Following a series of external factors influencing the market since 2026, the Hong Kong stock healthcare sector has experienced continuous volatility. Unlike the 2025 biotech bull market driven by single innovative targets and pipeline BD expectations, investors in the current market are more inclined to pay a premium for clear value realization. The logic of "accelerated innovation - global monetization - valuation uplift" is increasingly becoming the key framework for assessing the "investment certainty" of innovative biopharma companies. This shift was evident in the market reaction after HUA MEDICINE-B (02552) announced its 2025 annual results on the evening of March 26. The company's stock price surged at the open the next day, reaching a peak increase of nearly 15.6% by the midday close. This positive investor sentiment reflects strong recognition of HUA MEDICINE's commercial execution in 2025, its global strategy, and multiple breakthroughs in its R&D pipeline. This sentiment was further bolstered by the recent approval from the Hong Kong Department of Health for the new drug's launch in Hong Kong, creating a multi-layered catalyst for certainty.

The company's growth trajectory in 2025 was clear and robust. As a biopharmaceutical firm in a steady growth phase, HUA MEDICINE leveraged a strategic vision and the synergistic advantages of "commercial capability, innovation barriers, and long-term planning" to achieve a profitability breakthrough, thereby consolidating its industry leadership and injecting strong momentum for long-term growth.

In 2025, HUA MEDICINE reported revenue of RMB 493 million, a significant year-on-year increase of 93%. Pre-tax profit reached RMB 1.106 billion, marking the company's first-ever annual profit, which stands as the most direct highlight of the report. This breakthrough was underpinned by two key variables: the explosive sales growth of its core product, HuaTangNing® (dorzagliatin tablets), and the refined implementation of operational efficiency and cost control. This success signifies the strategic payoff from the company's decision to take full control of its commercialization efforts.

On the revenue side, the flagship product HuaTangNing® achieved annual sales of 4.011 million boxes, up 91% year-on-year. Sales revenue reached approximately RMB 493 million, also growing 93%, while the unit price remained stable. This indicates that the growth in market demand was not driven by price reductions but stemmed from recognition of the product's clinical value and improved patient accessibility through its inclusion in the national reimbursement drug list (NRDL). Optimization on the cost front demonstrated a qualitative improvement in the company's operational capabilities, serving as a crucial support for the profit breakthrough. Benefiting from expanded production scale and continuous manufacturing process optimization, the company's gross profit margin for 2025 was 56.9%, an increase of 8.2 percentage points from 2024. More importantly, the refined control over sales expenses was pivotal. The ratio of sales expenses to revenue decreased substantially compared to 2024, primarily because the company, after terminating its collaboration with Bayer, no longer had to pay high promotion fees. Instead, it utilized its own sales team for efficient promotion. The reduction in sales expenses directly boosted profitability and validated the high execution capability of the in-house commercialization team.

January 1, 2025, marked a critical turning point for HUA MEDICINE as it fully took over the commercialization of HuaTangNing® in China. Post-transition, the company established a professional team covering 10 sales regions nationwide with nearly 200 members. This move not only drove volume and revenue growth but also granted the company absolute control over product pricing, market promotion, and channel strategy, forming the core foundation for long-term competitiveness. Furthermore, by deploying an AI-powered digital commercialization platform, HUA MEDICINE significantly enhanced its operational efficiency and sales productivity, achieving comprehensive coverage across hospitals, community health centers, pharmacies, and online channels. By the end of 2025, HuaTangNing® had benefited over 500,000 patients through more than 3,000 hospitals, community health centers, pharmacies, and online channels, fully validating the success of its commercial system.

In 2025, dorzagliatin was recognized by Chinese regulators as a nationally innovative drug and an effective treatment for chronic diseases. The successful renewal of HuaTangNing® in the 2026-2027 NRDL at the original price further demonstrates the product's value and the company's pricing power. Against the backdrop of normalized NRDL negotiations for innovative drugs, where most products face price pressure, this outcome fully underscores the unique advantages of dorzagliatin as a globally first-in-class GKA drug, particularly in glucose homeostasis control, safety, and broad patient applicability, addressing a clinical gap left by traditional anti-diabetic medications.

Notably, as the developer of the world's first GKA drug, HUA MEDICINE's leading advantage extends beyond the innovative product itself to the continuous building of "commercial certainty." Two key developments in 2025 further strengthened its leading position in the GKA field. Firstly, in February 2026, dorzagliatin (branded as MYHOMSIS® / HuaLing Pian® in Hong Kong) received marketing approval from Hong Kong regulators, with a planned market launch in mid-2026. The company indicated that over 20 pharmacies in Hong Kong have already been approved to stock the drug. The initial focus in 2026 will be on market education and scientific promotion, with a subsequent goal of inclusion in Hong Kong's public medical insurance system. Concurrently, the company submitted a new drug registration application to Macau in 2025, gradually advancing its expansion in Asian markets. This marks HuaTangNing®'s official step beyond mainland China into the Greater China region, accelerating its global footprint. From an industry perspective, with the global prevalence of diabetes, particularly type 2 diabetes in Asia, continuing to rise, the demand for novel GKA-class drugs remains strong. HUA MEDICINE's focus on broader overseas markets opens new avenues for long-term growth.

