A recent IPO filing from Guangzhou Zhiyi Bio-Technology Co., Ltd. (referred to as "Zhiyi Bio") marks another 18A biotech company seeking a Hong Kong listing. Notably, the company is focused on the emerging field of Live Biotherapeutic Products (LBPs), a sector where no second-generation products have been approved in China. If its core product successfully reaches the market, it could represent a significant breakthrough. Public records show the company has completed eight funding rounds, attracting participation from prominent investors including Shenzhen Capital Group, Hongtu Venture Capital, Qidi Jinxin, Tsinghua Holdings Capital, and SDIC Venture Capital. In a Series C-3 financing round in March 2026, Qingdao Tian'anma and Zhuhai Lehong invested at a price of 45.74 yuan per share, resulting in a post-investment valuation of 1.403 billion yuan.

From a pipeline perspective, Zhiyi Bio demonstrates advanced research progress and a clear differentiation strategy. However, as a pioneer in this field, the company must navigate the uncertainties of regulatory review, the challenges of commercialization, and the prolonged process of market education. The key question remains whether the secondary market will be convinced by the risks and potential of this first-mover as the company pursues its IPO.

Subsidy Decline and Growing Profit Pressures

According to its prospectus, Zhiyi Bio is a clinical-stage biopharmaceutical company specializing in LBPs, targeting gastrointestinal diseases, oncology, cancer treatment-related complications, metabolic disorders, and autoimmune diseases. For the fiscal years 2024 and 2025, the company reported revenues of 721,000 yuan and 2.407 million yuan, respectively, primarily from research and development services and probiotic raw material sales, totaling less than 3.13 million yuan over two years. During the same periods, gross profits were 298,000 yuan and 231,000 yuan, while net losses reached 63.998 million yuan and 69.393 million yuan, resulting in cumulative losses exceeding 130 million yuan. With its core product yet to receive marketing approval, the company is advancing its next-generation probiotic (NGP) business as a dual-drive strategy. Its proprietary AKK AM06™ strain, derived from healthy human breast milk, is one of the first and only two FDA-recognized AKK strains from human milk. Akkermansia muciniphila (AKK), a representative strain in the NGP field, has abnormal abundance linked to various metabolic diseases and has been approved as a novel probiotic ingredient in Europe and North America, with rapidly growing market acceptance and scale. However, the company acknowledges that its R&D services and NGP raw materials are not core businesses and are insufficient to support operations. In 2024, 94.4% of its "other net income" came from government subsidies (approximately 21.97 million yuan), which dropped to 8.164 million yuan in 2025, a decrease of 13.806 million yuan. As subsidies decline, the company has reduced spending, with R&D expenses falling from 67.57 million yuan in 2024 to 61.941 million yuan in 2025, and general and administrative expenses decreasing from 19.307 million yuan to 15.838 million yuan. As of April 30, 2026, the company held 49.065 million yuan in cash and cash equivalents with no bank loans.

Multiple World-First Innovative Drugs in the Pipeline

Zhiyi Bio, focused on the LBP field, has built a portfolio of six drug candidates, including its core product SK08, a key product SK10, and four other products covering gastrointestinal diseases, oncology, cancer treatment-related complications, metabolic disorders, and autoimmune diseases. However, most products are still in preclinical or early clinical stages. Core product SK08 is a live biotherapeutic based on Bacteroides fragilis, primarily targeting diarrhea-predominant irritable bowel syndrome (IBS-D), and is currently in Phase III clinical trials. According to Frost & Sullivan certification, SK08 is the first Bacteroides fragilis LBP to enter clinical trials globally, the only biological drug in late-stage clinical development for IBS-D worldwide, and the first LBP to receive registration clinical trial approvals from both China's NMPA and the U.S. FDA. If approved, it could become the first marketed product for this indication. IBS is a common chronic functional gastrointestinal disorder, with IBS-D accounting for approximately 70% of IBS patients. In 2025, the number of IBS patients in China reached 165.8 million, with a diagnosis rate of 25.0%. The Chinese IBS-D drug market was valued at 4 billion yuan in 2025 and is expected to grow to 5.1 billion yuan by 2030. Among the seven clinical-stage IBS candidates in China, only two have entered Phase III, both targeting IBS-D, with SK08 being the only biological therapeutic, offering a differentiated advantage. However, while Phase II trials showed SK08 achieved dual endpoints of improved abdominal pain and diarrhea symptoms with good safety, the sample size was limited, and the reproducibility of these results in larger Phase III trials remains uncertain. IBS-D, as a functional gastrointestinal disorder, involves subjective symptom assessments and generally high placebo effects, adding to clinical success variability. The company expects SK08's Phase III trial to complete enrollment by Q3 2027, with the primary efficacy endpoint evaluation in Q4 2027 and an NDA submission in the second half of 2028. Beyond IBS-D, SK08 is being developed for four additional indications: pediatric rotavirus diarrhea (has received Phase II approval, expected to start in Q3 2027), ulcerative colitis (China and U.S. Phase II approvals received, expected to start Chinese trial in Q4 2027), and combination with PD-1/L1 for advanced solid tumors (previous IND expired, planned to resubmit and start in Q4 2028). The pediatric rotavirus diarrhea indication is the only LBP candidate in clinical stages globally, and the solid tumor indication is the first live biotherapeutic approved for a registration clinical trial in oncology patients in China.

