The industry logic has changed, but don't rush to conclude to CXO

Just before the storm came, the Shanghai CXO industry first -level market just ushered in the 12th financing.

On August 31, Shanghai Baiying Biotechnology Co., Ltd. (hereinafter referred to as "Bai Ying Biological") announced that it had received about 500 million yuan B financing. Investors include cornerstone capital, Jifeng Capital, Tianhui Capital, Haitong Venture Capital, Jiangsu, Jiangsu More than ten institutions such as Gao Investment, Langzi Hanya, Yue Shi Capital, Gao Rong Capital, October Capital, West Shanghai Investment, Bin Fu Capital, etc., old shareholders also participated in the investment and Chengshu investment. In May last year, Baiying Biological has received a round A financing of nearly 100 million yuan in Gatai Pharmaceutical and Cominning Investment, one of the well -known domestic CXO companies.

The track, known for its high prosperity in the past, has been frequently reported by the performance of the middle of the year. As a result, it has recently suffered a well -known change. Is it because of the industry cycle, or the foam rupture and falling altar, or is it just habitually zooming in anxiety? How far is the truth of CXO from us?

500 million yuan in large financing, for the expansion of CRO service production capacity

Biointron was established in 2012. It is a national high -tech enterprise focusing on antibodies discovering CRO services, Shanghai Science and Technology Giant Cultivation Enterprises, Shanghai Specialized New Enterprise, and a potential unicorn enterprise in Jiangsu High -tech Zone Essence At present, there are R & D and production centers in Zhangjiang and Zhoupeu and Jiangsu Taizhou, and a business center in the United States and the Netherlands.

Relying on the industry's leading ultra -high -throughput reorganization protein preparation platform, the company has established coverage of antibodies from target protein development, single B cell antibody screening, to antibody humanization, antibody affinity, nano -antibody development, stabilized cell plant development, etc. The technology platform of the entire process provides end -to -end R & D service support for thousands of drug research and development enterprises, in vitro diagnostic reagents, vaccine companies, and cell therapy enterprises.

▲ Shanghai Pudong to build a business research and development base, source: Baiying Biological WeChat public account

The company has a complete genetic engineering and antibody engineering technology platform to provide reorganized antibody and drug target protein CRO services. This round of financing will be mainly used for the expansion of CRO service capacity, the construction of intelligent manufacturing research and development service production lines, and the continued construction of overseas channels.

Baiying Bio is one of many CRO companies, and CRO is a branch of "CXO" well known.

The so -called CXO is commonly known as pharmaceutical outsourcing, which is mainly divided into CRO (contract research organization), CMO (contract production organization)/CDMO (contract R & D and production organization), CSO (pharmaceutical contract sales organization) and other categories. Outsourcing, outsourcing and sales outsourcing.

CRO (pharmaceutical research and development outsourcing) is the most reflected technical strength in CXO. The core business of Yin Kangde and Tiger Pharmaceutical Enterprise in the domestic CXO industry is CRO. According to statistics, the service pharmaceutical company through CRO can shorten the research and development time of a new anti-cancer drug for about 3 years, which is equivalent to shortening the entire R & D process by 23%-30%, and saving R & D costs of 30%to 70%.

From 12 months of financing, Shanghai CXO companies welcomed the "Xiaofeng Year"

According to the statistics of Zhangtong News Agency's Link database, from January to August this this this this this of this, the Shanghai CXO industry completed 12 financing, with a total financing amount of 1.8 billion yuan. From the perspective of rounds and financing amounts, there are 6 round A or Pre-A round, with a maximum amount of 200 million yuan; 4 CROs of the B-round or B+round have 4, with the amount ranging from 500 million yuan to tens of millions of yuan. Two other family members are strategic investment, and the amount has not been disclosed.

In the past 2021, a total of 10 market financing incidents of Shanghai CXO enterprise first -level markets were only 10, with a total financing amount of about 1.5 billion yuan. Among them, Pengli biological occupies the list with a strategic financing of about 100 million US dollars. In addition, only Kaiyu Biotechnology (A+round, over 100 million yuan), Yuan Jianyou (round A, hundreds of millions of dollars), and vein creatures (C+rounds, 50 million US dollars) exceeded 100 million yuan.

From the perspective of the dimension of financing, as of August this year, the amount of financing disclosed by Shanghai CXO companies has increased by about 20%compared with last year, and CXO companies that belong to the "financing breaking 100 million clubs" have reached at least 6 companies. It is also higher than the level of 4 last year. In addition, including Baying Bio, some CXO companies have also received multiple rounds of financing within a few months. These signs seem to show the preferences and confidence of the first -level market investment institutions for the CXO industry. Let's look at a few financing events:

On January 4th and March 29, Shanghai Yaotan has harvested the Pre-A round and entrepreneurial relay funds from Oriental Chase, Hao Miao Health, Jiyu Capital and other institutions for more than two months. Honghui Capital, Yida Capital and Yangtze Guohong's 200 million yuan A round of financing.

