Amid the 600 times oversubscription frenzy of Huaren Biology, is it an emotional carnival or value discovery?

When the Hong Kong IPO market saw a long-awaited recovery in 2025, capital began searching anew for the next sector capable of fueling imagination.

Against this backdrop, a biotech company—Huaren Biotech—with no commercial revenue yet and core products still in Phase II and IIb clinical trials, sparked an unprecedented capital frenzy during its IPO: margin subscriptions exceeded HKD 50 billion, and the public offering was oversubscribed nearly 600 times.

Driving this hype is the scarcity narrative of the "first PDGF stock in Hong Kong" and the long-term potential of the billion-dollar wound-healing market. Yet, running parallel are the uncertainties in clinical data, repeatedly prolonged R&D timelines, and the reality that commercialization remains six years away.

But the question is: Does this hype stem from early validation of the company’s fundamentals, or is it yet another collective bet on uncertainty? Let’s take a closer look.

Sentiment Over Fundamentals: Who Pushed Huaren Biotech to 600x Oversubscription?

According to the prospectus, Huaren Biotech, founded in 2012, focuses on R&D for platelet-derived growth factor (PDGF) drugs, targeting wound-healing indications like burns and diabetic foot ulcers.

Its core product, Pro-101-1, is for deep and superficial second-degree burns, while Pro-101-2 targets diabetic foot ulcers. Neither has entered Phase III trials, let alone generated commercial income. Over the years, the company has sustained losses, with R&D and administrative expenses consuming most of its cash.

But the capital market isn’t measuring it by the yardstick of a "mature pharma company."

Huaren’s first appeal lies in PDGF’s untapped potential in China. To date, no PDGF drugs have been approved domestically, and the pipeline is sparse—Huaren alone accounts for two of the few candidates.

Such scarcity has always amplified biotech IPOs, especially after Hong Kong’s biotech sector endured prolonged oversupply and thematic homogenization. Any differentiated direction—"non-pan-cancer" or "non-Me-too"—quickly attracts attention.

But a blank slate doesn’t mean low risk. PDGF isn’t a novel target—it has overseas applications. The real uncertainties lie in whether efficacy is stable, clinical data can withstand statistical scrutiny, and whether clear payment and usage scenarios exist in real-world healthcare systems.

The second driver comes from the capital structure itself. Huaren’s oversubscription was largely fueled by margin financing.

Billions in leveraged capital bet on a classic "low float + high attention + short-term sentiment surge" model, not a meticulous forecast of the company’s decade-long trajectory. This pattern isn’t new in Hong Kong’s 18A history—the logic isn’t "I fully believe," but "I believe someone else will take over."

Deeper still, Hong Kong’s biotech sector is undergoing subtle sentiment repair. Over the past two years, valuations were systematically compressed, and tolerance for "cash burn + clinical uncertainty" hit rock bottom.

But with the sector at lows, new IPOs are seen as emotional outlets. Huaren, with its compact size, focused story, and clear narrative, naturally fits as a litmus test for this risk-appetite rebound.

In short, Huaren’s frenzy resembles a capital event catalyzed by funding structures, sector sentiment, and scarcity narratives—not a value discovery validated by fundamentals.

From Hype to Reality: Three Hard Constraints Huaren Must Face

Market enthusiasm can’t replace clinical data.

Returning to fundamentals, Huaren’s risk exposure is highly concentrated. Its real "bet" rests solely on Pro-101-1 and Pro-101-2—both in the most patience-testing and volatile stages.

For Pro-101-1, its Phase IIb trial for deep second-degree burns showed no statistically significant difference between treatment and placebo groups in some data.

In biopharma, this isn’t failure, but it’s far from reassurance. Subsequent clinical design optimizations and endpoint settings will directly impact progress.

Pro-101-2 faces more practical challenges. Since entering Phase II in 2022 for diabetic foot ulcers, slow patient enrollment has dragged the R&D timeline.

Diabetic foot is an indication with clear demand and a large patient pool, but it’s a field with strict efficacy standards and high real-world complexity. It’s not as simple as "demand equals volume."

Even if core products are approved, the real test begins. Burn and diabetic foot treatments must integrate into hospital systems and insurance payments. PDGF drugs must balance efficacy, price, and usability to determine their ceiling.

Huaren’s prospectus outlines plans to commercialize at least two innovative drugs independently within six years—a goal demanding execution, financial endurance, and market savvy.

Financials amplify this pressure. From 2023 to the first nine months of 2025, net losses were RMB 105 million, RMB 212 million, and RMB 135 million, respectively, with no operating cash flow yet.

Over 60% of the raised funds will go toward clinical development and commercialization. If key clinical milestones stall or funding tightens, the safety margin shrinks.

Conclusion

When sentiment leads and capital crowds, all issues are shelved. But when hype fades, the market returns to basics: Is the data solid? Is the pace steady? Is commercialization viable?

For Huaren, listing is just the start. For investors, it’s another gamble on patience and reality.