After experiencing a series of events such as selling pipelines, leaving executives, and refusing to acquire, Liantuo Biotechnology ultimately chose to "close down" and delist.
Since 2022, the Biotech industry has been continuously plunged into a cold winter, and by 2023, the cold wind has not dissipated. Under financing difficulties and cash flow pressures, companies in the industry are also experiencing self rescue and liquidation.
Official announcement of delisting and shutdown
On February 13th, NASDAQ listed company Lian. O announced that its board of directors had completed a comprehensive strategic assessment of the company and decided to gradually end its business, including selling remaining pipeline assets, delisting from NASDAQ, and layoffs.
According to Liantuo Biotechnology, most of the closure work is expected to be completed by the end of 2024, including fulfilling transitional service obligations under existing agreements and gradually stopping ongoing clinical trials. The complete dissolution is expected to be completed in the first half of 2027. Along with the gradual closure of business, the board of directors also announced the distribution of a special cash dividend of $4.80 per common share, totaling approximately $528 million.
In response to this decision, Konstantin Poukalov, founder and executive chairman of Liantuo Biotechnology, stated that "as the company shifts its focus from commercialization of Mavacamten and licenses the rights of NBTXR3 to Yang Sen, the board unanimously decided to gradually end the business as a way to maximize shareholder value in the current biotechnology market.".
On February 13th, the stock price of Liantuo Biotechnology surged 18.81% in a single day, closing at $4.80 per share, with a market value of approximately $519 million, reaching a new high in nearly a year.
From establishment to listing and preparation for shutdown, Liantuo Biotechnology only took less than 4 years.
In August 2020, Perception Advisors, an American biopharmaceutical investment firm, led the establishment of Liantuo Biotechnology. At the beginning of its establishment, the company established a "License in" business model, which involves collaborating with leading international biotechnology enterprises to introduce pharmaceutical products to major markets such as China and Asia.
In November 2021, Liantuo Biotechnology, which had been established for less than 16 months, successfully landed on NASDAQ with a stock issuance price of $16 per share, an issuance market value of $1.728 billion, and a total fundraising of $325 million. However, since its listing, the company's stock price has continued to fluctuate and fall. As of October 24, 2022, the lowest intraday stock price of the company dropped to $1.07 per share, and the market value has evaporated by more than 90% compared to the time of issuance.
As of now, Liantuo Biotechnology has not been able to overcome its loss making difficulties. From 2020 to 2022 and the first three quarters of 2023, the company's research products did not generate any operating income, while the company's net losses were $140 million, $196 million, $111 million, and $70 million, respectively. During the same period, the company's R&D investment was $121 million, $159 million, $60 million, and $21 million, respectively.
Under continuous losses, Liantuo Biological's cash reserves have gradually deteriorated. As of the end of September 2023, the company had a total of approximately $252 million in cash and cash equivalents, securities, and restricted cash. As of the end of 2022, the company held approximately $302 million in these assets. According to the company's estimate, its cash reserves are sufficient to meet its operational needs until the first half of 2025.
In this context, the management of Liantuo Biotechnology continues to fluctuate. On December 19, 2023, Liantuo Biotechnology announced the departure of its Chief Financial Officer, Yi Larson. The next day, CEO Wang Yizhe also announced his resignation.
Multiple transfers of pipeline blood return
As a biopharmaceutical company with a "License in" model, Liantuo Biotech continues to introduce potential pipelines from other Biotech pharmaceutical companies. Within two years of its establishment, the company introduced a total of 9 products. Among them, Mavacamten is the closest drug to the market among its introduced products.
In 2020, at the cost of a down payment of US $40 million and a potential milestone payment of US $147.5 million, Liantuo Biology introduced the exclusive right of Mavacamten to develop and commercialize in Chinese Mainland, Hong Kong, Macao, Taiwan, Singapore and Thailand from the US biopharmaceutical company MyoKardia. In April 2023, the application for the launch of Mavacamten new drug was accepted by the China Medical Products Administration.
Mavacamten can be used to treat symptomatic obstructive hypertrophic cardiomyopathy. According to data from Medical Cube Info, there are approximately 1.1-2.8 million patients with hypertrophic cardiomyopathy in China. However, there is currently no specific drug approved for the treatment of hypertrophic cardiomyopathy in China. This also means that if Mavacamten is successfully approved for listing, its commercial prospects may be quite promising.
However, in October 2023, Liantuo Biotechnology chose to sell the related equity of Mavacamten to Bristol Myers Squibb (BMS). According to the agreement, Liantuo Biotechnology will receive a down payment of $350 million, and in addition, the company's outstanding milestone payment of $127.5 million will also be waived.
