A 150%+ jump on trading debut: how Biocytogen became a high-margin gene-editing leader

After more than three years of twists and turns, Biocytogen has finally debuted on the Sci-Tech Innovation Board (STAR Market) of the Shanghai Stock Exchange today. With this listing, the three leading Chinese model animal companies, playfully dubbed the "Big Three Mouse Kings" within the industry, are now all gathered on the STAR Market.

As a star company in the biopharmaceutical field, Biocytogen has garnered significant market interest even before its official listing, transitioning from the Hong Kong Stock Exchange to the Sci-Tech Innovation Board (STAR Market). Data shows that Biocytogen's IPO on the STAR Market recorded an initial online oversubscription of approximately 5,383 times, with a final lottery-winning rate of only 0.028%. This performance surpasses that of most STAR Market newcomers this year and also exceeds the figures set by its peers during the IPO surge several years ago.

Compared to its debut on the Hong Kong Stock Exchange four years ago, Biocytogen has delivered a more mature report card this time. At the time of writing, its first-day share price surge once reached as high as 157.87%.

Behind the remarkable oversubscription lies Biocytogen's challenging transformation in the new cycle of the pharmaceutical industry, along with a glimpse of potential for long-term profitability.

Most people know Biocytogen as a leading model animal supplier in China. Around 2021, laboratory mice used in preclinical drug research suddenly became scarce and highly sought after, which brought Biocytogen and its two peers, GemPharmatech and Shanghai Model Organisms, into the spotlight. To this day, selling target-humanized model mice remains Biocytogen's primary revenue source. However, with its antibody discovery platform maturing after years of dedicated development, Biocytogen has evolved beyond being just an animal model service provider.

Founded in 2009, Biocytogen is positioned as both a preclinical CRO (Contract Research Organization) and a biotechnology company. In its prospectus, the company provides a detailed, albeit somewhat fragmented, description of its business. In essence, Biocytogen's operations can be divided into two main segments: traditional business and innovative business.

On one hand, the traditional business provides a stable foundation. Biocytogen primarily offers a range of services and products centered around animal models, including customized gene editing, preclinical pharmacological and efficacy evaluations, and disease animal models.

It can be said that Biocytogen started with gene editing. In drug development, using animal models for efficacy testing is the "gold standard" for preclinical validation. Initially, Biocytogen employed gene editing technologies such as ESC/HR and CRISPR/EGE to provide customized gene editing services for mice, rats, and cell lines, meeting the demand for animal models in efficacy evaluations. Since its founding, the company has cumulatively developed over 5,000 animal and cell models for basic research and pharmaceutical clients.

Building on this foundation, Biocytogen gradually extended its services to cover various stages of preclinical efficacy evaluation. According to the prospectus, Biocytogen's pharmacology and efficacy team provides in vitro and in vivo pharmacodynamic and pharmacokinetic evaluations, as well as small animal pathology and toxicology assessments, for pharmaceutical companies and clinical research institutions in China and abroad. By the first half of 2025, it had completed over 6,350 drug evaluations for approximately 950 global partners, assisting some of them with IND submissions.

Finally, and most critically, is the direct sale of animal models. Biocytogen has developed disease mouse models covering several high-demand therapeutic areas, such as oncology, autoimmune diseases, and metabolic disorders, enabling its scaled supply of laboratory mice. Currently, Biocytogen can supply over 800,000 animal models annually.

On the other hand, the innovative business drives growth. Moving beyond the conventional narrative, Biocytogen focuses on more advanced antibody molecules, engaging in activities such as potential drug target discovery, development, and licensing. Starting from animal models, Biocytogen aims to build an "antibody supermarket" where pharmaceutical companies can directly select molecules. This segment of the business is supported by Biocytogen's unique fully human antibody platform (RenMice) and its "RenBiologics" initiative, which the company has been intensively developing in recent years.

The "RenBiologics" initiative involves using the RenMice platform to generate target knockout (Target KO) mice for over a thousand potential drug targets in humans. Each Target KO mouse is immunized to produce hundreds of antibody molecules targeting different epitopes of that specific target.

