Hangzhou Tangji Medical Technology Co., Ltd. has recently filed its second application for a mainboard listing on the Hong Kong Stock Exchange, aiming to list under the 18A biotech company rules, with ICBC International and CMB International Capital serving as joint sponsors. Founded in 2016, Tangji Medical's core product is the world's first commercially approved gastric bypass stent system (GBS). The GBS is a minimally invasive medical device developed for treating obesity, consisting of a bendable, retrievable sleeve-shaped stent placed via endoscopy that creates an impermeable barrier between gastric chyme and the intestinal mucosa of the duodenum and proximal jejunum, reducing nutrient absorption and promoting hormonal regulation to achieve weight loss. The product received market approval in January 2024 through the innovative medical device special review process. However, a review of the prospectus and related materials reveals that the company still faces numerous challenges, including pronounced single-product dependence, strong patient diversion toward GLP-1 drugs, persistent cash flow pressure, and substantial hidden contingent liabilities of the company's actual controller. In the fiercely competitive weight-loss market, Tangji Medical's IPO path may not be smooth.

Persistent Net Cash Outflows and Off-Balance-Sheet Redemption Rights Raise Governance Concerns

From a financial perspective, Tangji Medical recorded revenues of RMB 12.709 million, RMB 32.21 million, and RMB 23.69 million for 2024, 2025, and the first half of 2026 respectively, with 2025 full-year revenue growing 153.4% year-on-year and the first half of 2026 growing 91.4% year-on-year, maintaining a rapid growth trajectory. Net losses during the same periods reached RMB 65.957 million, RMB 88.33 million, and RMB 68.327 million respectively, with loss growth significantly outpacing revenue growth, accumulating total losses of RMB 223 million over two and a half years. As of end-June 2026, the company's accumulated undistributed losses exceeded RMB 440 million. The core driver of expanding losses is the rapid inflation of period expenses, which have consistently remained at more than three times revenue levels. In 2024, the company's three core expenses—selling and marketing, administrative, and R&D costs—totaled RMB 75.455 million, equivalent to 5.9 times revenue; in 2025, these combined expenses rose to RMB 117 million, or 3.6 times revenue; in the first half of 2026, the three expense categories totaled RMB 85.883 million, still 3.6 times revenue. Amid sustained losses, Tangji Medical's operating cash flow has continued to record substantial net outflows, with solvency under pressure. Net cash flows from operating activities were RMB -43.568 million and RMB -72.938 million in 2024 and 2025 respectively, totaling RMB 117 million in net outflows over two years. In the first half of 2026, operating cash flow net outflows reached RMB 55.97 million, expanding 61.4% from RMB 34.672 million in the same period of 2025. As of end-2024 and end-2025, the company's current assets were RMB 26.402 million and RMB 65.523 million respectively, while current liabilities were RMB 93.075 million and RMB 105.751 million, resulting in current ratios of only 0.3 and 0.6. As of end-September 2025, the company's short-term interest-bearing bank borrowings reached RMB 75.04 million, with total liabilities of RMB 106 million against total assets of just RMB 77.751 million, yielding a debt-to-asset ratio as high as 136%, at one point leaving the company in a state of insolvency. Founder Zuo Yuxing personally provided guarantees for certain bank loans of the group, with maximum guarantee liability reaching RMB 103 million as of end-September 2025. Between November 2025 and June 2026, Tangji Medical raised approximately RMB 225 million through a Series C+ financing round, bringing book cash and cash equivalents back to around RMB 160 million and temporarily alleviating immediate liquidity concerns. However, based on the current annual operating cash flow net outflow rate of approximately RMB 70-80 million, existing funds can only sustain company operations for about two years.

Regarding historical evolution, according to a series of shareholder agreements signed between December 15, 2016, and November 18, 2025, multiple pre-IPO investors were granted special shareholder rights including redemption rights personally awarded by founder Zuo Yuxing. Subsequently, a supplementary agreement signed in December 2025 stipulated that these redemption rights would terminate one day prior to the initial filing of the listing application with the Hong Kong Stock Exchange. The terms explicitly state that Tangji Medical itself has not provided any guarantee, backstop, or commitment for the founder's performance obligations under these redemption rights. Based on this arrangement, the company did not recognize these redemption rights as financial liabilities during the reporting period and did not present them on the balance sheet. Many innovative companies in the Hong Kong 18A track have book insolvency primarily because investor redemption rights in shareholder agreements are recognized as financial liabilities. However, Tangji Medical's situation is completely different—the redemption obligation rests with founder Zuo Yuxing personally, not with Tangji Medical, and the company bears no joint or several guarantee liability. Nevertheless, this arrangement still carries hidden risks. Although not reflected on the company's financial statements, it constitutes a significant contingent liability at the founder's personal level. Should redemption-related disputes arise in the future, investors pursuing Zuo's personal assets could trigger risks such as equity pledges, indirectly affecting the stability of founder shareholding.

