Akeso’s Booming Profits
Key Takeaways:
- Akeso achieved an annual profit of 1.94 billion yuan, driven by a substantial licensing income of 2.92 billion yuan
- Ivonescimab, a groundbreaking PD-1/VEGF bispecific antibody in Phase III clinical trials, is the focal point of Akeso’s drug pipeline
Chinese pharmaceutical trailblazer Akeso Inc. (9926.HK) has gallantly navigated the ever-challenging biopharma landscape, resolutely advancing innovative strategies to empower the immune system in its battle against cancer.
In its latest financial revelations, the company demonstrated progress on multiple fronts, with a substantial surge in revenue stemming from drug licensing agreements and a notable uptick in product sales revenue.
The revenue stream for the year 2023 rocketed more than fivefold to an impressive 4.53 billion yuan ($628 million), propelling Akeso from a loss-making entity to a profit-making powerhouse with earnings totaling 1.94 billion yuan.
Undeterred by a slight decline in its share value, Akeso took advantage of the situation to issue a fresh set of shares, aimed at financing additional drug research endeavors.
The company’s revenue stream comprises both product sales and technology licensing fees. Sales of its two approved anti-cancer products, cadonilimab and penpulimab, collectively spiked by 48% to 1.63 billion yuan last year. Cadonilimab targets the PD-1/CTLA-4 immune checkpoints as a bispecific antibody, while penpulimab is a PD-1 monoclonal antibody.
While overall product sales demonstrate an upward trajectory, the lion’s share of profit acceleration stems from a lucrative licensing deal with U.S.-based pharmaceutical giant Summit Therapeutics (SMMT). This partnership magnified Akeso’s revenue from tech collaborations to a remarkable 2.92 billion yuan.
Excluding the windfall from licensing agreements, Akeso’s net loss for 2023 would have narrowed to 788 million yuan from 1.43 billion yuan the previous year, still positioning the company as making strides in its commercialization pursuits.
The Strategic Rights Issue
Displaying unwavering confidence in the demand for its shares, Akeso swiftly announced a rights issue just two days following its financial results release. The company is set to distribute 24.80 million shares to a minimum of six investors, priced at HK$47.65 per share, representing a 6% discount from the prior day’s closing price and potentially yielding an estimated HK$1.17 billion ($150 million).
Out of the total funds raised, 65% will be channeled directly into research and development initiatives, focusing on advancing multiple pre-clinical programs, enhancing an advanced antibody drug conjugate (ADC) platform, and hastening global clinical trials for drugs like cadonilimab. Another 25% of the proceeds will be allocated to further commercialize cadonilimab and the promising drug candidate ivonescimab.
Despite possessing ample financial reserves—with current assets standing at 5.68 billion yuan by the end of 2023—the company opted to secure additional funds for future research and development, leveraging the positive earnings report to its strategic advantage.
This latest rights issue marks Akeso’s third capital-raising endeavor post its Hong Kong IPO in April 2020. With this new injection of equity, the company’s cumulative fundraising efforts exceed 5 billion yuan, inclusive of 2.31 billion yuan from the IPO, 1.07 billion yuan from a placement in January 2021, and 520 million yuan from a previous rights issue in July 2022.
