Zhengxiang Pharmaceutical Benchmarks Against Roche's Speed Shield: Domestic Flu Wonder Drug Becomes Only Bet, 415.84% Debt-to-Equity Ratio on Hong Kong Shares

Chinatrust (chinatimes.net.cn) Reporter Nu Na, Beijing

Innovative flu drug star Zengxiang Medicine (Nanjing) Group Co., Ltd. has recently officially submitted an application for listing on the Main Board of the Hong Kong Stock Exchange, attempting to raise funds through the capital market to break through development difficulties. Its core product is the new anti-influenza drug “Merseloxavir Tablets” (brand name: Jike Shu), approved by the National Medical Products Administration in July 2025, which is also the company’s main confidence in pursuing an IPO.

“Merseloxavir Tablets” is a domestically developed, globally proprietary new generation targeted influenza virus RNA polymerase PA inhibitor, and one of four domestically produced anti-influenza drugs approved by the NMPA in 2025. Priced at 222 yuan per box, consistent with Roche’s Baloxavir, it is currently the most expensive domestically produced innovative flu drug.

Investors have noticed that, due to restrictions in the timing of the prospectus disclosure, the actual sales performance of Merseloxavir Tablets after approval has not been included in the disclosed documents. This means investors cannot accurately assess the true market competitiveness and commercialization potential of this core product through the prospectus.

Meanwhile, Zengxiang Medicine’s financial situation is already strained. Since 2024, it has been continuously losing money. As of September 30, 2025, the company’s total liabilities reached 1.26 billion yuan, with a debt-to-asset ratio of 415.84%, far exceeding the reasonable range for the biopharmaceutical industry. With weak core product performance and looming financial pressure, the company’s IPO journey, hastily filed, is fraught with obstacles.

Lack of core product sales

Zengxiang Medicine’s exclusive commercialized product, Merseloxavir Tablets, was expected to be a key to its commercialization and profit, but its market performance has yet to support the company’s IPO, instead becoming a point of market skepticism about the urgency of listing.

The first-class innovative drug Merseloxavir Tablets, approved in July 2025, is a targeted influenza virus RNA polymerase PA subunit inhibitor with independent intellectual property rights. It works by specifically inhibiting viral mRNA transcription, providing long-lasting antiviral activity. A single oral dose can quickly reduce fever and relieve flu symptoms within a day, with a very low incidence of gastrointestinal side effects, effectively addressing some clinical pain points of traditional anti-flu drugs. As Zengxiang’s only commercialized product, it was highly anticipated to help the company open up the market and escape losses.

The prospectus disclosed that after approval in July 2025, actual sales only occurred in the last three months of that year. Due to timing restrictions, this sales data was not included in the current disclosure, preventing investors from accurately judging the product’s true market competitiveness and commercialization potential, and raising questions about the core performance support for Zengxiang’s IPO fundraising logic.

In addition to missing performance data, the anti-flu market where Merseloxavir operates has entered a fierce “new and old” competition pattern, increasing commercialization uncertainty. In 2025, several domestically developed anti-flu drugs were approved, including Qingfeng’s Masha Laxavir, Zhongsheng’s Angladiwe, and Jiankangyuan’s Mairuvisavir, besides Zengxiang’s Merseloxavir.

However, Zhongsheng’s Angladiwe and Qingfeng’s Masha Laxavir have been included in the national medical insurance catalog as Class B drugs, significantly increasing market penetration through price competition. Merseloxavir, due to later approval, did not participate in the 2025 medical insurance negotiations and has not yet entered the insurance catalog, putting it at a price disadvantage. Additionally, traditional anti-flu drug Oseltamivir remains the mainstream choice at the grassroots level, further squeezing Merseloxavir’s market space.

Zengxiang’s own commercialization capability also shows clear shortcomings. The prospectus indicates that the company has not yet built its own sales team, and the commercialization of Merseloxavir relies entirely on an exclusive partnership with Jichuan Pharmaceutical. In August 2023, the two parties signed an exclusive sales and promotion agreement, with Jichuan investing 60 million yuan in equity and paying 50 million yuan non-refundable prepayment and 70 million yuan milestone payments, gaining exclusive commercialization rights. After product sales, Zengxiang must pay a double-digit percentage of sales as promotional service fees to Jichuan.

