Massive losses are just a temporary phenomenon? Baili Tianheng's core products are about to unlock a trillion-dollar market

Listing | Zhongfang Network

Review | Li Xiaoyan

On February 28, Sichuan Baili Tianheng Pharmaceutical Co., Ltd. released its 2025 annual performance forecast. The data shows the company achieved a total revenue of 2.52 billion yuan for the year, a 56.72% decrease year-over-year; net profit attributable to the parent company was -1.051 billion yuan, turning from profit to loss compared to the previous year. This performance “turnaround” has attracted widespread market attention, with many linking it to the “money-burning” model in the innovative drug industry and questioning its sustainability. However, behind the short-term data fluctuations, considering the company’s core product progress, global collaborations, and industry development patterns, this performance adjustment is actually a phased phenomenon in the transition of innovative drug companies from “one-time revenue” to “sustainable commercialization,” with its long-term value anchors gradually becoming clearer.

The performance fluctuations of Baili Tianheng in 2025 mainly stem from the staged change in revenue structure rather than a substantive decline in operational capability. In 2024, the company secured an $800 million upfront payment through global cooperation with BMS on the iza-bren project, a one-time intellectual property income that directly boosted revenue to 5.823 billion yuan and net profit to 3.708 billion yuan that year. In comparison, although the cooperation with BMS continued to deepen in 2025, receiving a milestone payment of $250 million, this amount was significantly less than the previous year’s one-time upfront payment, which was the direct reason for the year-over-year revenue decline. Notably, this $250 million milestone payment set a record for the highest single milestone payment in China’s innovative drug “going abroad” deals for an ADC asset, marking the transition from “signing” to “results realization” phase in the partnership. According to the cooperation agreement, the company can also receive up to an additional $250 million in near-term or contingent payments, as well as milestone payments for development, registration, and sales totaling up to $7.1 billion, indicating substantial long-term revenue potential.

This shift in revenue structure is a common pattern in the development of the innovative drug industry. For pharmaceutical companies centered on original innovation, relying initially on one-time licensing income, and gradually transitioning to milestone payments and commercialization revenue sharing, is an essential path to sustainable development. Baili Tianheng’s performance changes precisely reflect its transition from “transaction realization” to “industry landing,” and the short-term pains during this transformation should not be simply equated with operational risks.

The core support for Baili Tianheng’s long-term development lies in its solid layout and key breakthroughs in innovative drugs, especially the clinical progress of its core product iza-bren, which has entered a critical window for commercialization. As a globally first-in-class EGFR×HER3 bispecific antibody ADC, iza-bren is currently the only similar product in Phase III clinical trials worldwide, with its clinical value and innovation recognized by authorities. As of March 2026, the product’s two marketing applications for nasopharyngeal carcinoma and esophageal squamous cell carcinoma have been accepted by the National Medical Products Administration (NMPA) and included in the priority review process. The Phase III clinical study for esophageal squamous cell carcinoma has achieved the primary endpoints of progression-free survival (PFS) and overall survival (OS), demonstrating significant clinical benefits.

Yuan Shuai, Executive Vice President of the China Urban Development Research Institute, stated that the marketing application for iza-bren targeting nasopharyngeal carcinoma and esophageal squamous cell carcinoma is expected to be approved in 2026, with broad commercialization prospects. Both indications are high-incidence tumor types in China with significant unmet clinical needs. Especially in the field of esophageal squamous cell carcinoma, where no ADC drugs have been approved globally, iza-bren’s successful market entry would become the first standard treatment option, filling a clinical gap. Additionally, the company’s global collaborations with BMS on clinical trials for triple-negative breast cancer, non-small cell lung cancer, and other indications are progressing steadily, which could further expand its market potential.

To strengthen its innovation foundation, Baili Tianheng has continuously increased R&D investment in recent years. R&D expenses have grown from 279 million yuan in 2021 to 1.772 billion yuan in the first three quarters of 2025, more than sixfold, with R&D accounting for 86% of revenue in the first three quarters of 2025. This high-intensity R&D investment is necessary to develop globally leading innovative drugs. From an industry perspective, 2026 marks a critical turning point for China’s innovative drug industry from “catch-up” to “leading,” with ADC drugs being one of the most competitive tracks globally. The market size is expected to surpass 30 billion yuan, with a compound annual growth rate of 67%. Baili Tianheng’s R&D focus on bispecific ADCs positions it to seize opportunities in this frontier.

Despite a promising long-term outlook, Baili Tianheng faces some phased challenges. On one hand, its core product iza-bren carries R&D risks; the HER3 target has shown poor response rates in monotherapy, and similar products have been discontinued due to safety issues. After market launch, it will also face competition from giants like Chia Tai-Tianqing and AstraZeneca. On the other hand, its traditional generic drug business has been impacted by centralized procurement policies, leading to sharp declines in revenue and gross margins for key products like propofol emulsion injections, making it difficult to generate R&D “blood” in the short term. Additionally, the capital market’s cautious attitude, including delays in H-share listing and stock price adjustments, reflects market concerns over short-term performance and R&D risks.

In response, Baili Tianheng is actively taking measures to solidify its development foundation. Financially, the company completed a private placement of over 3.7 billion yuan in September 2025, and by the end of the third quarter, its cash and cash equivalents increased by 2.338 billion yuan, providing ample funding for R&D. It also launched a share repurchase plan of 100 million to 200 million yuan, with nearly 100 million yuan spent by January 31, 2026, for employee stock ownership plans or equity incentives, helping stabilize the team and boost investor confidence. In pipeline development, the company currently has 17 innovative drugs in clinical trials, including 6 in global trials, and 17 domestic Phase III registration trials progressing steadily, gradually alleviating reliance on core products.

From an industry perspective, 2026 is a key year for the transition of the innovative drug sector from “expectation fulfillment” to “performance realization,” with market evaluation shifting from “signing scale” to three key indicators: clinical data, cash flow, and internationalization capability. Baili Tianheng’s core products are approaching approval windows, milestone payments from global collaborations are being realized, and its R&D pipeline is being built up step by step. These factors will be the main support for its navigation through industry cycles.

Short-term performance fluctuations are an inevitable cost for innovative drug companies pursuing original innovation. For Baili Tianheng, this performance “turnaround” is not a “turning point” but a “node” in its transformation. As core products reach commercialization, global cooperation benefits are gradually released, and R&D pipelines continue to advance, the company is expected to gradually reduce reliance on one-time revenue and establish a virtuous cycle of “R&D - licensing - commercialization.” In the industry’s wave of淘汰, only by adhering to long-termism and deepening core technologies can true value breakthroughs be achieved. Baili Tianheng’s layout and progress already demonstrate its potential to become a “long-distance runner” in the global innovative drug field.