Shanghai Pharmacy was established in October 2019. The R & D Center is located in Zhangjiang Pharmaceutical Valley. The founder team comes from famous enterprises such as Fosun Pharmaceutical, Haosen Pharmaceutical, Pharmaceutical Kant, and Roche Pharmaceutical. The company provides a comprehensive one -stop CDMO service for domestic and foreign pharmaceutical companies and biotechnology companies to study and produce raw materials and preparations. According to the company, Series A financing will be used for the construction and improvement of the construction and R & D system for the production and development system in raw medicine, preparation production bases, in order to better provide services to global biomedical companies and meet increasingly increasing demand for innovative drug research and development and production.

On August 2nd, the three -best creatures announced the completion of the B+round of financing of tens of millions of yuan. This round of financing was led by the Zijin Hongyun Fund of Huatai Zijin and the Hua Thai Fund. Founded in 2015, the company aims to continue to launch new technologies, new products, new services and new scenes with "the best quality, the fastest, and most cost -effective" (three excellent). The services provided by the company include the innovative antibody drug clinical candidate (PCC) and the overall project service of the pre -clinical R & D (IND). Overall services, 11 CRO characteristic services and 11 CRO phase services.

On April 22, the research and development of Shengfang Pharmaceuticals received a $ 52 million Series A financing led by Lyfecapital, Innovation Workshop, and Chow Tai Fook Enterprise. It was not until more than 4 months later that the 500 million yuan round B financing of Baiying Biological broke its record record.

The R & D of Saint Fang Pharmaceutical was established in November 2019. It is committed to improving the efficiency of clinical research and management and operation with digital technology, focusing on the innovative service capabilities of the entire process of clinical trials, and strictly followed international standards to provide high -quality solutions to pharmaceutical and device companies with high -quality solutions. Plan, thereby accelerate the process of commercialization and help new drugs to go public quickly. At present, the business capabilities of Shengfang Pharmaceutical's research and development include BE, I-IV clinical trials, real world research, and final application registration.

On August 17, Zhongke's new life received hundreds of millions of yuan B investment led by Junlian Capital.

China Science and Technology New Life was founded in July 2004. It is a high -tech enterprise invested by the former Academy of Life Sciences of the Chinese Academy of Sciences. It is reported that this round of financing will be used in the layout of the company's field of research and development and pre -clinical research and analysis in the field of mass spectrometer and the development of innovative drugs, and accelerate product research and development, team building and market expansion. layout.

Due to more and more technical problems in the medical field and overcome technical problems, the return on research and development of the original drug research drugs in the past 20 years has declined, and the research and development team and equipment are very expensive with past standards. CXO is the industry that grows up in this context.

At the same time, regardless of whether the new drug research and development is successful, pharmaceutical companies always pay R & D expenses, so the CXO industry is also known as the "selling shovel" in the pharmaceutical industry chain. However, such a business model "drought and flood protection" has the industry logic that has been developed and has contributed to the development of new drugs.

The industry is cold, but it is not cold everywhere

The most conspicuous is that behind the relatively popular market of the CXO industry, the secondary market shows the opposite scene in the secondary market.

According to the statistics of Shenwanan Three -level industry, in September this year, the total market value of 23 CXO companies listed in A shares has shrunk from 980 billion yuan at the beginning of the year to 680 billion yuan, a overall decline of more than 30%. 23 companies have recorded negative income from the beginning of the year to the present, and the industry is returning valuations from 79 times PE at the beginning of the year to 36 times PE. Simultaneous declines in market value and valuation have formed a typical "Davis Double Double Double Double Double Double Double kill".

▲ Data cycle 2022.1.1-2022.9.1

However, the logic of the secondary market is extremely clear.

First, this year's high -growth head CXO company has a greater dependence on the new crown related projects. The increase in the incremental business brought by this business seems to be lacking. In other words, the market does not recognize the short -term performance brought by the new crown.

For example, the semi -annual data released by Yaoming Kant showed that as of the first half of the year, the company's revenue was 17.756 billion yuan, a year -on -year increase of 68.52%. Among them, the largest proportion of chemical business revenue was 12.974 billion yuan, with a synchronous growth rate of 101.91%. However, the company's semi -annual report has another sentence: "Eliminating the new crown commercialization project, the company's chemical business sector revenue increased by 36.8%year -on -year."

▲ Yaoming Kangde's 2022 semi -annual report

Second, more important reasons are that the secondary market has witnessed the overall coldness of the upstream pharmaceutical industry's financing this year, and it also makes it premonitions as downstream CXOs cannot be alone. 79%of the R & D investment costs of domestic biotechnology companies come from external financing, which means that the financing data of upstream pharmaceutical companies is the relevant indicators of CXO strong prosperity.

