A Chinese biotech that made a name for itself by co-developing an anti-Covid drug has filed for a stock market listing to fund research into tackling other conditions

Key Takeaways:

Vigonvita works closely with the Chinese Academy of Sciences through its founder and biggest shareholder, research scientist Shen Jingshan

After selling rights to its flagship anti-viral product, the drug developer fell back into the red last year

As Chinese biotechs beat a path to Hong Kong's IPO market, hoping to catch the eye of investors, one drug developer can point to a commercially launched Covid treatment as proof of its capability.

Vigonvita Life Sciences Co. Ltd., in partnership with Chinese research institutes, began work on the oral anti-viral medicine during the pandemic, later selling the product rights to a major Chinese pharmaceutical brand.

The pandemic project raised the company's profile and is now being leveraged in its pursuit of a Hong Kong stock listing.

Before the Chinese New Year holiday, the developer of innovative drugs applied to join the main board of the Hong Kong Stock Exchange, with CITIC Securities as the sole sponsor.

Founded in 2013, Vigonvita Life Sciences develops small molecule drugs to treat viral infections, mental health disorders and reproductive issues. Its pipeline contains nine innovative drugs as well as four generic drugs, two of which have gained marketing approval, bringing new revenue streams into the company.

Vigonvita's activities extend from drug research and development to manufacturing and sales. Its founder and biggest shareholder, Shen Jingshan, is a leading researcher and doctoral supervisor at a Shanghai institute within the Chinese Academy of Sciences that was involved in developing the Covid drug.

After the pandemic broke out in 2020, Vigonvita collaborated with Chinese research bodies to develop anti-Covid medicines, acquiring exclusive intellectual property rights to the resulting treatment, VV116.

In September 2021, Vigonvita sold the rights to develop, manufacture, and commercialize the product in most parts of the world to Junshi Biosciences (1877.HK; 688180.SH), while the right to supply the active ingredients was transferred to a pharmaceutical company based in Hainan province.

Together, the two out-licensing deals boosted Vigonvita's finances. China granted conditional marketing approval for the drug in January 2023 and folded it into the national medical insurance system a year later, although by then the pandemic had subsided.

The drug brought in revenues of 110 million yuan ($15.02 million) in the first half of 2023, according to earnings data from Junshi Biosciences, but after that the company stopped releasing specific product figures. Vigonvita is currently working on widening the clinical use of VV116 to cover respiratory syncytial virus (RSV) infections in children. Phase Three clinical trials are expected to be launched in the third quarter of 2025.

The research alliance that produced the Covid drug has also developed two other candidate treatments for which Vigonvita holds the intellectual property rights. According to the IPO prospectus, the company's co-founder and second biggest shareholder, Tian Guanghui, played a key role in developing the two drugs, LV232 and TPN171.

The first of those, a treatment for depression, will enter Phase Two trials in China in the first quarter of 2025. The company expects its TPN171 drug for erectile dysfunction to get marketing clearance in China in the middle of this year, after it was already approved in Uzbekistan. The income would be a welcome boost for the company, after revenues plunged last year.

Falling from a high base

Product sales have not been the company's main source of revenue. Instead, the bulk of the firm's earnings come from licensing deals, contract research services and pharmaceutical sales. On that basis the company brought in 190 million yuan in 2023 and revenues of 10 million yuan in the first nine months of 2024, but it made a net profit of just 48.51 million yuan and a loss of 151 million yuan in the two periods.

The prospectus blamed the sharp drop on a high base effect, after the previous year's earnings had been boosted by milestone payments and the sale of rights relating to VV116. An analysis of the firm's top five revenue sources shows 102 million yuan coming from Junshi Biosciences in 2023, and payments from the supplier of active ingredients amounting to 94.34 million yuan. But in the first three quarters of last year the input from Junshi Biosciences was a mere 7.98 million yuan and there was no payment from the other partner.

With licensing money drying up, Vigonvita quickly fell back into the red, although its research credentials helped it maintain access to capital. The company completed five rounds of financing between 2020 and 2024. The Series B financing in April 2022 boosted the firm's valuation to 4.2 billion yuan from 1.57 billion yuan four months earlier. The last round of Series C in April 2024 brought in another 160 million yuan, pushing the value to 4.45 billion yuan.

Cash and cash equivalents held by Vigonvita had fallen to 95.05 million yuan at the end of September last year. In the absence of licensing revenue and more drug launches, the IPO is an opportunity for the company to replenish its coffers for future R&D.