Net profit surged 1,377% year-on-year; is A-share's "Monkey Maotai" Adzoon New Drug making a big breakthrough?

Recently, Adamas Biotech released a performance forecast for the first half of 2026: its H1 revenue is expected to be between 669 million and 739 million yuan, with a year-on-year growth of up to 10.5%. However, strangely enough, Adamas Biotech's net profit attributable to shareholders is expected to reach between 600 million and 900 million yuan, a surge of 884.9% to 1377.4% year-on-year. While revenue growth is negligible, profits have multiplied by more than ten times, leaving many puzzled: Where did this money come from?

Revenue didn't rise, yet profits multiplied by over ten times. Where did the money come from?

The answer is that this money wasn't made from selling drugs or conducting experiments, but rather from the price hike of monkeys.

In the first half of the year, changes in the fair value of Adamas Biotech's biological assets contributed approximately 703 million to 777 million yuan to net profit. In other words, just based on the valuation of the monkeys raised on its books, Adamas Biotech gained an additional 700 to 800 million yuan in "paper profits" in H1. Excluding this portion, the net profit from laboratory services and other businesses was actually at a level of a loss of 142 million yuan to a profit of 64.97 million yuan.

What is a change in fair value? Take an analogy: A few years ago, you bought several apartments in the core area of the city. This year, housing prices rose, and your asset value increased by millions on paper. But since you haven't sold the houses, there is no extra real cash in your bank account. This is a change in fair value. Accounting standards recognize this money, but it is entirely different from cash earned through actual work.

This does not mean that paper profits are unimportant. They are legal and compliant, and they do not constitute financial fraud. However, pharmaceutical companies must remain clear-headed: The gains brought by asset revaluation are one-time events, while profits generated through service delivery, deal by deal, are sustainable.

Why are monkeys so expensive?

One reason why Adamas Biotech's monkeys can be valued so highly is that monkey prices have indeed risen in the real market.

In October last year, the procurement unit price for cynomolgus monkeys stood at 88,000 yuan. By March this year, the Shanghai Institute of Materia Medica procured 450 monkeys, with a transaction price of 131,000 yuan per monkey. In June, the National Institutes for Food and Drug Control procured 40 monkeys, with a unit price reaching 178,000 yuan. Following a new round of bidding, the budgeted unit price approached 190,000 yuan. Currently, the market average price for age-appropriate experimental monkeys has broken through 200,000 yuan. In less than a year, their unit price has more than doubled.

A point needs to be added here: Unlike gold, there is no industry-wide unified price list for experimental monkeys. Factors such as age, weight, health status, pathogen test results, and delivery time all affect the final transaction price. What the market truly lacks are experimental monkeys that are legally sourced, healthy, age-appropriate, and capable of being delivered in batches on time. These procurement data point to the same direction: High-quality monkey sources are indeed becoming more expensive at a visible speed.

Some might ask, why use monkeys specifically? Can't we use mice instead? This touches upon a core rule in new drug development.

Not all drugs require monkeys. However, for complex biologics such as multispecific antibodies, ADCs (Antibody-Drug Conjugates), and small nucleic acids, monkeys are almost indispensable. The key lies in a concept called "relevant species." International ICH S6(R1) guidelines require that for safety evaluation of biologics, an animal model where the drug can truly exert its effect must be selected. The criterion is not whether the animal looks like a human, but whether it possesses the specific target receptor that the drug aims to bind to.

If a drug produces no response in mice, researchers cannot determine whether it is safe or simply failed to find its target. Non-human primates share high similarities with humans in certain receptor structures, immune systems, and physiological mechanisms. When mice, rats, and dogs are unreliable options, cynomolgus monkeys may be one of the few viable choices. This is not a preference, but a scientific necessity.

Demand continues to rise, but supply cannot keep up.

On the demand side, the total number of clinical trial registrations for drugs in China exceeded 5,000 for the first time in 2025, including 2,997 new drug clinical trials, a year-on-year increase of 18%. Clinical trials are a downstream process, but once project pipelines become active, demand transmits forward to preclinical toxicology, efficacy, and pharmacokinetics stages, directly increasing the consumption of monkey resources. Completing preclinical toxicology experiments for a single new drug consumes an average of 60 experimental monkeys. More than 70% of macromolecular drugs cannot bypass the need for monkeys.

And on the supply side? Cynomolgus monkeys typically give birth to only one offspring per litter, and young monkeys must be raised for over three years before they can be used. The domestic breeding population consists largely of old and sick animals. It takes at least six to seven years to replenish breeding stock until the next generation is usable. During the period when monkey prices were high in previous years, many monkey farms even sold off their breeding stock. This is akin to slaughtering the hens that lay eggs, leading to a further shrinkage in subsequent supply capacity. Zheshang Securities estimates that from 2026 to 2028, the annual supply-demand gap for experimental monkeys in China will be at least 15,000 to 20,000 units.

