New Element Pharmaceuticals bets on innovative gout drugs to make a comeback in Hong Kong stocks: no sales revenue yet, annual loss exceeds 500 million yuan

Recently, Hangzhou New Element Pharmaceuticals Co., Ltd. (hereinafter referred to as “New Element Pharmaceuticals”) submitted an IPO prospectus to the Hong Kong Stock Exchange, with CITIC Securities acting as the sole sponsor.

This marks another attempt following their initial filing in September 2025.

The prospectus reveals that New Element Pharmaceuticals was established in 2012 and is a biotechnology company focused on developing therapies for metabolic, inflammatory, and cardiovascular diseases.

As of the last practical date, the company’s pipeline includes a core product ABP-671, a clinical-stage candidate ABP-745, and several preclinical candidate products such as AT6616, ABP-6016, and ABP-6118.

With no sales revenue, net losses continue to widen.

ABP-671 is an independently developed small molecule urate transporter 1 (URAT1) inhibitor designed for first-line treatment of gout. As of the last practical date, ABP-671 has been granted 124 patents, with an additional 34 patent applications pending approval. The indications for ABP-671 are closely related to recurrent gout, reflecting different stages of disease progression and clinical manifestations. ABP-671 is classified as a Class 1 innovative drug in China and as a new chemical entity (NCE) in the United States, with clinical trials currently underway in both jurisdictions in phases 2b/3.

However, New Element Pharmaceuticals emphasized in the prospectus that “the company may not be able to successfully develop or market its core product.”

The prospectus states that based on a structure-metabolism analysis drug discovery platform, the company has not only launched clinical-stage candidate products ABP-671 and ABP-745 but has also introduced a series of preclinical pipelines, including AT6616, ABP-6016, and ABP-6118. The company is developing core products and other candidate products in a highly competitive market, facing fierce competition from multinational and domestic pharmaceutical companies that have multiple approved drugs and similar or later-stage clinical candidates.

From a financial perspective, New Element Pharmaceuticals remains in a high investment phase.

From 2024 to 2025, the company has no commercialized product revenue, with its income primarily derived from government grants and bank interest.

Other income for 2024 and 2025 is projected to be 7.718 million yuan and 4.821 million yuan, respectively, down 37.5% year-on-year, with government grants reducing by 40.3% and bank interest decreasing by 31.6%. In the same period, net losses are expected to be 435 million yuan and 534 million yuan, with the loss amount increasing by 23% year-on-year, primarily due to high R&D expenditures.

From 2024 to 2025, the company’s R&D expenses are expected to be 338 million yuan and 180 million yuan, with R&D investment in the core product ABP-671 accounting for 83.9% and 66%, respectively.

New Element Pharmaceuticals stated that as it continues to advance the 2b/3 clinical trials, ABP-671 is expected to incur significant R&D expenses.

According to the prospectus, the company’s key strategies mainly include: accelerating the global commercialization process of core product ABP-671; expediting clinical development and market entry of key product ABP-745; expanding indications for products and preclinical projects; advancing the implementation of commercialization strategies and promoting business development plans; and attracting, retaining, and strengthening a high-quality talent pool.

Currently, New Element Pharmaceuticals has no commercialized products, which means the company has no sales revenue and is fully reliant on first-market financing to sustain operations.

As of the end of 2025, the company’s net current liabilities reached 1.333 billion yuan, an increase of 38.3% year-on-year, with a current ratio of only 0.2, far below the healthy level of 1. The company’s net liabilities amount to 1.407 billion yuan, an increase of 61.2% compared to 873 million yuan in 2024.

Additionally, the company’s cash flow continues to be negative.

In 2024 and 2025, the company’s net cash outflows from operating activities are expected to be 368.4 million yuan and 119 million yuan, respectively.

In terms of financial reserves, by the end of 2025, the company has cash and cash equivalents of 185 million yuan, time deposits of 21 million yuan, plus financial assets measured at fair value of 140 million yuan and unutilized bank financing of 200 million yuan. The management stated that existing internal resources combined with funds raised from this IPO can cover at least 125% of costs for the next 12 months.

Dependence on a few suppliers.

From the information disclosed in the prospectus, the company faces supplier concentration risks.

In 2024 and 2025, the top five suppliers accounted for 87.5% and 66.7% of total purchases, respectively, with the largest supplier (a U.S. CRO) accounting for 56.8% and 28.1%, respectively. Although the concentration has improved, a supply disruption from a major supplier would have a significant adverse impact on the business.

The company cites data from Frost & Sullivan, stating that after obtaining NMPA approval for marketing, its core product is positioned as one of the first URAT1 inhibitors developed in the country for the treatment of gout. The company has entered into a commercialization arrangement with Kangzhe Pharmaceutical (ABP-671 commercialization agreement) to advance the commercialization process of ABP-671 for treating gout in mainland China, Hong Kong, and Macau (collectively referred to as “the Region”). Kangzhe Pharmaceutical will be fully responsible for the commercialization of ABP-671 in the Region, and the company will retain all R&D, production, and commercialization rights outside the Region. As of the last practical date, according to the ABP-671 commercialization agreement, the company received 80 million yuan from Kangzhe Pharmaceutical.

Although New Element Pharmaceuticals is targeting the gout drug market, according to data from Frost & Sullivan, the global gout drug market size has shrunk from $3.1 billion in 2019 to $2.7 billion in 2024; the Chinese market has also dropped from $500 million to $300 million, primarily influenced by centralized purchasing policies.

It is worth noting that New Element Pharmaceuticals is currently engaged in intellectual property litigation.

According to the information disclosed in the prospectus, in 2024, New Element Pharmaceuticals sued Suzhou Xinnuo Wei Pharmaceutical Technology Co., Ltd. in the Shanghai Intellectual Property Court, accusing it of stealing trade secrets and seeking 50 million yuan in damages. Xinnuo Wei countersued New Element for “maliciously filing intellectual property litigation,” also claiming 50 million yuan in damages and requesting a public apology. In September 2025, the Shanghai Intellectual Property Court accepted the case. New Element Pharmaceuticals withdrew and re-submitted the case in November 2025, receiving a notice of acceptance from the court in the same month. Currently, the Shanghai Intellectual Property Court has not made any rulings. The company requests that the defendant Xinnuo Wei cease stealing trade secrets, terminate relevant R&D, clinical trials, and promotional activities, and compensate for economic losses and reasonable expenses totaling 50 million yuan.

Regarding the equity structure, as of the last practical date of the prospectus, Shi Dongfang directly holds 29.4% of the equity, and after the IPO is completed, he will become the single largest shareholder, with no controlling shareholder in the company.