Pronounced Single-Product Dependence and Limited Addressable Patients Challenge Commercial Value Realization

In terms of operations, Tangji Medical's core product, the gastric bypass stent system (GBS), received approval in January 2024 through the National Medical Products Administration's innovative medical device special review process, becoming China's first Class III innovative medical device for endoscopic treatment of obesity. Leveraging its first-mover advantage, GBS rapidly entered hospital networks nationwide, driving the company's rapid revenue growth. Prospectus data shows that in 2024, 2025, and the first half of 2026, GBS product revenue accounted for 99.9%, 99.6%, and 99.7% of total revenue respectively, nearly supporting the company's entire revenue base. In terms of sales structure, GBS completed 239 commercial placement procedures in 2024, rapidly growing to 2,066 procedures in 2025, and reaching 1,955 procedures in the first half of 2026, approaching the full-year 2025 level. Despite rapid placement growth, relative to China's massive base of 233.7 million obese patients, the cumulative placement volume of over 5,200 procedures remains at an extremely early stage of market penetration, and the pace of subsequent penetration rate improvements remains to be observed.

Furthermore, as an intermediate route between pharmacological treatment and surgical intervention, endoscopic weight-loss devices compete on the premise of more durable effects than drugs and less trauma than surgery. However, the significant price reductions and product iterations of GLP-1 drugs are squeezing the survival space of endoscopic weight loss from both price and efficacy angles. On pricing, a single GBS treatment costs approximately RMB 30,000-50,000 at the terminal, while annual treatment costs for mainstream GLP-1 drugs have fallen to RMB 10,000-20,000. Following the expiration of semaglutide's core patent in March 2026, domestic generic versions are entering the market in force, with expected annual treatment costs further declining to below RMB 5,000—only about one-tenth the price of GBS. On clinical data, the weight-loss efficacy of next-generation GLP-1/GCG dual-target drugs (such as tirzepatide) has approached 20%, narrowing the gap with GBS's approximately 25% weight-loss effect. Moreover, drug therapy requires no surgery, is non-invasive and painless, can be discontinued anytime, and offers far higher patient compliance than interventional treatment. In contrast, endoscopic weight-loss procedures suffer from low awareness, high costs, and invasiveness, making market education difficult and commercial value realization potentially highly uncertain.

More critically, the stepwise treatment pathway and priority ordering for obesity have long been clearly defined in both domestic and international authoritative guidelines, with endoscopic interventional therapy consistently positioned downstream of pharmacological treatment. Domestically, the National Health Commission's officially released "Obesity Diagnosis and Treatment Guidelines (2024 Edition)" and "Weight Management Guiding Principles (2024 Edition)" explicitly designate GLP-1 receptor agonists and other weight-loss drugs as first-line medical treatment options; bariatric and metabolic surgery is recommended only for patients with BMI ≥ 32.5 kg/m², or BMI ≥ 27.5 kg/m² with comorbidities where medical treatment has failed. Additionally, recommended surgical approaches include SG, RYGB, OAGB, and other procedures supported by high-level clinical evidence, while other surgical methods, including certain "sleeve-plus" procedures and endoscopic treatments such as endoscopic sleeve gastroplasty and endoscopic gastric bypass stent placement, are permitted only for clinical exploration after approval by medical ethics committees. Consequently, interventional devices like GBS can only access the niche patient population where drug therapy has failed, significantly compressing the market space and potentially limiting growth ceilings.

To break the single-product dependence, Tangji Medical has built a pipeline of 13 investigational products covering fatty liver disease, diabetes, intragastric balloons, and other directions. However, most products remain in early-stage development, far from commercial realization, and unlikely to replace GBS as a new growth engine in the near term. Among them, GBS-SH targets metabolic dysfunction-associated steatohepatitis (MASH), has received FDA Breakthrough Device designation, and is planned to initiate early feasibility studies in Europe in the second half of 2026; GBS-DM targets obesity with type 2 diabetes, currently in the first-in-human stage domestically, with FIH study completion expected in the second half of 2027. Beyond the GBS platform, the company is developing a biodegradable intragastric balloon (DIGB), with key clinical trial enrollment 70% complete and trial completion expected in 2027. However, intragastric balloon technology is not novel, with multiple domestic and international companies already active in this space, creating a highly competitive market where Tangji Medical's differentiation advantages are not pronounced. Other pipeline products, including radiofrequency ablation catheter RAC, electronic gastroscopes, and endoscopic retrieval kits, are either supporting devices or address limited market space, unlikely to become new growth engines. The digital health management platform and clinical nutrition products have been launched but contribute negligible revenue, serving primarily as supporting services for the core product.