Shaoyan New Drug stock hits daily limit down, company's latest response

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On March 17, Zhaoyan New Drug’s stock hit the daily limit down. According to news, shareholders Gu Xiaolei and their concerted persons plan to “clear out” their holdings.

In response, a staff member from Zhaoyan New Drug’s securities department told China Securities Journal that the sharp decline was mainly due to the news of the share reduction. The shareholders have been reducing their holdings, but this time the scale exceeded expectations, causing a significant market reaction.

Response to “full clearance” reduction

On the evening of March 16, Zhaoyan New Drug disclosed a plan for shareholder reduction of A-shares. Shareholders Gu Xiaolei and their concerted persons plan to reduce approximately 20.42 million and 10.32 million shares, respectively, within three months after the announcement, through Shanghai Stock Exchange’s centralized bidding, accounting for about 4.1026% of the company’s current total share capital.

The announcement states that Gu Xiaolei and their concerted persons currently hold about 20.42 million and 10.32 million A-shares, representing 2.7251% and 1.3775% of the company, respectively. These shares come from pre-IPO restricted shares and other sources such as capital reserve conversions. Gu Xiaolei and Gu Mifang are not controlling shareholders or actual controllers of the company. The reduction plan will not lead to a change in the company’s control.

“Apart from some shares obtained before the IPO, these shareholders have been important shareholders of the company before listing. The company’s current operations have not changed significantly,” the securities department staff told China Securities Journal.

One of the actual controllers made a large-scale reduction

Notably, on the evening of January 29, Zhaoyan New Drug announced that one of its actual controllers, Zhou Zhiwen, disclosed a reduction plan. From the date of announcement, within 15 trading days, he plans to reduce no more than 14.98 million shares through centralized bidding or block trades, representing no more than 20.0466% of his holdings and no more than 1.99873% of the company’s total shares at that time. As of January 29, 2026, Zhou Zhiwen had reduced 14.979 million A-shares via block and centralized trades and decided to terminate the plan early.

Zhaoyan New Drug’s 2025 semi-annual report shows that Zhou Zhiwen is married to Feng Yuxia, chairman of Zhaoyan New Drug.

Zhou Zhiwen is currently chairman of Shute Shen, a listed company on the A-share market.

Expected significant increase in net profit

The 2025 semi-annual report indicates that Zhaoyan New Drug has established a high-value-added industry chain, including unique non-clinical drug services, clinical drug services, related services, breeding and sales of high-quality experimental models, and custom gene editing models, providing one-stop premium services for clients.

The company’s earnings forecast shows that in 2025, revenue is expected to reach between 1.573 billion and 1.738 billion yuan, a decrease of 13.9% to 22.1% year-on-year. Net profit attributable to shareholders is projected to be between 233 million and 349 million yuan, a year-on-year increase of 214% to 371%. Of this, fair value changes of biological assets are expected to contribute 452 million to 499 million yuan; laboratory services and other businesses are expected to generate a net loss of 206 million to 130 million yuan.

Regarding this, the securities department staff told reporters that the company’s order situation in 2025 is positive, but revenue has declined mainly due to a lag between actual orders and revenue recognition. The large fluctuation in fair value of biological assets is mainly because, in recent years, the prices of monkeys were at historic lows. According to third-party evaluations in 2025, monkey prices have risen sharply, leading to a significant contribution to net profit from fair value changes of biological assets.

“The company’s monkeys are divided into breeding monkeys and experimental monkeys, mainly relying on breeding. They are kept separate and not used interchangeably. Breeding monkeys may age over time, but experimental monkeys generally do not have this issue. Overall, the company’s monkey stock has not changed significantly. Monkey prices were low in 2023 and 2024, but increased substantially in 2025, greatly contributing to net profit,” the staff explained.

Renowned economist and member of the Ministry of Industry and Information Technology’s Information and Communication Economy Expert Committee Pan Helin told China Securities Journal that domestic and international demand for crab-eating macaques and other monkeys in clinical trials remains strong, and many listed companies are beginning to develop monkey sources.

Bai Wenxi, vice chairman of the China Enterprise Capital Alliance, said that experimental monkeys are core assets for CRO companies and should be measured at fair value according to accounting standards. From 2020 to 2022, prices of experimental monkeys surged; although they declined after 2023, they remain high. After excluding non-recurring gains and losses, the sustainability of main business profits is uncertain. Therefore, whether Zhaoyan New Drug’s investment logic is sustainable remains questionable.