net proceeds from the placement were approximately HK$240 million, with 45% earmarked for market promotion, channel expansion, and brand building for CU-40102 and CU-10201, underscoring the company's commitment to commercializing these new products. According to previous market forecasts, the estimated revenue for CU-40102 in its first full year was expected to exceed RMB 100 million, with a peak sales potential estimated at RMB 1-2 billion. For CU-10201, the first full-year revenue was estimated at RMB 50 million, with peak sales potential estimated at RMB 500 million to 1 billion. Notably, CU-40102 is the world's first and only topical finasteride, enjoying a favorable competitive landscape, which previously led to optimistic market views on its commercial prospects. However, CUTIA is still in the early stages of commercializing these two products, and whether their commercial milestones will be reflected in the 2025 annual report remains to be seen. Nevertheless, the recent positive Phase III topline results for another key asset, CU-20101, serve as a promising "appetizer" for many investors.

According to information, the clinical trial results showed that in terms of efficacy, using the Facial Wrinkle Scale (FWS), the treatment success rate based on on-site investigator assessment and participant assessment upon maximum frown met the non-inferiority criteria. Furthermore, the treatment success rate assessed by an independent assessment committee (IAC) based on photographs further supported the non-inferiority conclusion for the primary efficacy endpoint, indicating that CU-20101's efficacy is comparable to BOTOX®, meeting both primary and secondary endpoints. Regarding safety, CU-20101 demonstrated a favorable overall safety profile, with no adverse events leading to premature trial withdrawal or death, and no treatment-related serious adverse events. The safety assessment of CU-20101 was similar to that of BOTOX®, with no new safety signals identified. Additionally, the manufacturing process for CU-20101 will not use animal-derived materials, thereby eliminating the risks of Transmissible Spongiform Encephalopathy (TSE) infection and related allergic reactions, suggesting potential safety advantages. However, within the current domestic competitive landscape, several botulinum toxin products are already approved and marketed in China, including Lanzhou Biological's Hengli, Allergan's BOTOX®, Ipsen's Dysport, Hugel's Letybo, Merz's Xeomin, and Revance's Daxxify. Among these, BOTOX® and Hengli, as early entrants, dominate the high-end and mid-to-low-end markets respectively, with BOTOX® holding approximately 50% market share and Hengli around 30%. As a latecomer, whether CUTIA's CU-20101 can capture a slice of this market remains uncertain.