“Self-hematopoiesis”'s new 18A, Baoji Pharmaceutical-B (02659) uses the “troika” to create a sustainable growth sample

In 2025, the 18A biotech sector of Hong Kong stocks ushered in an IPO boom after a long absence.

However, unlike in the past, after a full cycle of baptism, investors' mentality has profoundly changed — from blindly chasing “hot tracks” and “cutting-edge concepts” in the early stages to a careful assessment of the company's commercial maturity, cash flow sustainability, and clear value proposition, fundamentally reshaping the valuation calculation system for all participants.

Previously, traditional investment logic mainly relied on forecasting the future cash flow of a single product pipeline, but as homogenized competition for popular targets such as PD-1 and ADC technology intensified, and the capital market's tolerance for unprofitable assets decreased marginally, the return on investment of this model has declined marginally, and the market has placed more stringent requirements on 18A Biotech going to Hong Kong.

In this context, Baoji Pharmaceutical-B (02659) has opened up a unique differentiated track with a unique three-driver “horse-drawn carriage”, providing the industry with a new biotech survival logic and innovation paradigm.

First Carriage: Strategic Positioning - From Target Competition to Scenario Change

As the first driving force of Baoji Pharmaceutical, its differentiated strategic positioning fundamentally determines the robustness of the company's valuation logic.

The Zhitong Finance App learned that in terms of track selection, Baoji Pharmaceutical intends to avoid “Red Sea” competition in fields such as ADC and PD-1, and instead anchor “focusing on upgrading traditional processes and focusing on changes in clinical application scenarios.” The strategy aims to focus on the efficient optimization of clinically proven drugs rather than blindly chasing high-risk new targets, thereby effectively avoiding the high failure rate and long cycle risks commonly found in pure innovative drugs, and achieving shorter and more definitive commercialization.

This strategic thinking stems from the complex background of founder Dr. Liu Yanjun — with the experience of doctors, scientists, and business executives, enabling it to accurately identify “real needs” and “invisible varieties” on the clinical front line, starting from clinical application scenarios, and avoid the R&D misunderstanding of “not understanding medicine”.

For example, its core products KJ017 (recombinant human hyaluronidase) and SJ02 (long-acting FSH-CTP) do not explore an uncertain new mechanism, but rather focus on improving patients' quality of life and convenience of medication. Not only is this demand huge, but it can also effectively bypass the price reduction pressure of national health insurance on large varieties.

Second driving car: technical barriers - the industrialization capacity of advanced biomantry

As the second driving car of Baoji Pharmaceuticals, the advanced bio-manufacturing platform represented by synthetic biology is the core tool for achieving strategic differentiation.

The Zhitong Finance App learned that after 6 years of hard work, the company has successfully built a high-barrier advanced biological manufacturing platform aimed at solving the problems of large-scale expression, activity maintenance, and ultra-efficient purification of difficult recombinant enzymes.

This capability makes it powerful in the field of recombinant protein drugs. More importantly, synthetic biology platforms not only provide technical feasibility, but also bring structural safety advantages:

Its products have achieved zero animal-source production, eliminating the risk of viral contamination and serious allergies that may be caused by traditional biochemical extracts from the source, and building a “safety barrier” that cannot be shaken by the price war. This high quality and high safety brought about by technological upgrades is the core guarantee for Baoji Pharmaceutical to achieve “technology substitution” dividends in the market.

The third driving car: industrial operation - a full-platform system with leading total cost

At the strategic execution level, Baoji Pharmaceutical has built a “leading total cost” structural moat by deeply integrating technical advantages with the third driving car — industrial operation capabilities.

The Zhitong Finance App learned that unlike most biotech companies that rely on external CDMOs, Baoji Pharmaceutical insists on building and expanding large-scale cGMP production bases. Currently, the company is one of the few domestic companies that also has commercial-scale production lines for the fermentation of mammalian engineered cells (CHO), yeast and Escherichia coli, and has achieved a “one-stop” full-platform system.

At present, Baoji Pharmaceutical's completed and ongoing production base covers a total area of nearly 100,000 square meters. The total volume of the reactor is expected to reach about 26,100 L, and the annual production capacity is expected to reach 22.5 million doses of the preparation. The intention behind this strategic investment is to firmly grasp the initiative for cost control and supply chain security in one's own hands, so as to develop new drugs that can be controlled by oneself.

By achieving large-scale industrialization, the company was able to achieve the “leading total cost” advantage, which not only gave Baoji Pharmaceutical a cost incentive to “cut prices at any time”, making it strong in the face of medical insurance price cuts or competitors' price wars; at the same time, self-built production capacity also solved the problems of stability and adjustability in the supply of high-volume products (such as KJ017, SJ02, etc.), thus avoiding the risk of being “stuck” by an external CDMO.

Troika collaboration results: “pyramid type” pipeline layout

Thanks to the combination of “scenario-driven” strategic choices, synthetic biology technical barriers, and “leading total cost” industrialization advantages, Baoji Pharmaceutical was able to form its unique “pyramid” pipeline layout:

The Zhitong Finance App learned that as a base for cash flow, Baoji Pharmaceutical's “pyramid” pipeline base consists of products with short clinical cycles, low costs, and high market demand certainty, such as SJ02, which has been approved for marketing, and KJ017, which has been submitted for NDA. By focusing on solving clear clinical scenario pain points and technical alternatives, this type of product can quickly form stable sales and cash flow, and provide enterprises with the ability to “self-hematopoietic”, thereby effectively eliminating the “financing anxiety” common among 18A companies.

Furthermore, as a high-value innovation engine, Baoji Pharmaceutical's “pyramid” pipeline tower/spire is committed to innovative projects with FIC/BIC potential that focus on high barriers and disruptive potential. Take the company's KJ103 product as an example. It is positioned as the world's first and only low-reserve antibody IgG degrading enzyme that has reached the clinical stage of registration. It has obtained two “breakthrough therapy certifications” (BTD) for kidney transplant desensitization and anti-GBM disease in China. With its mechanism for rapid and efficient removal of pathological IgG antibodies, KJ103 is expected to become a rescue therapy in the field of “acute and severe autoimmune diseases”. Its broad spectrum application potential for hundreds of pathological antibody-mediated autoimmune diseases has established its position as a high-value innovation engine.

This scattered and hierarchical “two-legged approach” model enabled Baoji Pharmaceutical to achieve continuous, stable, and gradual “slope” growth, successfully avoiding the traditional “upstairs” gambling model that relies on the success or failure of a single product, thus showing comprehensive competitiveness and long-term sustainability under the new valuation system.

Summarize

In summary, the rise of Baoji Pharmaceutical is not an accident, but an inevitable result of organic collaboration between its unique strategic positioning, technical routes, production capacity, and pipeline layout.

In the current context where the biomedical industry is generally facing an “internal volume” dilemma, Baoji Pharmaceutical has not fallen into the plight of homogenization, but has provided a new paradigm of innovation. By focusing on clinical scenario innovation, technology upgrading (replacing traditional therapies), and strategic resilience (pyramid layout, self-built production base), the company has finally formed a unique differentiated path, which is expected to grow into the next generation of Biotech pioneers that balance R&D and commercialization.