The first "H first, then A" company to be reviewed this year has arrived: BIOCYTOGEN's performance surge and "negative disclosure" growth rate attract attention

Since the beginning of this year, as the popularity of "A+H" continues to rise, many A-share companies are making a push into the Hong Kong stock market.

However, some companies are taking the opposite approach.

The Hong Kong company Biocytogen (Beijing) Pharmaceutical Technology Co., Ltd. (hereinafter referred to as "Biocytogen"), which is about to be reviewed, has adopted the "H first, then A" listing path.

As early as September 2022, Biocytogen had already entered the Hong Kong stock market, and less than a year later, under the sponsorship of China International Capital Corporation (CICC), it submitted a listing application to the STAR Market. The review period has now exceeded two years, and it has finally welcomed a key development.

On September 24, the STAR Market Listing Committee will review Biocytogen's listing.

Biocytogen is not only the first Hong Kong-listed company to be reviewed by the STAR Market this year but also the first company to adopt the "H first, then A" approach.

As a preclinical CRO company, Biocytogen mainly engages in the sale of laboratory mice and is known as one of the "three giants of model animals" alongside YaoKang Bio (688046.SH) and Nanmo Bio (688265.SH).

Biocytogen has achieved profitability, with revenue in the first half of 2025 reaching 621 million yuan, a year-on-year increase of over 50%; during the same period, net profit reached 48 million yuan, a significant turnaround from a net loss of 51 million yuan in the same period of 2024.

Despite the significant increase in net profit, Biocytogen's listing draft states that the year-on-year change in net profit for the first half of 2025 and the first nine months of 2025 is represented as "-194.72%" and "-162.18%" respectively.

Such representation has sparked controversy in the market.

Many industry insiders told Xinfeng that generally, in cases of turning losses into profits, the change ratio can be omitted, and there is no unified practice regarding this.

How to reasonably express performance growth during the transition from losses to profits in practice, providing clear indicators for investors, still requires more explicit rules.

Biocytogen's IPO plan aims to raise 1.185 billion yuan, which will be directed towards the construction of "early drug development service platforms," "antibody drug research and evaluation," and preclinical research projects. This fundraising amount has been reduced by over 30% compared to its initial application.

Disclosure Controversy of Turning Losses into Profits

Biocytogen's opportunity to be reviewed may have been anticipated in the market.

With the acceleration of the IPO review process, many long-waiting biopharmaceutical companies have welcomed key developments, such as the unprofitable innovative drug company HeYuan Bio (688765.SH), which recently initiated its IPO.

A more critical factor is that Biocytogen's fundamentals have indeed improved significantly, with expected revenue of 897 million yuan for the first nine months of this year, a year-on-year increase of over 50%; during the same period, the net profit attributable to the parent company was 58 million yuan, a significant improvement from a net loss of 93 million yuan in the same period of 2024.

The controversy arises from Biocytogen's listing draft, which indicates the profit growth rate from turning losses into profits as a negative value—stating that the year-on-year growth in net profit for the first nine months of 2025 is "-162.18%."

From this figure alone, the increase in net profit attributable to the parent company this year may be misunderstood as a significant decline, but in fact, this is a result of the mathematical calculation method, which directly calculates the performance change ratio as "(0.58 + 0.93) / (-0.93) = -1.62." Sources close to BIOCYTOGEN-B told Xinfeng: "For turning a negative number into a positive number, the change ratio can be omitted, but if written, it generally follows this format."

According to communications between Xinfeng and industry insiders, the relevant rules have not yet clarified the calculation method for the change ratio of "turning losses into profits."

"Generally speaking, if the base period is a negative number, there should not be a change ratio. If a change ratio must be calculated, there is indeed no unified writing method in practice," a person from an auditing firm in Beijing told Xinfeng.

This is indeed the case in practice; even for projects from the same sponsoring institution, the identification methods can vary.

Xinfeng noted that the Shenzhen Beixin Life Technology Co., Ltd. (referred to as "Beixin Life"), which is also sponsored by China International Capital Corporation and has entered the registration phase for its Sci-Tech Innovation Board IPO project, adopted a different calculation method.

In the first quarter of 2025, Beixin Life's net profit attributable to the parent company was 21 million yuan, achieving a significant turnaround from a loss of 19 million yuan in the same period of 2024, with its change ratio expressed as "207.85%."

Specifically, Beixin Life's calculation method was "(2060.61 + 1910.55) / |-1910.55| = 2.08."

According to the Shanghai Stock Exchange's "Stock Listing Rules," listed companies and relevant information disclosure obligors must ensure that the disclosed information is concise, clear, and easy to understand.

"From the principle of being easy to understand, it is generally recommended that companies turning losses into profits use positive values to represent the change ratio, which facilitates investors' understanding of the company's performance changes," pointed out an investment banking professional in Beijing.

Xinfeng observed that third-party financial terminal databases like Wind also record the change ratio for turning losses into profits using positive values.

How to identify this more reasonably remains to be discussed by all parties.

"Grasping Both Revenue Growth and Cost Reduction"

BIOCYTOGEN-B's ability to turn losses into profits is primarily supported by revenue growth and cost reduction.

BIOCYTOGEN-B's business is mainly divided into four major sectors: preclinical pharmacology and efficacy evaluation, sales of model animals, antibody development, and gene editing.

Sales of model animals and antibody development constitute the main sources of revenue.

In 2024, the model animal sales business generated 389 million yuan, a year-on-year increase of over 40%, mainly benefiting from the competition among Chinese innovative pharmaceutical companies for popular targets like PD-1 in recent years, with significant sales of humanized mice covering these targets.

In 2024, BIOCYTOGEN-B sold 119,700 humanized mice for targets, with sales amounting to 298 million yuan, translating to a unit price of 2,487.04 yuan per humanized mouse, a year-on-year increase of 4.5%.

The growth of the antibody development business was even stronger, generating 318 million yuan in 2024, a year-on-year increase of over 80%.

BIOCYTOGEN-B primarily recognizes revenue from antibody business based on the results of development or the workload of services, with the upfront payments and licensing fees mainly depending on negotiations with clients This means that the speed of antibody development and the tendency of pharmaceutical companies to acquire external antibody usage rights may affect BIOCYTOGEN's performance fluctuations, which may vary from year to year.

In 2024, BIOCYTOGEN completed transactions with major clients such as Neurocrine Biosciences, Doma Pharmaceuticals, IDEAYA Biosciences, and ABL BioInc, driving a surge in antibody licensing revenue.

For example, in July 2024, BIOCYTOGEN signed an OPTION AND LICENSE AGREEMENT with IDEAYA Biosciences, which consisted of a $500,000 upfront payment, a $6 million option exercise fee, and milestone payments.

In the same year, after transferring the bispecific ADC molecule to IDEAYA Biosciences, BIOCYTOGEN received a total revenue of 47 million yuan from the upfront payment and option exercise fee.

Moreover, BIOCYTOGEN seems to be compressing management and R&D expenses.

In 2024, BIOCYTOGEN's management expenses were 187 million yuan, a nearly 30% year-on-year decline; R&D expenses were significantly reduced from 474 million yuan in 2023 to 324 million yuan in 2024, a year-on-year decrease of nearly one-third, with the proportion of revenue dropping by over 30 percentage points compared to the previous year.

It is precisely the dual approach of "increasing revenue and reducing expenditure" that has enabled BIOCYTOGEN to quickly turn a profit in 2024, achieving a net profit of 34 million yuan.

Whether BIOCYTOGEN can continue to maintain growth may be worth paying attention to