After 13 years of extended research and development and hundreds of millions in continuous investment, Huashi Biotechnology remains at a crossroads with "three absences" - no stable revenue, commercialized products, or profitability achieved.

This biotech company specializing in platelet-derived growth factor (PDGF) drug development is expected to fill a domestic market gap. However, the company simultaneously faces mounting administrative expenses and pressure from betting agreements for public listing. While director compensation increased last year, the reality remains that core products have yet to receive approval and market size faces potential ceiling constraints.

Now standing at Hong Kong's stock exchange threshold, whether Huashi Biotechnology can successfully navigate these challenges remains to be seen.

According to the company's prospectus, Huashi Biotechnology was established in 2012, focusing on developing protein drugs targeting medical needs and market opportunities with unmet demand. The main direction involves discovering, developing, and commercializing wound healing therapies, with current research centered around PDGF drugs. PDGF is a growth factor secreted by platelets after injury that promotes angiogenesis, regulates inflammation, and stimulates cell proliferation and migration, thereby accelerating wound healing.

Notably, approved drugs in the PDGF field are extremely limited globally, with only one FDA-approved medication - Regranex - indicated solely for lower extremity diabetic neuropathic ulcers. Huashi Biotechnology is positioned to achieve a breakthrough in the domestic market.

The company currently maintains three research pipelines with 10 candidate products covering 14 indications, including seven PDGF-class drugs. Core products include Pro-101-1 (targeting burns and scalds) and Pro-101-2 (targeting "diabetic foot" ulcers). Pro-101-1 has completed Phase IIb clinical trials in China, with Phase III trials expected to conclude in Q4 2026, and plans to submit an IND application to the FDA in Q1 2026. Pro-101-2 is currently undergoing Phase II clinical trials in China, expected to complete in Q2 2027, with Chinese market launch planned for 2030.

According to Frost & Sullivan reports, China has three PDGF drug pipelines as of the last practicable date, with two belonging to Huashi Biotechnology and one to Tasly Pharmaceutical. Notably, Tasly Pharmaceutical's PDGF-BB candidate drug entered Phase III clinical trials in 2014 but has made no progress due to Phase II results not reaching statistical significance and the technology transfer party's business license being revoked.

Even if Huashi Biotechnology's two core drugs succeed in the PDGF field, their commercial potential remains uncertain.

The company's focused niche market has limited scale. China's burn and scald-related PDGF drug potential market size is projected to reach only approximately 66.6 million yuan by 2033.

For diabetic foot PDGF drugs, the same-period market is estimated at approximately 580 million yuan. While China's overall diabetic foot treatment market reached 38.3 billion yuan in 2024, current treatments primarily consist of antibiotics and blood sugar control medications. For example, Surebet cream is currently the only non-growth factor biological drug approved domestically for diabetic foot, priced at approximately 4,380 yuan per tube, with treatment course costs ranging from 8,760 to 17,520 yuan.

Competition environment equally demands attention. Domestically, nine products from eight companies are available for burn and scald treatment growth factor drugs, mainly based on EGF or FGF. In the diabetic foot field, besides Huashi Biotechnology, four other growth factor drug pipelines are under development, with three already in Phase III clinical trials.

Responding to inquiries, Huashi Biotechnology stated that PDGF drugs represent innovative biological medicines serving as adjunctive treatments for multiple indications, with the company advancing preclinical development of PDGF candidates for nine other indications.

While Huashi Biotechnology focuses on PDGF, a commercially insufficient specialized field, the decision-makers behind it have deep pharmaceutical industry experience.

The company is led by 57-year-old Jia Lijia and her son Wang Kelong. Jia Lijia, Wang Kelong, and two other natural persons act in concert, collectively holding approximately 66.99% of the company's total issued share capital, with Jia Lijia directly holding 19.54% and Wang Kelong directly holding 17.98%.

Despite the company's pending public listing, founders have already reaped benefits.

In May 2021, Jia Lijia and other shareholders increased the company's registered capital through capital injection. Jia Lijia invested 5.25 million yuan, raising her registered capital holding from 15.75 million to 21 million yuan.

Shortly after, on May 25, 2021 - exactly nine years after the company's establishment - the company welcomed Pre-A round financing. The company signed capital increase agreements with investors including Zhang Hong, who acquired 0.62% equity in Huashi Biotechnology for 5 million yuan, with 543,800 yuan injected into registered capital and the remaining 4.456 million yuan converted to capital reserves. In this transaction, each yuan of registered capital corresponded to a 9.2 yuan price.

Why did initial shareholders choose this timing to increase registered capital?

The prospectus shows that one month before Jia Lijia and other initial shareholders increased registered capital in April 2021, the company's core product Pro-101-2 reached a major milestone - submitting an IND application. Pro-101-2 quickly received clinical trial notification from the drug review center in July 2021, followed by Huashi Biotechnology beginning Pro-101-2 Phase I clinical trials in August 2021.

A pharmaceutical industry professional noted that submitting IND applications represents a significant research milestone, marking the legal starting point for drugs transitioning from laboratory to clinical settings, often serving as a key valuation leap point for pharmaceutical companies. Additionally, after IND approval, companies must immediately initiate Phase I clinical trials, with single-center costs typically ranging from 20 to 50 million yuan, significantly increasing funding urgency.

