Recently, Prairie Pharmaceutical submitted its second main board listing application to the Hong Kong Stock Exchange, seeking to list under Chapter 18A rules. Just three months earlier, the company's core product PL-5 (pelaglanin spray, trade name Puyike) received official marketing approval from the National Medical Products Administration, becoming the world's first approved cananin-class antimicrobial peptide First-in-class (FIC) drug.

Records show that since 2018, Prairie Pharmaceutical has completed multiple rounds of equity financing, bringing in a number of industrial and financial investors including Chia Tai Pharmaceutical and Hillhouse-affiliated investments. After the completion of its Series D+ financing in February 2026, the post-investment valuation reached 2.505 billion yuan. However, behind the glossy FIC halo and capital backing, the company still faces numerous hidden concerns, including persistently tight cash flow, substantial redemption liabilities, a relatively short remaining lifespan for its core patents, and limited market space for its core product.

Cash Flow Emergency and Billion-Yuan Redemption Liability Hanging Overhead

From a financial data perspective, in 2024, 2025, and the first half of 2026, the company's operating revenue was 5.194 million yuan, 3.332 million yuan, and 2.192 million yuan respectively, all derived from peripheral businesses such as daily care products, with no revenue yet generated from its main business. Over the same periods, the company recorded net losses of 158 million yuan, 142 million yuan, and 85.24 million yuan respectively, accumulating total losses of approximately 385 million yuan over the two-and-a-half-year period. In 2025, the company's net loss narrowed by 10.6% year-on-year, primarily due to a decline in R&D investment after the core product PL-5 completed its NDA filing. R&D expenses were 80.725 million yuan in 2024 and dropped to 57.215 million yuan in 2025, a year-on-year decrease of 29.1%. In the first half of 2026, the company's net loss expanded by 28.5% year-on-year, mainly due to a significant increase in interest expenses on equity redemption liabilities, which reached 39.659 million yuan during the period.

Amid sustained losses, the company's cash flow is under significant pressure. As of June 30, 2026, the company's cash and cash equivalents balance was only 34.05 million yuan, totaling approximately 66.49 million yuan when including time deposits. In the first half of 2026, the company's net cash outflow from operating activities was 40.819 million yuan. At this burn rate, existing cash reserves can only cover approximately 8 months of operating expenses.

From a balance sheet perspective, as of June 30, 2026, the company's net liabilities reached 819 million yuan, placing it in a state of insolvency. Among these, the book balance of equity redemption liabilities was 1.082 billion yuan, accounting for more than 90% of total liabilities. According to a supplementary agreement entered into in November 2025, the equity redemption right was temporarily terminated one day before the first submission of the listing application to the Stock Exchange, but with restoration clauses attached. If the company fails to obtain listing approval within 24 months after the initial listing application submission, or if the listing application is rejected, returned, or withdrawn, or if the issuance is not completed within the approval validity period, all special rights will automatically be restored. Therefore, Prairie Pharmaceutical must complete the hearing, issuance, and listing within less than 18 months, or it will trigger share repurchase obligations. Given the company's current cash reserves and profitability, it is clearly unable to bear this repurchase payment.

From a valuation perspective, after the Series D+ financing in February 2026, the company's post-investment valuation was 2.505 billion yuan. In terms of valuation reasonableness, due to the unique characteristics of the innovative drug industry, some companies are still in early stages of development and have not yet achieved profitability. Their core value logic is often based on favorable future development expectations rather than current performance, making the commonly used price-to-earnings valuation method distorted. The price-to-R&D ratio is a key quantitative valuation metric introduced against this backdrop and can serve as a valuation reference for such companies. Based on the company's average R&D expenses for 2024 and 2025, Prairie Pharmaceutical's price-to-R&D ratio is approximately 36.3 times. Wind data shows that the median price-to-R&D ratio for 90 Hong Kong biotech companies listed under Chapter 18A rules is 21.09 times. The company's price-to-R&D ratio, without considering IPO premiums, is already above the industry median. From a pipeline value calculation based on the risk-adjusted net present value model, the rNPV of the PL-5 pipeline for burn and scald wound infection indication in mainland China is approximately 500 million yuan (detailed calculation process can be found in "Targeting the Wound Infection Market: How Much Is PL-5 Worth for Prairie Pharmaceutical, a Potential Hong Kong Listed Company?"), representing a significant gap from the company's current post-investment valuation.

Core Product Commercialization Faces Multiple Challenges: Compound Patent Nearing Expiry, Market Space May Be Limited

On the business side, the company's core product PL-5 is the world's first cananin-class antimicrobial peptide drug. Based on its "membrane discrimination mechanism" physical bactericidal action, it is theoretically less likely to induce bacterial resistance, and its clinical data against multidrug-resistant bacteria has also shown impressive results. However, it is worth noting that, according to the prospectus, the Chinese patent for the PL-5 core compound expired in December 2025, a full six months before the product received marketing approval in June 2026. The U.S. patent covering the same compound will also expire in October 2028. The compound patent was originally held by the University of Colorado, and Prairie Pharmaceutical obtained commercialization rights for Greater China and the United States through exclusive license agreements in May 2007 and December 2021, respectively. Currently, the company has arranged five Chinese formulation patents and one Japanese patent around PL-5, valid until 2041. However, the protection strength of formulation patents is inherently weaker than that of compound patents, as generic drug companies can circumvent formulation patents by changing dosage forms or routes of administration. Additionally, the U.S. Phase II clinical trial for PL-5 is not expected to be completed until the third quarter of 2028, highly overlapping with the expiration of the U.S. compound patent. This may create an awkward situation where the clinical trial is not yet finished but the patent has already expired, potentially significantly weakening the patent foundation for overseas commercialization of the product.

From a market space perspective, the company's prospectus cites Frost & Sullivan's data showing that "the 2025 China secondary wound infection drug market is approximately 900 million USD" to argue for PL-5's growth ceiling. In reality, within the 900 million USD overall market, systemic antibacterial drugs account for more than 70% and are the core treatment drugs for wound infections. Topical antibacterial drugs account for less than 30%, approximately 250 million USD, equivalent to about 1.8 billion yuan. Within this 1.8 billion yuan topical market, low-priced disinfectant and antiseptic products such as iodophor, alcohol, and silver sulfadiazine ointment account for more than 90% of usage. These products are priced below 10 yuan and are basic consumables for surgical dressing changes. As a new topical antimicrobial peptide drug, PL-5's target market is only a very small high-end niche segment within the topical market, and its actual audience and usage scenarios may fall short of expectations.

From a payment perspective, in surgical clinical pathways, topical antibacterial drugs have always played a supplementary role. Against the backdrop of the comprehensive implementation of DRG/DIP payment reform, hospitals exercise relatively strict cost control over auxiliary drugs, and high-priced auxiliary drugs may face challenges in hospital admission and prescribing.

In addition to PL-5, the company currently has three other drug candidates, two of which are in Phase I/II clinical trials and one in preclinical stage. Specifically, PL-3301 (oropharyngeal candidiasis) is expected to initiate Phase II clinical trials in September 2026, PL-18 (vulvovaginal candidiasis) is in Phase II clinical trials in the United States, and the remaining pipeline assets are all in preclinical stages. The overall pipeline echelon skews early-stage, and all indications are in niche segmented areas with limited market space for individual products, resulting in a relatively pronounced single-product dependency for the company.