In December 2023, Liantuo Biotechnology sold the pipeline again and transferred the development and commercialization rights of the radiotherapy sensitizer NBTXR3 in Greater China, South Korea, Singapore, and Thailand to Johnson&Johnson's pharmaceutical company Yangsen for a down payment of $25 million and a milestone payment of $5 million. The corresponding rights to this drug were purchased by the company from pharmaceutical company Nanobiotix in 2021 with a down payment of $20 million and a milestone payment of $220 million.
In addition to the two pipelines that have been transferred, the company currently has 6 pipelines purchased from other partners, covering the fields of oncology, ophthalmology, and inflammation.
(Tabulated by Blue Whale Finance)
With the closure of Liantuo Biotechnology, the above-mentioned pipeline under research will also be gradually sold by the company. According to the announcement, if the above-mentioned pipeline is successfully sold, the company will distribute the profits to the shareholders at that time before the final dissolution.
The industry's cold winter continues
Innovative drug research and development has always been highly invested, and the industry has long used the term "ten years, one billion dollars" to describe the hardships of innovative drug research and development. Since 2022, the financing in the Biotech industry has gradually entered a cold winter, and companies in the industry have also begun to face cash flow pressures.
In 2023, the industry's cold winter will continue. According to the data from Medical Cube Info, in 2023, the primary market financing amount of China's innovative pharmaceutical industry (including Biotech and Biopharma, excluding traditional pharmaceutical companies), excluding IPOs, was a total of 30.9 billion yuan, a year-on-year decrease of 29%, and a decrease of about 65% from the high point in 2021. The cumulative financing amount in the secondary market, including IPOs and additional issuances, is about 21.5 billion yuan, a year-on-year decrease of 44% and a decrease of about 75.8% from the high point in 2020.
According to a research report by Xinyin Capital, it is expected that in the primary market in 2024, the innovative pharmaceutical industry will continue to "sleep". Although the number of investment and financing projects is expected to increase due to undervaluation, expected adjustments, and longer investment periods, the willingness of PEVC to invest in the innovative pharmaceutical sector is not strong, and industry funds are expected to be in a net exit state.
In this context, some Biotech companies choose to sell themselves to multinational pharmaceutical companies. In December 2023, Genxi Biotechnology and global pharmaceutical giant AstraZeneca jointly announced that AstraZeneca had signed a final agreement on its acquisition proposal for Genxi Biotechnology. After the acquisition is completed, Genxi Biotechnology will become a wholly-owned subsidiary of AstraZeneca and conduct business in China and the United States. The final agreement terms indicate that the total transaction value of this acquisition is approximately 1.2 billion US dollars. Genxi Biotechnology has also become the first Chinese innovative pharmaceutical company to be fully acquired by a multinational corporation in China.
Less than ten days later, on January 5, 2024, Xinruinuo Pharmaceuticals also officially announced the "selling" of Novartis Group. Xinruinuo Pharmaceuticals mainly focuses on the treatment of kidney diseases. After the transaction is completed, the company will be integrated into Novartis China as a whole.
Previously, Liantuo Biotechnology had also received acquisition proposals. On December 1, 2023, Liantuo Biotechnology confirmed receipt of an acquisition proposal from Concentrate Biosciences, a subsidiary of Tang Capital Partners. According to the proposal, Concentrate plans to acquire 80% of the net income of any Liantuo Biotechnology project for a consideration of $4.30 per share plus a contingent value right (CRV), and requires that at the time of delivery, Liantuo Biotechnology has a guaranteed account of no less than $515 million in cash and cash equivalents.
However, on December 7th of the same year, the board of directors of Liantuo Biotechnology rejected the proposal on the grounds that it underestimated the company's value and did not align with the best interests of Liantuo Biotechnology and its shareholders.
But not all Biotech pharmaceutical companies facing difficulties can survive until the day of acquisition. According to SEC filings, the number of US Biotech companies filing for bankruptcy in 2023 has reached a ten-year high. As of October 11, 2023, a total of 28 Biotech companies went bankrupt during the year, while the total number of bankrupt companies in 2022 was 20.
In China, some Biotech companies also choose to go bankrupt. On January 8th, the People's Court of Yuhang District, Hangzhou City, Zhejiang Province ruled to accept the bankruptcy case of Boji Biotechnology. Boji Biotechnology specializes in innovative biopharmaceutical research and development for immune system related diseases, with a total of 7 research pipelines, two of which are in the first phase of clinical trials.
