The company says its new tie-up with Dekai Pharma involving its KX-826 hair-loss treatment could be worth 100 million yuan in sales

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Key Takeaways:

• Kintor shares rallied more than 8% in the three trading days after announcing a marketing partnership for its hair loss treatment
• The company began as a cancer treatment specialist, but has abandoned that business and is rebranding as a maker of more mainstream skin and hair loss treatments

It's all in the marketing. That's the lesson that Kintor Pharmaceutical Ltd. (9939.HK) has learned, and that it's been teaching investors, over the last two years, as it shifts from its original focus on cutting-edge cancer treatments to more mundane cosmetics. While the cancer drugs were sexier and grabbed greater attention from the medical community, they were far costlier to develop and also had a more limited market.

By comparison, the hair-loss, acne and skin whitening businesses that Kintor is now pursuing all have huge markets with millions of potential customers in China alone. What's more, products from those categories can be sold as either cosmetics or drug treatments, involving different sales channels and regulatory approval processes.

Kintor appears to be taking advantage of that duality in its announcement last week of a new marketing partnership for KX-826, its hair-loss treatment. The partnership is with Beijing Dekai Pharmaceutical Technology, a specialist in hair loss treatments involving minoxidil, the active ingredient in the popular Rogaine. In this case, the partnership appears set to market the KX-826 combination with minoxidil as a cosmetic treatment and not a drug.

Still, Kintor's ongoing clinical tests for KX-826 could be reassuring for Dekai, showing the treatment is effective. In May last year, Kintor said a clinical observational study in China of KX-826 in combination with minoxidil for treatment of male adults with androgenic alopecia (AGA), a type of hair loss that can affect both men and women, reached its primary endpoint.

While previous questions have been raised about the efficacy of KX-826, this latest partnership, involving a foam product using the product, seems to at least show the treatment has commercial potential. In its announcement, Kintor points out that Dekai has served more than 25 million chronic disease users, mostly male. It adds that Dekai's sales revenue for a single product, in this case presumably its version of minoxidil, exceeded 100 million yuan ($14.4 million). Dekai also has strong sales channels for such drugs, including collaborations with more than 2,000 pharmaceutical companies across China, according to Kintor.

And perhaps most importantly, the latest announcement contains a potential figure for sales that Kintor believes it could get from the partnership. It says that following the signing of the partnership, its "anti-hair loss foam product is expected to achieve leapfrog sales growth, striving to realize the sales target of exceeding 100 million yuan."

While Kintor doesn't give a timeframe, we could assume it means either 100 million yuan this year, or perhaps 100 million yuan in annual sales going forward. Either way, the figure is significant for Kintor as it tries to rebuild its top-line revenue. That figure stood at nil as recently as 2023. It rose to a tiny 5 million yuan in 2024 as the company began to market some of its products as cosmetics under the Koshine brand name.

The revenue figure was still quite small, at just 6 million yuan in the first half of last year, as Kintor set about the difficult task of building the Koshine name on its own using popular channels like Tmall and Douyin in China, and Amazon in the U.S.

Growing stock

The shift to cosmetic products, while continuing to focus on clinical trials to prove their efficacy as potential drug treatments, has provided some strong medicine for Kintor's own ailing stock. The shares have more than tripled over the last 52 weeks, including an increase of nearly 50% this year. The stock rose 8.6% in the three trading days after the latest partnership announcement, providing fresh momentum to the company's comeback story.

Still, we should note the shares are still down about 85% from their IPO price in 2020 when Kintor raised $240 million and was still a hotshot cancer drug specialist. Even after its latest rally, the company has a market value of just $175 million, less than what it raised during those headier times. It still lists its cancer drugs in its regular financial updates, but their development appears to be frozen as it focuses on its newer cosmetic products.

Clinical trials for such cosmetic-use products are far less costly than for cancer drugs, which is important as the company's cash runs dangerously low. It had just 53 million yuan at the end of last June, plus another 30 million yuan in unused bank facilities. It also raised an additional HK$50 million ($6.4 million) in a share placement last November as its stock was rallying.

Meantime, the company is still losing lots of money, including an 83.3 million yuan loss in the first half of last year. A big part of that came from R&D spending, which totaled 48.6 million yuan in the first half of last year, as the company races against time to get its products approved for medical treatments to complement their cosmetic uses.

In addition to the KX-826 hair loss treatment, Kintor's other two main products are GT20029, an acne treatment, and KT-939, a raw material used for skin whitening and freckle removal. Those treatments are currently available for cosmetic use, which requires far less rigorous testing than for use as drugs. KX-826 is currently in Phase 2 and Phase 3 clinical trials, while GT20029 is in Phase 2 trials, according to the company's latest financial reports.

The market opportunity for such cosmetic products is huge, reflected by a recent explosion in new listings by skincare companies. Two of the latest from that group, Dream Garden and HBN Technology, filed this month for Hong Kong IPOs, joining around a half-dozen similar companies already listed in Hong Kong and on China's domestic markets in Shanghai and Shenzhen.

Kintor still faces some challenges rebuilding its business, and investors will be watching its annual report due out in March for signs that its revenue is improving and for any signals of when it can become profitable. The latest partnership certainly seems to signal it's moving in the right direction, and its surging stock seems to show that investors are buying into its regeneration story – at least for now.

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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.