The Hang Seng Biotech Index has fallen by more than 30% since September 2025, with the overall valuation of pre-profit Hong Kong-listed 18A biotech companies continuing to decline. The market's investment focus has gradually shifted from sector hype to clinical execution capability, shareholder endorsement, and financial safety margins.
As a rare domestic innovator with a full pipeline in kidney disease, Liban Pharmaceutical holds several differentiated drug candidates. It is backed by a strong shareholder and cornerstone investor lineup, including Singapore's GIC, Tencent, and Lilly Asia Ventures, giving it solid fundamentals among its biotech peers. In the current pressured environment for the sector, the pace of pipeline advancement, speed of commercialization, and valuation appropriateness have become the market's central focus points.
The Kidney Disease Sector's Rigid Demand and Differentiated Pipeline Form a Foundation for Long-Term Growth
Chronic Kidney Disease (CKD) is the world's third most prevalent chronic illness, with the global patient population surpassing 800 million in 2025 and the domestic patient base reaching 124 million. Driven by an aging population, the sector's compound annual growth rate is expected to remain stable at 1.6% over the next decade. Subtypes like hyperphosphatemia, IgA nephropathy, and diabetic kidney disease have limited clinical treatment options, with existing drugs often burdened by heavy pill loads and poor tolerability, indicating significant unmet clinical needs.
In terms of market size, the global hyperphosphatemia drug market was valued at $1.8 billion in 2025 and is projected to grow to $6.4 billion by 2035. The corresponding domestic market is expected to expand from 1.8 billion yuan to 10.7 billion yuan, showing clear growth potential.
Compared to peers, Liban Pharmaceutical is one of the few domestic innovators covering multiple kidney disease indications, including hyperphosphatemia, IgA nephropathy, and polycystic kidney disease, with an industry-leading complete pipeline layout. Its core candidate, AP301, has completed a Phase III clinical trial in China, with data superior to mainstream marketed phosphate binders, and is planned for a New Drug Application (NDA) submission in 2026. Its innovative mechanism product, AP306, has received Breakthrough Therapy Designation from China's NMPA, showing significantly better phosphate control in clinical trials than traditional drugs. The company is also developing disease-modifying candidate AP303 and the world's first IgA protease, AP308. This multi-pipeline strategy creates a tiered structure of near-term commercial products combined with mid-to-long-term innovative candidates, giving it distinct competitive advantages in pipeline reserves among 18A kidney disease companies.
Strong Capital Endorsement with a Robust Shareholder and Cornerstone Lineup
For Hong Kong-listed 18A companies, the background of investors is a key measure of a company's long-term development strength. Liban's past financing rounds and its current cornerstone investor allocation are at the top tier of the industry. Since its founding, the company has completed several major funding rounds, raising over 2 billion yuan cumulatively. Its shareholder base includes diverse leading institutions: sovereign wealth fund GIC, long-established overseas biotech fund LAV, and strategic investor Tencent. The continued, long-term investment from these various capital sources validates the clinical value of its pipeline.
For this global offering, the company has attracted 11 cornerstone investors who have collectively subscribed for approximately 49.8% of the offering size, committing a total of $81.5 million with a six-month lock-up period, providing strong support. The lineup includes diverse capital: GIC, as an existing major shareholder, is the largest cornerstone investor, joined by overseas long-term healthcare funds like Loomis Sayles and RTW, strategic capital from Tencent, and long-term Chinese institutional investors including GF Fund and Zhen Fund. The diversity and long-term nature of this capital is notable. Against the backdrop of a persistently weak biotech sector, having nearly half the offering locked up by cornerstone investors means potentially lower selling pressure in the secondary market compared to many other 18A IPOs with scattered participation from smaller institutions, giving it a clearer safety cushion.
Operations Align with 18A Biotech Norms as Commercialization Progresses Steadily
The Hong Kong 18A listing framework is specifically designed for pre-profit innovative biopharma companies. The standard industry development model involves significant upfront R&D investment and periodic operating losses. Liban's financial performance over the past two years is not significantly out of line with sector peers. The company recorded net losses in 2024 and 2025, with core expenditures focused on three long-term strategic investments: simultaneous clinical development of multiple pipelines, building high-caliber R&D and commercial teams, and constructing its own API and formulation production base in Yangzhou. Continued heavy investment in R&D is a necessary part of building out its comprehensive kidney disease product portfolio and holds clear long-term value.
Unlike many 18A biotech companies that hold only clinical-stage pipelines and have no revenue, Liban has established a two-tier business structure: a mature commercial product providing a foundation, complemented by multiple differentiated innovative pipelines running in parallel. This generates operating income, meaning the company is not solely reliant on equity financing for survival, and its internal cash flow can partially support daily operations.
On the commercialization front, the company holds exclusive distribution rights in China for Roche's long-acting erythropoiesis-stimulating agent, Mircera, which has been successfully included in China's National Reimbursement Drug List (NRDL), indicating mature commercial readiness. Revenue from this product reached 6.5 million yuan in 2024 and 30.6 million yuan in 2025, showing rapid year-on-year growth. The product is currently available in over 300 hospitals across China. The company has simultaneously built a complete commercial team for academic promotion and channel distribution, accumulating practical experience in physician relationships, hospital access, and terminal operations within the kidney disease field. This established sales system can be seamlessly applied to the launch of its future self-developed drugs, significantly reducing the cost and time for commercial promotion and creating a channel advantage that is difficult for competitors to replicate quickly.
In terms of production, the company is also building its own manufacturing capacity. Its integrated API and formulation production base in Yangzhou is under construction, with operations expected to commence in 2028. At full capacity, the designed annual output is 200 tons. Once its core candidates are approved, this will enable in-house supply, gradually reducing reliance on external CDMOs, continuously optimizing production costs, and ensuring supply stability.
Overall, many 18A companies in the market possess only clinical-stage pipelines with no products launched, relying entirely on multiple rounds of external financing to cover expenses, leaving them with little room for operational error. In contrast, Liban benefits from stable operating income contributed by its already-launched, NRDL-listed product, which helps cover part of its daily operational and clinical support costs. Combined with its tiered pipeline of innovative candidates, its operational structure is more balanced, and its ability to withstand fluctuations in the financing environment is significantly better than that of peers still purely in the clinical stage.
Biotech Sector Under Pressure with Clinical Progress as the Core of Long-Term Value
With the Hang Seng Biotech Index down over 30% from its peak last September, market appetite for valuations of new 18A listings has cooled noticeably. Capital is now focusing more on tangible clinical progress rather than just sector narratives. The total market capitalization implied by this offering is approximately 7.68 billion Hong Kong dollars, which does not yet meet the threshold for inclusion in the Stock Connect program. Post-listing liquidity may therefore be weaker than that of larger biotech leaders. Although cornerstone support and strong retail oversubscription are positive, given the overall sector weakness, first-day trading sentiment could be mixed. If secondary market capital turns cautious, short-term volatility is likely.
The pace of pipeline execution will dictate the company's medium-to-long-term performance after listing. Key catalysts for institutional tracking include the NDA review timeline for core candidate AP301 in China, its Phase III data in the US, and subsequent Phase II results for AP306 and AP303. If clinical data continues to exceed expectations, the company could outperform the weak sector. However, delays in regulatory reviews or disappointing trial data could lead to periodic valuation corrections. Additionally, the normalization of China's National Reimbursement Drug List (NRDL) negotiations and volume-based procurement (VBP) introduces policy variables that will affect future drug pricing and market access potential, requiring ongoing monitoring by long-term investors.