Health Guard plans dual listing to fund HPV vaccine fight

After a Beijing IPO last year, the loss-making biotech has also filed for a Hong Kong listing to better compete in the crowded market for HPV vaccines

Key Takeaways:

• Beijing Health Guard is expected to seek a Chinese marketing license by the end of the year for its most advanced pipeline product, a trivalent HPV vaccine
• The company is up against a host of other developers with nine-valent HPV vaccines in late-stage trials 

By Molly Wen

Last stop Beijing, now onto Hong Kong. A Chinese company developing vaccines against cancer-causing viruses is aiming to become the first company to be listed on exchanges in both cities.

The Beijing Stock Exchange opened in 2021 with a remit to serve small- and medium-sized businesses, becoming China’s third major mainland bourse alongside Shanghai and Shenzhen. Until now, none of the Beijing-traded companies have been listed in Hong Kong as well.

But Beijing Health Guard Biotechnology Inc. (833575.BJ), which develops vaccines against human papillomavirus (HPV) infections, is hoping to widen its investor base by gaining a Hong Kong stock ticker, barely a year after first listing its shares on the Beijing exchange.

Its Hong Kong listing application in late January, if successful, would result in the first “Beijing + Hong Kong” stock.

The loss-making biopharma company has already made multiple trips to the capital markets to raise the large sums needed to get its vaccine candidates to the clinical trial stage.

None of its vaccines have been cleared for marketing yet, but Beijing Health Guard has several HPV candidates in its development portfolio, mostly using recombinant protein technology, as well as one of the new types of mRNA vaccines.

The product closest to a commercial launch is a trivalent HPV vaccine, for which the company is expected to seek a Chinese product license by the end of this year. In vaccine technology, the higher the valency the broader the protection against virus strains.  Another of the company’s major products is a nonavalent, or nine-valent HPV vaccine that is expected to move to the license application stage in China and Indonesia in 2025. The vaccine is the first Chinese product in the nine-valent category to be used in clinical HPV trials for men.

HPVs cause sexually transmitted diseases and lead to cancers of the sexual organs and reproductive system. In women they are a major cause of cervical cancer.

Aside from its advanced vaccine candidates, Beijing Health Guard is also working with Liaoning Chengda Biotechnology to develop a 15-valent HPV vaccine that could enter Phase I clinical trials this year. Such vaccines, with the highest valency to have been approved so far for clinical trials around the world, would cover all the high-risk HPVs identified by the WHO’s cancer research agency. The company said its 15-valent vaccine could boost protection against cervical cancer to more than 96%.

The company is also working on an HPV vaccine using mRNA technology, as well as five vaccines for other diseases that have few treatment options such as respiratory syncytial virus (RSV), varicella zoster virus, and hand, foot and mouth disease. The five vaccines are still in the pre-clinical stage, with uncertain commercial prospects.

Set up in 2008, Beijing Health Guard has yet to break even. In the meantime, it has dipped repeatedly into the capital markets to support its vaccine research. The company listed on the National Equities Exchange and Quotations (NEEQ), an over-the-counter market, in September 2015. Between 2019 and 2021 it also raised more than 1.7 billion yuan ($236 million) from industry funds operated by Yuanwang Capital, Yunfeng Capital and Shenzhen Oriental Fortune Capital.

In February 2022, the company announced its intention to list up to 44.53 million shares at 77.68 yuan per share on the Beijing Stock Exchange. Just over a year later, it left the NEEQ and became the first producer of human vaccines to list on the Beijing exchange, but the issuance volume and price were lower than originally planned: 7 million shares at 42 yuan each.  Even so, the stock fell 15.4% on its debut trading day.

The stock rose 3.1% on news of the Hong Kong filing but the rally was short-lived. The share price sank 1.2% and 7.8% in the following two days, reflecting investor concerns about the company’s long-term prospects in a highly competitive field.

Race for vaccine riches

China became the world’s second-biggest vaccine market in 2022 with a 36.3% share, driven by its huge population and economy, according to a report in the prospectus. The research estimated that the Chinese vaccine market grew at a compound annual rate of 32% between 2017 and 2022 to 125.1 billion yuan, helped by increased access to innovative products and government support for vaccination programs.

HPV vaccines targeting cervical cancer are a big subset of the market. With vaccines in short supply, the inoculation rate among Chinese females aged nine to 45 was just 9.36% by 2022. The same report predicted the rate would rise to 57% by 2031, and 7.6% of males in that age group would also be vaccinated. The higher take-up would boost the value of the Chinese HPV vaccine market to 73 billion yuan by 2031, the report said.  

Five HPV vaccines are already on the market in China, three of them imported. Beijing Wantai Biological (603392.SH) blazed the trail in 2019 when its bivalent product Cecolin was the first domestically developed HPV vaccine to be approved for use in China. Three years later a bivalent vaccine from Walvax Biotechnology (300142.SZ) also gained approval. Chinese producers of bivalent HPV vaccines are now locked in a price battle for market share.  When the Guangdong provincial authorities put out a vaccine tender last August, Wantai Biological cut its unit price to 116 yuan and Walvax Biotechnology lost out with a price of 146 yuan.

Competition is reaching a new pitch for high-valence vaccines that protect against a wider range of viruses. Beijing Health Guard, Wantai Biological, Walvax Biotechnology, Shanghai Bovax Biotechnology and Jiangsu Recbio Technology (2179.HK) all have nine-valent HPV vaccines in Phase III trials, while several 11- and 12-valent products are joining the fray. Can Beijing Health Guard, with no track record in vaccine sales, emerge as a market leader in such a tough race?

Cash reserves have been running low. By the end of last September, the company’s cash had dropped to 253 million yuan from 826 million yuan in the same period of 2022. Meanwhile its nine-month loss stood at 225 million yuan in 2023, after full-year losses of 293 million yuan and 380 million yuan in 2022 and 2021.

However, the prospectus revealed the company had obtained additional bank lending in December 2023 and January 2024, of which 328 million yuan remained unused. The company’s price-to-book (P/B) ratio is about five times, against only three times for Jiangsu Recbio Technology, a loss-making vaccine maker listed in Hong Kong, reflecting investor caution about valuations in the sector.  Whether Beijing Health Guard can be a frontrunner in the race for HPV vaccine sales remains to be seen.

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