In the first half of the year, driven by the bullish wave in Hong Kong's innovative drug sector, ZHAOKE OPHTH-B (06622) saw its stock price surge rapidly, a trend that persisted until mid-August. On August 18, the stock hit a yearly high of HK$4.60, marking a staggering 283.33% year-to-date gain. However, after peaking, the stock failed to sustain its upward momentum and entered a phase of volatile decline. Over the next two and a half months, the stock recorded consecutive losing streaks—a "nine-day decline" followed by a "ten-day decline." Though daily losses were modest, this gradual erosion led to a cumulative 30% drop in ZHAOKE OPHTH-B's share price during this period.

On October 22, ZHAOKE OPHTH-B achieved a milestone when its abbreviated new drug application (ANDA) for NVK002, a low-concentration atropine sulfate eye drop (0.01%), received full approval. This signaled that the product is one step closer to final market authorization. However, the secondary market reaction was muted. While the stock briefly rallied 3.58% intraday on October 22, the gains were short-lived—shares fell 4.72% the next day, erasing all prior gains. Subsequent trading sessions saw the stock oscillate sideways, with prices dipping as low as HK$2.90.

Currently, ZHAOKE OPHTH-B trades at a price-to-book (PB) ratio of just 0.92x, significantly below the industry average of 3.15x and 19% lower than its three-month historical PB. With the stock now in a "flat price, shrinking volume" pattern, investors are closely watching for signs of a turnaround.

**Key Product Nears Commercialization** On August 28, ZHAOKE OPHTH-B reported interim 2025 results, posting revenue of RMB15.80 million (down 68.25% YoY) and a net loss of RMB117 million (widening 53.85% YoY). The sharp revenue decline was attributed to a one-time licensing income of RMB33.50 million in the prior-year period. Excluding this, product revenue stood at RMB15.10 million, only slightly below the year-ago figure of RMB15.60 million. Meanwhile, heavy R&D spending further inflated losses.

The market had already priced in these weak financials, as evidenced by the stock’s 280% surge earlier in the year—a bet on the company’s future prospects, particularly its atropine sulfate eye drop (NVK002) for myopia control.

Progress on NVK002 has been notable: In January 2025, the ANDA for the 0.01% dose was accepted by China’s National Medical Products Administration (NMPA), followed by the NDA for the 0.02% dose in July. This makes ZHAOKE OPHTH-B the only Chinese firm with two atropine formulations under regulatory review simultaneously.

NVK002, a patented formula addressing the instability of low-concentration atropine, is preservative-free with a shelf life exceeding 24 months. Targeting children and adolescents aged 3–17, it is among the most advanced atropine candidates globally for myopia progression. With approximately 700 million myopia patients in China—163 million of whom are potential NVK002 users—the addressable market is vast. CICC estimates China’s myopia treatment market could reach RMB210 billion by 2030, growing at a 13.7% CAGR.

Currently, Xingqi Eye Pharmaceuticals’ 0.01% atropine eye drop is the only competing product in China. Despite 16 domestic candidates in development, PUYI International projects ZHAOKE OPHTH-B could capture 22% peak market share.

**Bottoming Out?** After hitting a low of HK$1.30 on April 9 amid broader market volatility, ZHAOKE OPHTH-B’s shares climbed steadily along the 5-day moving average. Two major uptrends occurred between May 15–June 13 and July 17–August 18, with the stock riding the upper Bollinger Band amid surging volume. By August 18, 99.23% of positions were profitable, with the cost concentration around HK$2.93 (largely from June’s rally) and an average cost of HK$2.70.

Subsequent declines aimed to shake out low-cost holders. After peaking at HK$4.60 on August 18, the stock retreated, forming a long upper shadow. By late August, early investors had largely cashed out, and trading volume plummeted to under 100,000 shares on September 12—the lowest since July—reflecting strong holding sentiment.

After 2.5 months of consolidation, the average holding cost has risen to HK$3.24, with the cost concentration near HK$3.00. Over 71% overlap in cost distribution suggests tighter institutional control. Despite a 20% drop from September 16–October 14, dwindling daily volume indicates limited further downside. Recent sessions saw volume hit a record low of 38,500 shares (November 3), hinting at exhaustion. With signs of stabilization over the past three days, any uptick in volume could signal accumulation and a potential reversal—a scenario warranting investor attention.