According to the prospectus, since its launch in March 2020, the "RenBiologics" initiative has completed monoclonal antibody screening for nearly 700 targets and bispecific antibody screening for over 200 tumor-associated antigen (TAA) targets. This has resulted in the establishment of an "off-the-shelf" library comprising nearly one million antibody sequences with diverse epitope-binding profiles.

In 2024, Biocytogen reached a significant turning point in its operations. After 15 years since its founding, the company achieved overall profitability for the first time. According to the prospectus, Biocytogen recorded a net profit of RMB 33.5369 million in 2024, ending years of consecutive losses. By the first half of 2025, its net profit further expanded to RMB 47.9988 million.

This turnaround to profitability can be attributed to two main factors: an increased proportion of high-margin businesses and the completion of a phase of heavy R&D investment.

Regarding the improvement in high-margin businesses, according to the prospectus, model animal sales and antibody business development are Biocytogen's segments with the highest gross margins. Among these, antibody development boasts the highest gross margin, ranging between 80% and 90%, followed by model animal sales, which is approximately 70% to 80%. A consolidated review of the financial data from the prospectuses filed with both the Hong Kong Stock Exchange and the Sci-Tech Innovation Board reveals that the revenue contribution from model animal sales and antibody development has steadily increased as a share of Biocytogen's total revenue over the years.

Among these, model animal sales, which currently account for the highest proportion of revenue, were only Biocytogen's third-largest business segment in 2020. However, this segment has grown rapidly at a compound annual growth rate exceeding 50% and has been the company's largest revenue source since 2021.

In terms of the antibody business, with the gradual maturation of the "RenBiologics" platform, Biocytogen has begun generating increasing revenue from antibody development. It is worth noting that once established, antibody development is a highly lucrative business, making Biocytogen among the highest-margin gene-editing companies.

Typically, antibody development is characterized by high early-stage investment and high late-stage returns, particularly after the out-licensing of specific antibody molecules, which can generate substantial milestone payments in later stages. For example, in 2024, Biocytogen recognized RMB 40 million in revenue after a pipeline previously transferred to Doma Biopharma reached the milestone of enrolling the first patient in a Phase I clinical trial, with no corresponding cost incurred during the same period. According to the prospectus, the antibody development business has rapidly grown from a minor contributor to become Biocytogen's second-largest revenue source.

Moreover, over the past few years, Biocytogen's gross margin has been higher than the industry average and has continued to rise. During the period spanning 2023 and 2024, when industry-wide gross margin growth was weak or even negative, Biocytogen still achieved significant margin expansion. This improvement was primarily driven by its differentiated focus on antibody development.

Regarding R&D expenditure, the primary cost reductions were in labor expenses and clinical trial investments. First, R&D labor costs decreased significantly as large-scale R&D phases concluded. With the progression and near completion of major R&D projects like the "RenBiologics", related labor expenses dropped sharply from RMB 223 million in 2022 to RMB 73.3938 million in 2024. Second, by out-licensing certain pipelines, the company substantially reduced clinical trial expenditures. Since 2022, Biocytogen has out-licensed pipelines such as YH001, YH002, and YH003, which were originally intended for in-house clinical trials, retaining only YH004 in Phase I clinical development. According to the prospectus, Biocytogen plans to advance future development through co-development partnerships and currently has no plans to independently conduct subsequent clinical trials for these pipelines.

Overall, the return to profitability through cost reduction and efficiency improvement aligns with sound business logic. For Biocytogen, achieving profitability in 2024 represents a significant milestone.

Of course, the external focus remains on whether Biocytogen can achieve sustained and stable profitability. From the perspective of VCBeat, this depends not only on the company's core competence in gene editing but also on whether its second growth curve—the "antibody molecule supermarket"—aligns with the development needs of the pharmaceutical industry, can consistently deliver value, and matches the industry's own growth potential.

First, let's examine industry demand. Biocytogen's antibody molecule supermarket was established against the backdrop of antibody drug development remaining time-consuming, labor-intensive, and fraught with high failure risks. Typically, drug development involves a complex process from target assessment and validation, antibody screening and preparation, lead identification and optimization, candidate compound selection and confirmation, in vitro and in vivo pharmacological and efficacy studies, CMC (Chemistry, Manufacturing, and Controls), to safety evaluation and clinical trials. The financial and time costs of trial and error in this process are extremely high. Data shows that the success rate from drug discovery to market approval in this journey is only 3.1%.