Zhiyi Bio's other key product, SK10, is an orally administered inactivated LBP based on a novel Bacteroides fragilis strain developed in-house, designed to prevent and treat chemotherapy-induced diarrhea (CID). According to Frost & Sullivan, SK10 is the first Bacteroides fragilis-based LBP candidate to receive FDA approval for clinical development and the first LBP candidate globally for CID. CID is a common and challenging adverse reaction in cancer treatment, potentially leading to dose reduction, delays, or discontinuation, and can be life-threatening in severe cases. Currently, no globally approved drugs specifically treat or prevent CID, and existing supportive care has safety issues and lacks preventive interventions, representing a long-unmet clinical need. SK10 precisely targets these pain points with multiple advantages: it has a lower adverse reaction rate compared to live bacterial preparations, making it suitable for immunocompromised cancer patients; it can be stored and transported at room temperature, reducing costs; and it can be administered prophylactically before or during chemotherapy, shifting from symptom management to active prevention. SK10 has completed Phase I clinical trials in the U.S., with 50% of participants being of Chinese descent. All adverse events were mild, with no moderate or severe events or serious adverse events, demonstrating good safety and tolerability. The company plans to initiate a Phase II trial in China in Q4 2026, with a U.S. Phase II trial expected to start in 2028 and complete in 2029. Additionally, the company has four preclinical drug candidates, including TP2 for autoimmune diseases, SK16 for oral mucositis, SK12 for atopic dermatitis and psoriasis, and ZY19 for metabolic diseases.

Navigating the Emerging LBP Field: Commercialization Challenges Ahead

LBPs, also known as live bacterial drugs or next-generation probiotics, are active microbial preparations made from normal microorganisms or their promoting substances. Before 2010, first-generation LBPs, such as Bifidobacterium quadruple viable tablets, were widely used in China but lacked a unified regulatory definition, mostly remaining at the level of traditional microecological preparations without clear indication targeting or systematic clinical validation. In recent years, as LBP indications have expanded from traditional gastrointestinal diseases to oncology, metabolic, and neurological disorders, and from clinical prescriptions to out-of-hospital management, this field has become a high-potential niche in the global biopharmaceutical industry. However, even if SK08 progresses smoothly in clinical trials, Zhiyi Bio faces multiple challenges in transitioning from R&D to commercialization. On the production side, manufacturing LBPs is far more complex than traditional drugs, involving issues of strain stability, live bacteria content control, contamination prevention, and cold chain storage and transportation, making batch-to-batch consistency difficult to achieve. To address this, Zhiyi Bio has built a 5,000-liter fermentation production line meeting GMP standards, capable of producing approximately 15 million sachets of powder and 100 million capsules annually. It has also broken through technological bottlenecks in high-density fermentation of anaerobic and aerobic bacteria, achieving fermentation densities of up to 10¹⁰ CFU/mL. Additionally, its proprietary freeze-drying and formulation processes solve room-temperature storage challenges, ensuring product stability, reducing reliance on the cold chain, and helping to expand market coverage while lowering logistics costs. On the commercialization front, as a pioneer of second-generation LBPs in China, Zhiyi Bio holds a first-mover advantage in R&D and market entry. However, the current regulatory and review policies are still evolving, and there is significant uncertainty regarding whether SK08 will be successfully approved, the scope of its indications, and whether its pricing can be included in medical insurance. Furthermore, the concept of "bacteria as medicine" is poorly understood among clinicians and patients, and the challenge of market education should not be underestimated. As of now, globally, four second-generation LBP products have been approved, with nine in late-stage development (Phase III and above). In China, 17 LBPs have been approved for marketing, but all are first-generation products launched before 2010, while 16 second-generation products are still in clinical stages. On the medical insurance payment side, several mainstream drugs for IBS-D, such as alosetron hydrochloride, loperamide hydrochloride, and montmorillonite powder, are already included in medical insurance at low prices. As an innovative biological drug, SK08's higher pricing will directly impact market penetration. Additionally, the significant price reductions typically associated with innovative drugs entering centralized procurement will continue to pressure the company.

With a global first-in-class core product in Phase III clinical trials, Zhiyi Bio could become the "first LBP stock" if it successfully lists on the Hong Kong Stock Exchange. However, while the story is compelling, the nature of innovative drugs is characterized by long-cycle assets, from clinical trials to market approval and sales ramp-up, each step requiring time to validate. Whether Zhiyi Bio can truly become a pioneer in this field remains to be seen through ongoing market observation.