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 its IPO prospectus to the Hong Kong Stock Exchange, with CITIC Securities acting as the sole sponsor.

This is another attempt following its first submission in September 2025.

The prospectus shows 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 products include a core product ABP-671, a clinical-stage candidate ABP-745, as well as several preclinical-stage candidate products such as AT6616, ABP-6016, and ABP-6118.

No sales revenue, net losses continue to expand

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

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

The prospectus states that based on a structure-metabolism analysis drug discovery platform, the company has launched not only the clinical-stage candidate products ABP-671 and ABP-745 but also a series of preclinical pipeline products, 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 the financial data perspective, New Element Pharmaceuticals is still in a high investment period.

From 2024 to 2025, the company has no product commercialization revenue, and its income mainly comes from government subsidies and bank interest.

Other income for 2024 and 2025 was 7.718 million yuan and 4.821 million yuan, respectively, down 37.5% year-on-year, with government subsidies decreasing by 40.3% and bank interest decreasing by 31.6%. During the same period, net losses were 435 million yuan and 534 million yuan, with losses expanding by 23% year-on-year, mainly due to high R&D expenses.

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

New Element Pharmaceuticals stated that as it continues to advance phase 2b/3 clinical trials, significant R&D expenditures for ABP-671 are expected to continue.

According to the prospectus, the company’s key strategies mainly include: accelerating the global commercialization process of the core product ABP-671; accelerating the clinical development and market launch of the 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 base.

Currently, New Element Pharmaceuticals has no commercialized products, which means the company has no sales revenue and completely relies on primary market financing for operational support.

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 reached 1.407 billion yuan, an increase of 61.2% from 873 million yuan in 2024.

In addition, the company’s cash flow has also remained negative.

In 2024 and 2025, the company’s net cash outflow from operating activities was 368.4 million yuan and 119 million yuan, respectively.

Regarding funding reserves, as of the end of 2025, the company had 185 million yuan in cash and cash equivalents, 21 million yuan in time deposits, along with 140 million yuan in financial assets measured at fair value and 200 million yuan in unused bank financing. Management stated that existing internal resources combined with funds raised from this IPO could cover at least 125% of costs for the next 12 months.

Reliance on a few suppliers

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

In 2024 and 2025, the procurement amounts from the top five suppliers accounted for 87.5% and 66.7% of total procurement, respectively, with the largest supplier (an American CRO) accounting for 56.8% and 28.1%. Although the concentration has improved, if key suppliers stop supplying, it will have a significant adverse impact on the business.

The company cited data from Frost & Sullivan, stating that after receiving NMPA approval for listing, the company’s core product is positioned as one of the first URAT1 inhibitors developed domestically for the treatment of gout. The company has established a commercialization arrangement with Kangzhe Pharmaceutical (ABP-671 commercialization agreement) for the future commercialization 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 rights for R&D, production, and commercialization outside the region. As of the last practical date, under 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 Frost & Sullivan data, 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, mainly due to the impact of centralized procurement policies.

It is noteworthy that New Element Pharmaceuticals is currently involved 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 demanding compensation of 50 million yuan. Xinnuo Wei countersued New Element for “maliciously initiating intellectual property litigation,” also seeking 50 million yuan in damages and demanding a public apology. In September 2025, the Shanghai Intellectual Property Court accepted the case. New Element Pharmaceuticals withdrew and resubmitted in November 2025, and received a notice of acceptance from the court in the same month. Currently, the Shanghai Intellectual Property Court has not made any judgments. The company demands that the defendant Xinnuo Wei stop 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 held 29.4% of the shares, and after the IPO, he will become the single largest shareholder, with the company having no controlling shareholder.