Secondly, in February 2026, the patent term extension (PTE) application for dorzagliatin was approved, granting an additional 5 years of market exclusivity in mainland China until April 2034. This establishes a nearly 10-year "market protection period" for HuaTangNing®. With no other approved GKA drugs globally, HUA MEDICINE, leveraging the first-mover advantage of dorzagliatin, has become the undisputed "absolute leader" in the GKA arena. This enhances commercial certainty, attracts more healthcare providers and patients to choose HuaTangNing®, and provides stable revenue to support ongoing R&D investments.

In recent years, driven by the logic of translating technological advantages into market advantages, HUA MEDICINE has achieved sustained and verifiable growth. However, the true moat establishing its position in the biopharma sector is the differentiated competitive advantage built through years of heavy investment in core innovation. As of the end of 2025, the company's cash balance stood at RMB 1.092 billion, indicating a robust financial position capable of supporting both the continued expansion of existing commercial operations and future R&D investments and global market expansion, forming a virtuous cycle of "R&D - commercialization - profit - reinvestment in R&D."

Examining the R&D pipeline, HUA MEDICINE's strategy consistently revolves around the core advantage of "extending the value of dorzagliatin and expanding treatment boundaries," focusing on unmet clinical needs across multiple indications. This builds a matrix of "core product + pipeline reserves," providing sustained momentum for long-term growth. The ongoing deepening of real-world evidence (RWE) studies is solidifying the clinical value barrier of the core product. In 2025, the company's HMM0701 and HMM0601 RWE studies yielded important results, continuously corroborating dorzagliatin's key role in improving glucose-dependent pancreatic islet secretion function and demonstrating its efficacy in diabetes prevention, remission, and delaying or preventing diabetic complications. The value of this RWE data lies not only in enhancing clinical recognition of the product but also in providing a solid evidence-based medical foundation for expanding into new indications, offering further reference for GKA clinical applications and consolidating HUA MEDICINE's academic authority in this field.

Simultaneously, leveraging the "one-target, multi-point" characteristic of GKA drugs and the "glucose homeostasis" mechanism of action, the company continues to explore the potential of its core asset, dorzagliatin. As clinical R&D deepens, new indications are being explored, including the rare disease MODY-2, diabetes prevention, and neurodegenerative diseases. The company plans to initiate related clinical studies to extend the target's value beyond metabolic diseases, further broadening the product's boundary. Moreover, on the innovation front, based on excellent data from Phase III trials and real-world use of the dorzagliatin and metformin combination therapy, the company is accelerating the development of a fixed-dose combination (FDC) of dorzagliatin and metformin for type 2 diabetes patients inadequately controlled by metformin alone, aiming to improve patient compliance. An Investigational New Drug (IND) application has been submitted to the NMPA. Additionally, GMP-compliant commercial production processes have been successfully established, preparing for the key bioequivalence studies required for the New Drug Application (NDA) anticipated in 2027. Clinical studies show that the dorzagliatin-metformin combination provides better glycemic control, reduces postprandial blood glucose, and improves fasting blood glucose, offering new clinical value for optimizing glucose homeostasis endpoints.

More notably, significant breakthroughs have been made in the development of a second-generation GKA drug. This is a new chemical entity with improved physicochemical properties, designed as a sustained-release formulation for once-daily dosing. It enhances convenience and compliance, prolongs drug efficacy, and helps restore impaired GLP-1 secretion function, aiding in all-day glycemic control. As a new sustained-release tablet for once-daily treatment in obese patients, the company has initiated a Multiple-Ascending Dose (MAD) study for the second-generation GKA in the US to explore its efficacy in glucose homeostasis control and its mechanism of action. The first patient was enrolled in December 2025, with topline data expected in mid-2026. Furthermore, according to the earnings call, the company's Business Development (BD) team is actively seeking license-in opportunities, prioritizing assets in metabolic diseases (integrating lipid and glucose metabolism) and aging-related diseases (such as frailty and early cognitive impairment), leveraging the internal team's expertise to advance collaborations.

In conclusion, the Chinese government work report during the 2026 Two Sessions explicitly included the biopharmaceutical industry for the first time in the national sequence of "emerging pillar industries," alongside integrated circuits, aerospace, and the low-altitude economy. This historic elevation of the industry's strategic importance sends a clear policy signal reinforcing top-level design and accelerating industrial upgrading, injecting long-term certainty into the sector. It is reasonable to expect that the explosive growth in 2025 is merely the beginning of sustained profitability from the core product's commercialization for HUA MEDICINE. The company will continue to expand its commercial team to prepare for the launch of pipeline products, and the profitability trend of its commercial operations is expected to continue growing. As the market penetration of HuaTangNing® further increases, its profit scale is poised for continued expansion. Capital re-rating often occurs when a company transcends a single cycle and demonstrates systemic value-creation capabilities. HUA MEDICINE has now established a dual-engine "R&D + Commercialization" system for systemic value realization, marking a critical transition from a "China-originated innovative drug" to a "global GKA leader." The company can proactively expand its international footprint with the highly competitive, first-in-class drug dorzagliatin, while defensively leveraging its first-mover advantage as the sole GKA leader to feed back into local innovation, R&D, and commercial sustainability, thereby endowing it with high risk resilience and justifying a long-term valuation premium.