Cao Ning, partner at healthcare management consulting firm, told Huaxia Times that over-reliance on a single partner for commercialization not only compresses profit margins but also weakens control over product promotion pace and market channels. Any change in cooperation could directly impact the market expansion of Merseloxavir. Meanwhile, Zengxiang’s R&D pipeline is overly concentrated, with weak risk resistance.

The prospectus shows that R&D investment is highly focused on Merseloxavir. In 2024, R&D costs for this product reached 82 million yuan, accounting for 82.3% of total R&D costs; in the first nine months of 2025, this proportion further increased to 82.7%. Other pipeline projects like ZX-8177 (solid tumor treatment) and ZX-12042B (HPV infection) are still in early clinical or IND application stages.

On March 3, Zengxiang’s pediatric dry suspension of Merseloxavir (children’s formulation) received acceptance from the NMPA for clinical trials, aiming to expand the pediatric flu treatment pipeline and broaden applicable populations. However, this formulation is still in clinical trial application stage and is unlikely to contribute to performance in the short term.

Cao Ning believes that “betting on a single product” in R&D makes the company’s development entirely dependent on the market performance of Merseloxavir. If sales fall short of expectations, patents expire, or more competitive alternatives emerge, the company will face the dilemma of lacking core products.

Financial risks of collapse

If the uncertainty of the core product is the “hidden worry” for Zengxiang’s IPO, then ongoing losses and high debt levels are the “hard injuries” it must confront.

(From: Zengxiang’s IPO application draft)

Financial data from the prospectus shows that in 2024, Zengxiang achieved zero revenue and a net loss of 145 million yuan; in the first nine months of 2025, revenue was only 355,000 yuan, with a net loss still at 145 million yuan, the same as the full year of 2024. In just 15 months, cumulative losses approached 300 million yuan, and by September 2025, total accumulated losses exceeded 400 million yuan.

Behind continuous losses are high R&D investments and inefficient operations. The prospectus indicates that in 2024, R&D costs were 100 million yuan, accounting for 82.3% of total costs; in the first nine months of 2025, R&D costs reached 81.6 million yuan, with the proportion rising to 85.6%, far above industry averages. Excessive R&D spending combined with insufficient revenue has trapped the company in a “high input, low output” vicious cycle, bleeding continuously.

(From: Zengxiang’s IPO application draft)

As of September 30, 2025, Zengxiang’s total liabilities were about 1.26 billion yuan, with net liabilities rising to 956 million yuan, and a debt-to-asset ratio of 415.84%, raising concerns over solvency. A long-term industry investor told Huaxia Times that the biopharmaceutical industry is capital-intensive, with a reasonable debt ratio generally between 50% and 70%. Zengxiang’s ratio of 415.84% means its liabilities are more than four times its net assets, nearing insolvency.

High debt levels are accompanied by significant short-term pressure from current liabilities. The prospectus discloses that as of September 2025, net current liabilities reached 903 million yuan, an increase of nearly 19% from the end of 2024, mainly due to an increase of 311 million yuan in redemption liabilities related to investors and other payables. Although on October 27, 2025, the company signed an agreement with investors to permanently terminate the redemption rights of pre-IPO investors, temporarily easing short-term redemption pressure, the fundamental debt problem remains unresolved, and the company still faces huge repayment pressure.

Cash flow remains tight, further exacerbating Zengxiang’s funding risks. The report shows that during the reporting period, net cash used in operating activities was -106 million yuan and -90.87 million yuan, indicating reliance on external financing for daily operations. As of September 30, 2025, the company’s cash and cash equivalents totaled only 118 million yuan, raising doubts about whether it can support pipeline clinical trials, daily operations, and short-term debt repayments.

To maintain normal operations, Zengxiang has completed eight rounds of equity financing since its establishment in 2018, raising over 870 million yuan. As financing becomes more difficult, going public and raising funds through an IPO has become an inevitable choice.

Cao Ning analyzed that Zengxiang’s IPO is essentially a desperate bid for survival and development under enormous financial pressure. If the listing fails, the company could face a liquidity crisis, inability to repay debts, halted R&D, and hindered product promotion. Even if it succeeds, poor sales of core product Merseloxavir, failure to turn a profit, or emergence of more competitive products could lead to a sharp drop in stock price and difficulties in refinancing. For Zengxiang, the key to sustainable development lies in solving its funding issues, enhancing core product competitiveness, and optimizing R&D pipeline layout, rather than rushing to list to ease short-term cash flow problems.

Editor: Jiang Yuqing Chief Editor: Chen Yanpeng