As of the first half of 2022, there were 568 global biomedical market financing incidents, a year -on -year decrease of 22%; the total financing volume was about 130 billion yuan, a year -on -year decrease of about 37%. A total of 314 domestic biomedical market financing incidents, a decrease of 62.8%year -on -year; the total financing volume was about 38.3 billion yuan, a year -on -year decrease of 65.6%. This data also explains other CXO companies, which have not caught up with the "New Crown Project Dividend", generally lack of good results.

With the variables brought by the recent game of great powers, the domestic CXO prospects that are seriously dependent on overseas markets worsen the snow.

So is these factors enough to become an iceberg in the CXO industry in the giant wheel?

First of all, people's hearts caused by the weak financing environment in the upstream of CXO can find a similar scene from the paper pile of the capital market.

When the Federal Reserve entered the interest rate hike period, the stock price of the original pharmaceutical pharmaceutical company listed in the US stock market and Hong Kong stocks even frequently broke. Similar situations also appeared in 2018. At that time, the Federal Reserve was also in the contraction cycle. The financing rhythm of the original pharmaceutical company slowed down and was highly hoped that Yao Ming Kant was announced in Hong Kong's listing. In the broader market. However, some investment institutions have pointed out that from the long -term cycle of 8 years, the S & P biotechnology XBI index is significantly negatively related to the 10 -year US Treasury yield. From this law, it can be seen that the current XBI index has fully reflected the expectations of the Federal Reserve ’s interest rate hike expectations. Essence In other words, when the market has experienced this round of interest rate hikes, it has been fully underestimated by pessimistic expectations that the CXO sector may get the first to rebound.

In addition, you should also see that the first -level market has not stopped the investment pace of the CXO industry.

In addition to the financing of Shanghai CXO related companies mentioned above, there are several representative financing events nationwide. In August of this year, Zhixiang Bio has obtained more than 500 million yuan of investment from Qingsong Capital and Gao Rong Capital, and Zhege creatures have received 100 million yuan of C+rounds of C+rounds of Chinese medicine in China Medicine Gold and Zhang Kerun. These signs are all showing that the first -level market investment institutions are quietly deploying in the segmented field.

A more optimistic data is: according to statistics, in August 2022, a total of 176 financing events (excluding IPOs, orientation addition, etc.) occurred in the global medical and health sector in August 2022. Essence Compared with July, the number of investment and financing incidents increased by 19%month -on -month, and the amount of financing increased by 4%from the previous month due to exchange rate. Although the recovery is limited, the financing status of the upstream pharmaceutical industry is improving marginal improvement.

From the feedback from some industry insiders, while the capital environment has a practical impact on CXO, it has also brought some positive changes.

"Although the upstream customers cut off the R & D pipeline, the projects given less, but many biopharmaceutical companies are also aware that it is not feasible to build a factory. They think it is easy to build a factory. I don't know how huge it is to get a database system. Project. They (pharmaceutical companies) will not go to build a factory, but will give us this part to do it. This is a new opportunity. "—— Chen Jianxin, CEO of Zhenge Bio

"The changes in foreign demand end will help the domestic industry upgrade. For example, domestic medium and consumable suppliers will get more market share. How can they survive. If the high -end is not good, it will slowly savage from the low end. "——On a biomedical R & D

Other investors believe that a series of incidents help the necessary CXO track to clear the necessary production capacity. The segments and industry heads that can withstand baptism will achieve longer -term development in the long run.

"The pseudo -innovative bubble is pierced to cause difficult moments for China CXO, and the resources saved by the pseudo -innovation savings are just in the real innovation. More benefit. This is the supply -side reform of China CXO, and the result will make the strong stronger. "—— Lin Cun, chairman of Senrui Investment

In response to the current turbulence of the industry caused by geopolitics, some analysts also began to call on the market and industry to sit down and do some calm thinking while worrying.

For example, multinational pharmaceutical companies have strict admission requirements for drug manufacturing suppliers themselves, and the cooperative relationships must have been accumulated for many years of cooperation, and the cost of replacing new suppliers is higher. In other words, whether the CXO capacity of the United States can undertake an order that originally belongs to Chinese companies, and a large question mark must be made.

There are also analysts that the current changes in overseas markets are not "sanctions" that many people understand, but the United States trying to promote the "domesticization" of the industry through subsidy policies rather than administrative orders. Not necessarily. In the context of the average labor cost of the Chinese CXO industry is only 1/3 of the United States, the upstream pharmaceutical company has no reason to easily change the supplier.

Overall, although the future prospects of CXO are facing uncertainty, this uncertainty itself has not yet entered the confirmed stage. From the perspective of the first -level market, institutional investors still have an overall objective attitude towards the industry. The capital market is always full of various "ghost stories", but it should be seen that many industries are still growing under multiple negative strikes.

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