Baoji Pharmaceutical-B (02659.HK) surges then retreats on debut: HK$20 billion valuation urgently requires substantiation

ZC Asia has learnt that Baoji Pharmaceutical-B (02659.HK), a biotech new listing, formally debuted on the Main Board of the Hong Kong Stock Exchange today. The share price opened at HK$60.50, surging nearly 130% above its issue price of HK$26.38. However, it failed to sustain its momentum post-opening, with intraday gains narrowing significantly as the stock exhibited a high-opening, low-closing trajectory.

This performance stands in stark contrast to the frenzy seen in the dark pool trading the day before listing, where the stock surged over 113%. The market's valuation assessment is shifting from an initial phase of heightened sentiment towards a more cautious period of reality testing.

(Image source: Snowball)

On 9 December, Baoji Pharmaceutical's dark pool price surged over 115% at one point, eventually closing at HK$56 – representing an approximately 112.28% premium over its issue price. Calculated per lot of 100 shares, investors in the new share offering saw paper profits exceeding HK$3,000 per lot during the dark pool phase. The public offering portion achieved an oversubscription of approximately 2,690 times, freezing substantial capital and demonstrating strong demand for short-term trading opportunities.

This extraordinary fervour stands in stark contrast to the company's fundamental realities.

The subsequent retreat from peak levels reveals the market's post-exuberance reassessment of the company's underlying fundamentals. According to corporate disclosures, while Baoji Pharmaceuticals has established a pipeline spanning high-volume subcutaneous delivery, autoimmune diseases and assisted reproduction – including a recently approved assisted reproduction drug – its financial performance remains characteristic of a biotech start-up.

The company remains unprofitable, having recorded net losses for the past two years and the first half of this year. Notably, over 40 million yuan of revenue in the first half of 2025 stemmed primarily from a single technology licensing income, whose sustainability remains to be seen. The core underpinning its current market capitalisation of nearly HK$20 billion lies not in immediate profits, but in the market's forward-looking expectations regarding the commercialisation prospects of its core products and the value of its pipeline.

Furthermore, an ongoing legal dispute disclosed in the prospectus introduces additional uncertainty. Although the company has appealed the initial court ruling, the final outcome remains contingent upon the progression of judicial proceedings.

For investors participating in today's trading, Baoji Pharma's significant volatility on its debut vividly illustrates the interplay between market expectations and underlying fundamentals. Short-term share prices are undoubtedly significantly influenced by market sentiment and capital flows. However, the medium-to-long-term trajectory of value will ultimately depend on actual product sales data, the achievement of R&D milestones, and the company's ability to establish a sustainable profit model. Having paid a substantial premium for the innovation narrative, the market now awaits more tangible performance feedback.

Disclaimer: The content herein is for reference only and does not constitute any form of investment advice. Should any information contained herein prove inaccurate, incomplete, or potentially misleading, please refer to the company's official announcements. Market risks exist; investment requires caution.