Ammunition Life-tech has commercially launched five diagnostic tests for various types of cancer but could struggle to win over investors at an elevated valuation

Key Takeaways:

• The company's combined losses over the past two years were nearly four times its revenues, as R&D and admin costs outpaced income
• The company's valuation after its last funding round in January, implying a price-to-sales ratio of 147 times, could be hard to reach in current conditions

Screening for early signs of cancer has long been regarded as a potentially large and lucrative business. But companies in the sector face high barriers to entry, heavy costs and long development cycles before they can turn that promise into hard cash.

The rewards for success could be substantial – the global market for molecular testing for cancer has been projected to reach 405 billion yuan ($59 billion) by 2033. But for now, some Chinese companies are having a hard time in the equity markets as they struggle to close the gap between ambition and achievement.

Against this backdrop, a company specializing in detecting some of the most lethal forms of cancer is making a second attempt to list on the Hong Kong Stock Exchange, filing a revised application on April 7.

Although its net losses widened by more than a fifth last year, Wuhan Ammunition Life-tech Co. Ltd. resubmitted its paperwork just days after its initial IPO filing lapsed, moving swiftly as the Hong Kong stock market faced a downward correction. CCB International and BOCOM International were named as joint IPO sponsors.

Founded in 2015, the company focuses on methylation technologies to detect cancer biomarkers in tissue or blood samples. It has brought five products to the market, including two core tests to detect cancers of the liver and urethra.

The first of those, IHepcomf, is the world's first such test using a real-time quantitative polymerase chain reaction, the company said. The other core product, IUrisure, tests for cancer using urine samples.

The other three approved products screen for colorectal cancer and esophageal cancer. Ammunition Life-tech has another four candidate tests in developmenttargeting lung, gastric and endometrial cancers.

According to the prospectus, its revenues more than doubled to 15.42 million yuan in 2025, driven by newly approved products, while its gross margin surged to about 78% from 56.9% in the previous year.

The new tests for liver cancer and esophageal cancer were both approved for sale in January 2025, contributing a combined 44.1% of total revenue. IColohunter, a blood test to detect early-stage colorectal cancer that was approved in September 2024, contributed another 18.4%. However, revenue from IColocomf, a stool test for colorectal cancer, fell 12.4% to 4.58 million yuan.

Despite the overall revenue surge, Ammunition Life-tech's net losses widened by 26.8% in 2025 to 48.98 million yuan. Combined losses for 2024 and 2025 reached nearly 88 million yuan, almost four times the revenue of 22.66 million yuan over the same period, as the company burned through cash to expedite growth. R&D expenses rose nearly 42% in 2025 to just under 21.30 million yuan, while general and administrative expenses surged 247% to 20.05 million yuan.

These included 8.5 million yuan in IPO-related fees and 6.4 million yuan in share-based compensation. The company also warned in its prospectus that high R&D expenses and other costs will keep it stuck in the red in 2026.

Cooling sentiment

As Ammunition Life-tech makes its bid for investor funding, the sector in which it operates has had a troubled relationship with the capital markets over the last two years. New Horizon Health (6606.HK), formerly an industry benchmark with a market value of HK$41 billion ($5 billion) at its peak, has been suspended from trading since March 2024 over allegations of financial misconduct and now faces the risk of delisting. Meanwhile, Genetron Health accumulated losses exceeding 5.5 billion yuan from 2018 to 2022 and was taken private and delisted in 2024. Burning Rock Biotech (BNR.US) was slapped with a Nasdaq delisting warning after its share price stayed below $1 for an extended period. The firm cut about 18% of its workforce in 2024 to control costs and carried out a 1-for-10 reverse stock split, nudging its share price above $1 to narrowly maintain its listing.

In this context, Ammunition Life-tech is set to face a stiff test of investor confidence, with annual revenue of just 15.42 million yuan.

The risk of a concentrated customer base has also been rising year by year, with much of the firm's business coming from related parties. Income from its top five customers rose from 69.3% to 76.6% of total revenue between 2023 and 2025. Its biggest client in 2024 was Wuhan Ainuo Medical Laboratory, a company owned by Ammunition Life-tech's founder Zhang Lianglu. Ainuo contributed around 52% of the company's revenue that year, or 3.77 million yuan.

Although Ainuo's contribution dropped to 17.2% in 2025, the largest customer that year, KingMed Diagnostics, is linked through one of its major stakeholders, Liang Yaoming, who also controls Suzhou Jinhe, a shareholder in Ammunition Life-tech. This suggests that a substantial portion of the company's revenue still depends on related parties or customers with equity ties.

Ammunition Life-tech was valued at around 2.2 billion yuan in its last funding round in January 2026, implying a price-to-sales ratio of 147 times based on its 2025 revenue of 15.42 million yuan. By comparison, New Horizon Health's peak market value before its trading suspension translated into a price-to-sales ratio of about 20 times. An elevated multiple for Ammunition Life-tech would be a hard sell during a broader downturn in the cancer detection sector. It remains to be seen whether a company with no clear profit timeline can find favor with investors under these conditions.

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Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.