If chips are insufficient, production lines can be added. But if monkeys are insufficient, it affects the progress of drug experiments. Supply elasticity is nearly zero; this is the true trump card behind the doubling of monkey prices in a year.

Therefore, the price of experimental monkeys essentially serves as a pressure gauge at the front end of the innovative drug industry chain. Rising monkey prices often indicate that more R&D projects are entering the preclinical stage. After all, to see if the water volume is large, one can first check if the upstream is rising.

What did Adamas Biotech do right? What risks lie behind the 狂欢 (celebration)?

Adamas Biotech's ability to capitalize on this dividend was not purely due to luck; early betting was the key reason.

Around 2020, Adamas Biotech began acquiring monkeys in large quantities: In 2022, it announced two acquisitions, spending approximately 1.8 billion yuan to acquire Guangxi Weimei Biology and Yunnan Yingmao Biology, with core assets consisting of nearly 20,000 rhesus macaques and cynomolgus monkeys. By the end of 2025, the number of monkeys owned by Adamas Biotech exceeded 20,000.

This move seemed quite aggressive at the time. Nearly 20,000 monkeys meant massive costs for feeding, facilities, and disease prevention. Financial reports show that Adamas Biotech's costs for experimental animal feeding and depreciation alone rose from less than 40 million yuan in 2019 to over 200 million yuan in 2024. One could say this was a heavy-asset, long-cycle, high-risk bet. However, once the unit price broke through 200,000 yuan, the value corresponding to these monkeys amounted to billions of yuan or even higher. The initial huge investment thus became Adamas Biotech's moat.

Accounting standards stipulate that experimental models used for breeding and drug research, classified as biological assets, are measured at fair value. Increases in monkey prices and natural growth of monkeys are directly recorded in current profit and loss. At the end of the first quarter, the book value of productive biological assets had surged from 668 million yuan at the end of last year to 1.097 billion yuan.

More importantly, newly signed orders are also recovering. Adamas Biotech signed new orders worth approximately 910 million yuan in Q1, a year-on-year increase of 111.6%; orders on hand totaled approximately 3.1 billion yuan, a year-on-year increase of 40.9%. Orders, advance payments, and cash flow improved simultaneously. The fact that rising monkey prices can be passed on to new order prices indicates that this is not a castle in the air; upstream demand is indeed increasing, allowing order signing to hold firm and monkey prices to stand steady.

Thus, Adamas Biotech has two lines: one is the paper gain from "inventory price appreciation," and the other is the real demand supported by "order recovery." The combination of these two lines resulted in this performance forecast.

However, looking at it from the reverse perspective, this model also has its fragile aspects.

At the Q1 earnings briefing, Adamas Biotech admitted: Rising monkey prices bring asset appreciation but also increase procurement costs for experimental monkeys, putting pressure on the gross margin of the main business. In Q1, its comprehensive gross margin dropped by 11.28 percentage points year-on-year to 31.48%. Adamas Biotech explicitly stated this was due to the rise in experimental monkey prices and procurement costs. The full-year gross margin for 2025 had already fallen to its lowest level since listing. After excluding monkey price revaluation in H1, the laboratory service business was still hovering around the break-even line.

The flip side of fair value is: If monkey prices can rise, they can also fall. Once supply and demand reverse and prices turn downward, the previously recognized paper profits will become impairment pressures. Experimental monkeys lack a global unified pricing mechanism and an active secondary trading market, making prices opaque. If innovation drug financing cools down again or alternative technologies emerge, the high-priced monkeys acquired at the peak would become a hot potato.

Adamas Biotech announced on July 16: The stock price has seen significant short-term gains, posing risks of overheated market sentiment and irrational speculation; the fair value of biological assets is subject to various uncertainties, carrying significant volatility risk, which may lead to substantial fluctuations in net profit attributable to shareholders.

A deeper issue is: Removing the monkey price revaluation component, Adamas Biotech's main business has not demonstrated expansion capabilities commensurate with its profit growth rate. Projects are fully booked, and orders are recovering, but whether this can sustain depends on how long the river of innovative drug R&D investment flows, not on how expensive the monkeys themselves are.

A 1377% growth is indeed shocking. But breaking it down, Adamas Biotech's profit comes from asset revaluation rather than main business expansion, and its growth relies on rising monkey prices rather than a qualitative leap in internal strength.

Having monkeys in hand is Adamas Biotech's biggest chip. Adamas Biotech capitalized on this dividend by hoarding monkeys early. But when will low-price orders be cleared? When will the main business stabilize profitability? Once the monkey price cycle turns, can it withstand the drawdown? The real test is yet to come.

Source: Medical Research Society