Therefore, after submitting the IND application, Huashi Biotechnology promptly increased registered capital. Following financing initiation, company valuation surged substantially, allowing initial shareholders' original holdings to appreciate accordingly. The prospectus shows that on August 27, 2021, Qingdao Dinghui Shuangbai Equity Investment Partnership acquired 1.459 million yuan in registered capital held by Jia Lijia for 25 million yuan consideration. In this transaction, each yuan of registered capital corresponded to 17.23 yuan, with Jia Lijia cashing out 25 million yuan.

As company founder, Jia Lijia possesses 27 years of pharmaceutical industry experience, previously serving as sales manager at Mudanjiang Lingtai Pharmaceutical and vice general manager at Beijing Shenghongye Medical Technology Development, primarily responsible for sales and operational management. She has served as chairman and executive director since the company's 2012 establishment.

However, besides Jia Lijia, other shareholders holding over 10% have limited pharmaceutical R&D connections.

34-year-old Wang Kelong studied in the United States, earning an MBA from University of Texas at Arlington in 2014 and participating in Harvard Business School's Advanced Management Program in 2022.

Before joining Huashi Biotechnology, his career experience had minimal pharmaceutical R&D connection. The prospectus shows he worked at Berkshire Hathaway Automotive (one of America's top five automotive dealer groups), though specific positions aren't detailed.

In 2017, not yet 30, Wang Kelong founded Beijing Green Auto Technology Co., Ltd. with 50,000 yuan registered capital, focusing on intelligent and autonomous driving system R&D and applications. According to social security contribution records, the company maintained only 1-2 insured personnel from 2017 to 2019. Despite modest company scale, Wang Kelong appeared on multiple elite entrepreneurship lists, including "2019 Forbes China 30 Under 30" and "2024 Fortune China 40 Under 40 Business Elite."

The prospectus reveals that after joining Huashi Biotechnology in 2018, Wang Kelong applied for 36 patents as co-inventor.

Li Gewei, another acting-in-concert party with Jia Lijia, is also a Huashi Biotechnology "veteran." Li Gewei graduated from Lanzhou University with a mathematics bachelor's degree and possesses over 30 years of corporate management experience. According to corporate database searches, Li Gewei has extensive investment experience, serving as shareholder in 34 companies. Jia Lijia's other acting-in-concert party, Zhang Hongbo, has approximately 20 years of biopharmaceutical enterprise operational management experience.

Compared to founding shareholders, among Huashi Biotechnology's disclosed 13 directors and senior management team members, besides Jia Lijia, executive director and general manager Dr. Zhai Junhui, executive director and chief strategy officer Miao Tianxiang, chief marketing officer and vice president Xu Zhenyu, chief R&D officer Zhao Xinghui, and medical director Cheng Long possess pharmaceutical field experience. The remaining senior management members have commercial and capital operation backgrounds.

From 2023 to 2024, total compensation for the aforementioned directors increased dramatically by over 91%, primarily due to increased share-based payment expenses settled in equity.

While director compensation grew, financial statement figures showed no improvement.

The prospectus shows that for 2023, 2024, and the first five months of 2025, Huashi Biotechnology generated revenues of 472,000 yuan, 261,000 yuan, and zero yuan respectively, with corresponding net losses of 105 million yuan, 212 million yuan, and 72 million yuan. In 2023, combined administrative expenses and R&D costs exceeded 80 million yuan; in 2024, these combined expenses exceeded 200 million yuan; and in the first five months of 2025, they exceeded 70 million yuan.

Particularly notable is that 2024 R&D investment reached 91.326 million yuan, growing dramatically over 120% year-over-year, while administrative expenses reached 117 million yuan, accounting for 56% of total expenses and exceeding R&D investment. As of 2024, the company employed 54 "general and administrative personnel" and 45 R&D personnel.

As a research-driven biotech company, why would administrative expenses exceed R&D expenses? Huashi Biotechnology explained this primarily resulted from increased share-based payments related to the employee incentive plan approved and adopted in February 2024. The company also noted that administrative expenses in the first five months of this year decreased from 55.1 million yuan in the same period last year to 40.2 million yuan.

The company's R&D expenses for the first five months of this year totaled 32.1 million yuan, still below administrative expenses for the same period.

Additionally, as of May 31, 2025, cash and cash equivalents fell to 105 million yuan.

At 2024's monthly average "burn rate" exceeding 17 million yuan (calculated as combined R&D and administrative expenses divided by 12 months), current funds would sustain operations for approximately six months only.

Huashi Biotechnology stated the company currently has no major external debt financing plans, estimating that assuming future average cash consumption rates of 1.6 times the first five months of 2025 levels, existing cash balances could maintain financial viability for approximately 10 months.

The company's Series A and B financing rounds both included betting clauses requiring IPO completion before December 31, 2026, or share repurchase at original price plus interest.

Facing continued losses and persistently high administrative expenses, the company must fight with backs against the wall to sprint toward public listing, where IPO success or failure will directly impact enterprise survival and development.