Meanwhile, existing antibody drug development remains relatively limited in target selection. Human understanding of biological signaling pathways and mechanisms is still incomplete, and the target landscape for antibody drugs is largely concentrated around well-researched major targets such as TNFα, PD-1/L1, and VEGF, which have been extensively studied in basic science. Many promising targets lack critical research data.

In a sense, the "RenBiologics" has upended traditional drug development logic by exploring a goal-oriented, start-from-the-end approach. Leveraging its deep expertise in animal models, Biocytogen proactively investigates a wide array of novel targets, generates corresponding antibody molecules, and evaluates their pharmacological and efficacy profiles, making them available for selection by pharmaceutical companies. These pre-screened antibody molecules function like finished or semi-finished products on supermarket shelves, significantly shortening the development timeline for antibody drug candidates and reducing associated risks. For the pharmaceutical industry, this addresses a genuine and pressing need.

Next, regarding the output of the RenBiologics. According to the prospectus, Biocytogen has entered into antibody molecule transfer, licensing, or co-development agreements with leading global and Chinese pharmaceutical companies including Merck (Germany), Gilead Sciences, IDEAYA Biosciences, Neurocrine Biosciences, Hansoh Pharma, Chia Tai Tianqing Pharmaceutical, CR Pharma, and RemeGen. Through these partnerships, the company receives upfront payments, milestone payments, and sales royalties following drug approval.

Furthermore, VCBeat has noted that Biocytogen has established a sub-brand for the "RenBiologics" initiative. In 2024, as the antibody business continued to expand, with collaborative projects exceeding 100 and the proportion of overseas clients steadily increasing, Biocytogen formally separated the "RenBiologics" initiative and its fully human antibody platform into an independently operated sub-brand of the same name. According to Biocytogen's plan, the RenBiologics sub-brand primarily focuses on several key business areas, including antibody molecule licensing, co-development partnerships, and the licensing of its RenMice fully human antibody/TCR discovery platform.

In fact, establishing sub-brands for mature business segments to operate independently is a longstanding practice at Biocytogen. In 2021, the company consolidated its largest business segment—target-humanized mice and cell models—along with traditional services such as customized gene editing, disease model mice, and in vivo pharmacodynamic evaluations under the sub-brand BioMice. Current operational data indicates that it was precisely after the independence of the BioMice brand that the corresponding business rapidly scaled up, becoming a stable revenue source. With the antibody development business, Biocytogen likely hopes to replicate the success achieved in the model animal segment.

Finally, there is market growth potential. The ultimate reach of the "RenBiologics" initiative as a solution for antibody drug development depends on the long-term demand within the antibody drug market. Currently, the global antibody drug market is expected to maintain sustained growth for the foreseeable future.

According to Frost & Sullivan statistics, the global antibody drug market reached USD 270.4 billion in 2024, with a compound annual growth rate (CAGR) of approximately 10.5% between 2019 and 2024. Based on structure and recognition patterns, antibody drugs can be categorized into monoclonal antibodies, bispecific antibodies, heavy-chain antibodies, nanobodies, antibody-drug conjugates (ADCs), and bispecific antibody-drug conjugates, among others. In recent years, different types of antibody drugs have alternately driven waves of development and licensing deal activity. It is projected that by 2031, the global antibody therapeutics market will further expand to USD 463.4 billion.

During this period, the Chinese antibody drug market has grown at an even faster pace. Statistics indicate that China's antibody drug market reached RMB 131.2 billion in 2024, with a CAGR of 35.4% between 2019 and 2024, significantly higher than the global market average. As more antibody drugs are included in the national reimbursement drug list (NRDL), the supply of biosimilars increases, and innovative antibodies are launched, the Chinese antibody market is expected to grow to RMB 448.5 billion by 2031.

In theory, accurately capturing market demand, gaining early user recognition, and benefiting from sustained end-market growth can provide a foundation for Biocytogen's continued profitability. However, whether Biocytogen can achieve genuine success under this new strategic narrative remains to be validated over time.