Wuhan Ammunition Life-tech Co., Ltd. (referred to as “Ammunition”) recently submitted its prospectus to the Hong Kong Stock Exchange, with CCB International and J.P. Morgan as joint sponsors. Established in 2015, Ammunition specializes in early cancer screening and aims to become a leader in global tumor early screening.

However, behind its grand narrative lies an annual revenue that hasn’t surpassed 10 million yuan in ten years, persistently high losses, a sales structure heavily reliant on related-party transactions, and a commercialization pathway that remains unverified. Ammunition’s IPO attempt comes amid turmoil in the sector, particularly following the financial misconduct allegations against industry benchmark firm Huazhong Health, which led to an 18-month trading suspension and looming delisting crisis. With Huazhong Health, previously touted as the first stock in China for cancer early screening, facing a significant downfall, the industry is currently shrouded in uncertainty. Can Ammunition successfully navigate the capital market in this challenging climate?

Revenue Below 10 Million with Losses Mitigated by Cost-Cutting; Related Parties or Shareholders Contribute Over 60% of Revenue

Financial data reveals that Ammunition’s revenues for 2023, 2024, and the first half of 2025 were 6.233 million yuan, 7.238 million yuan, and 6.513 million yuan, respectively. Despite a year-on-year growth of 103% in the first half of 2025, the overall revenue remains under 10 million yuan. Estimating from the unit price of its testing products, which is about 800 yuan, the annual testing volume is still below 10,000 cases.

During the reporting period, the company reported net losses of 67.922 million yuan, 38.63 million yuan, and 13.906 million yuan, respectively. Although the losses are narrowing, the loss ratio remains high, with an operational loss rate of 328.7% in 2024. In terms of cost structure, Ammunition’s total R&D, sales, and administrative expenses reached 35.87 million yuan in 2024, nearly five times the revenue for the same period.

Trends over the past three reporting periods show that the company has continuously reduced expenses, leading to a decline in losses. The total expenses in 2024 decreased by 36.42% compared to 2023, while the first half of 2025 saw a further decline of 38.63% compared to the same period in 2024. Nevertheless, whether this cost-cutting strategy can be sustained without compromising long-term competitiveness remains a question.

While low revenue and ongoing losses are common for startups, Ammunition's issues with customer structure raise further concerns. The prospectus reveals that its largest customer in 2023 and 2024 was Wuhan Ainuo Medical Laboratory, fully owned by Zhang Lianglu, Ammunition’s executive director and controlling shareholder. The purchasing amounts from Ainuo for the respective years were 2.776 million yuan and 3.774 million yuan, constituting a staggering 44.5% and 52.1% of Ammunition's total revenue. In other words, nearly half of the company’s income comes from a related-party lab owned by its controlling shareholder.

Additionally, the second-largest customer is KaiPu Biotech Co., Ltd., which not only acts as a customer but also holds approximately 11.69% of Ammunition’s shares. In 2023 and 2024, revenue contributions from KaiPu and its associates accounted for 8.9% and 9.3%, respectively.

Between 2023 and 2024, Ammunition's top two clients were all related parties or shareholders, together contributing over 60% of the revenue. Although the company explains in the prospectus that its collaboration with Ainuo is complementary and that working with KaiPu leverages its commercialization network, the high proportion of related-party transactions raises concerns in the market regarding the authenticity and sustainability of its revenue.

The industry remains in its early development stage, with commercialization proving challenging; core products have yet to obtain "early screening" qualification.

From a product perspective, Ammunition does have a diverse product line, having developed over 20 early cancer screening products, five of which have been approved in China as Class III medical devices. These include products for colorectal cancer detection such as “Ai Chang Kang,” “Ai Chang Jian,” and “Ai Si Ning” for esophageal cancer, and “Ai Xin Gan” for liver cancer. Additionally, several candidate products are still in the R&D phase.

However, it is noteworthy that the five approved Class III medical device products are all intended for “detection” or “auxiliary diagnosis,” targeting symptomatic patients or those with imaging abnormalities, rather than screening healthy individuals.

In August 2025, the National Medical Products Administration released clinical evaluation registration review guidelines for cancer screening IVD reagents, significantly raising the evaluation standards for early screening products. The new regulations explicitly state that screening products must target asymptomatic populations and demonstrate actual benefits in reducing cancer mortality while also requiring multi-center clinical trials with no less than three clinical trial institutes.

Currently, there are very few companies in China with approved cancer early screening products. Among them, Huazhong Health’s “Changwei Qing” (colorectal cancer) and Mi Rui’s “Mi Xiaowei” (stomach cancer) are representatives. The lack of formal early screening qualifications means that Ammunition's products cannot be directly promoted to healthy populations, significantly constraining market potential.

From an industry perspective, cancer early screening represents a high-investment, slow-return business model, where market acceptance is a critical factor influencing development. According to Frost & Sullivan, the market penetration rate for liver cancer early screening in China is only 0.7% in 2024, while the penetration for urinary epithelial cancer early screening is as low as 0.5%. This indicates that despite technological advancements, there is a minuscule proportion of healthy individuals who actually accept early screening.

With nearly 1,000 yuan per test, combined with the weak awareness of cancer prevention among healthy individuals and limited understanding of early screening, user willingness to pay is insufficient, leading to prolonged sales conversion cycles. Unlike tests prescribed by doctors, the decision to consume early screening products relies heavily on proactive health management from consumers, necessitating substantial educational investments, which presents a considerable challenge for a firm like Ammunition still in its early development stages.

Compounding these challenges, as a pioneer in the industry, Huazhong Health has failed to foster industry growth and, instead, has undermined industry credibility due to allegations of financial misconduct. Once a beacon in China’s cancer early screening realm, Huazhong Health reported over 700 million yuan in revenue in 2022, with a peak market value nearing 30 billion HKD.

However, in the latter half of 2023, it faced accusations from short-selling firm Capital Watch of "inflating sales revenues through inventory pushing," which led to the resignation of its auditing firm, a stock price plunge, and eventual suspension, leaving it on the brink of delisting. Huazhong Health's collapse has not only put itself in jeopardy but has also led the entire early screening industry to face a trust crisis, with capital markets likely to scrutinize early screening firms even more rigorously.

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