The cash-strapped biotech has begun generating its first revenue from over-the-counter cosmetic treatments, as it pivots away from its original oncology drugs

Key Takeaways:

• Kintor Pharma is shifting from its origins as a cancer drug specialist with its latest two products for freckle-removing and hair loss treatments
• The company has generated its first revenue from over-the-counter cosmetic treatments, but is also continuing clinical trials for its hair loss drug

Talk about cosmetic makeovers.

When Kintor Pharmaceutical Ltd. (9939.HK) made its Hong Kong IPO in May 2020, the Suzhou-based biotech firm had two potential winners in its pipeline, with clinical trials underway for its cancer and hair-loss treatments. The company was developing proxalutamide for treatment of late-stage prostate cancer, forecasting the China market for the drug could be worth an estimated 21.3 billion yuan ($2.95 billion) by 2025. It also had big hopes for a hair loss drug in development, hoping to enter a market dominated by Johnson & Johnson's (JNJ.US) minoxidil and Merck & Co.'s (MRK.US) finasteride, tapping into a Chinese hair loss market worth 3.1 billion yuan, according to its prospectus.

Fast forward to the present, when the company's approach is undergoing a big shift. Kintor has given up on proxalutamide. What's more the company's latest annual report for 2024, released in April, shows it has virtually shut down its R&D division for oncology research.

Its current direction is reflected in a more recent announcement last week, where it disclosed that it has begun to commercialize KT-939, a "functional raw material" for skin whitening and freckle-removing cosmetics. According to data from the China Association of Fragrance Flavor and Cosmetic Industries, cited by Kintor, the global market for such cosmetic materials was worth $50 billion in 2023 and is expected to rise to $60 billion by 2030.

Sales of such products in China were worth 61.9 billion yuan in 2023, Kintor said, citing the association's data. "In the multi-layer layout of the cosmetic raw material market, functional raw material is its core composition," the company said.

Shares of Kintor briefly jumped by 8% the day after last week's announcement, though they later gave back most of that to close up less than 1%. The announcement seemed to confirm Kintor's turn away from the marathon exercise of pushing drugs through clinical trials required to receive regulatory approval.

In addition to KT-939, Kintor is also working on KX-826, a hair loss treatment. It already sells KX-826 in an over-the-counter product called Koshiné, and is also working on clinical trials that, if successful, would give the treatment more credibility as a prescription drug.

In 2024, the company recorded its first revenue of 5 million yuan from Koshiné, whose web page describes the treatment a "cosmetic brand." KX-826 is also currently undergoing clinical trials for treatment of androgenic alopecia (AGA), a type of hair loss that can affect both men and women.

On May 2, the company announced that a clinical observational study for KX-826, used in combination with minoxidil, for treatment of AGA had reached its "primary endpoint," paving the way for the design of new trials. The results were positive but not exactly huge cause for celebration, saying the study showed a slight advantage to a group that received the combined minoxidil and KX-826 treatment, compared with another group just receiving minoxidil.

Dwindling cash

How the company will fund an envisioned phase three trial for the minoxidil and KX-826 combination, potentially involving thousands of volunteers, is another question. Kintor has been burning through cash for years and is unlikely to attract much interest from investors if it tries to raise new funds by issuing new shares. At the end of last year, it had just 147.4 million yuan in cash, down sharply from 456.3 million yuan at the end of 2023.

Regulatory approval for KX-826 as a prescription drug treatment would put Kintor in the big leagues with only two global competitors. But such approval is by no means guaranteed. For now, according to its annual report, the company is focusing on less capital-intensive cosmetic products. It has offered six such products, including Koshiné, as well as an acne cream based on KX-826 and a whitening essence and lotion based on KT-939, since the beginning of 2025.

The company is using popular social media channels, including Tmall, JD.com, Douyin and Xiaohongshu in China, and Amazon.com internationally, together with its own online sales platform to market the over-the-counter cosmetic treatments. Needless to say, both cosmetic hair loss and whitening products have numerous competitors in both China and globally in the lightly regulated over-the-counter market, and it's not clear what competitive advantage Kintor's products would have.

While its revenue from over-the-counter treatments is still quite small, a more telling number was the 91.7% decrease in Kintor's R&D costs from 938.9 million yuan in 2023 to just 78.1 million yuan last year, reflecting its transition into less cost-intensive cosmetic treatments. That helped the company pare its annual loss by 85.4% to 155 million yuan last year from 1 billion yuan in 2023. The company attributed the big drop in R&D spending to its "increasing focus on investments in core dermatology pipelines KX-826 and GT20029, which have much lower costs compared to oncology pipelines." GT20029 is a topical compound for treatment of AGA.

In jumping into the non-prescription hair loss market, Kintor is joining an increasingly crowded field whose members include Cutia Therapeutics (2487.HK)and Yonghe Medical (2279.HK). Shares of Cutia, which sells a spray for AGA called CU-40102, are down 72% from their June 2023 IPO, while shares of Yonghe Medical, which provides hair transplants and restoration, are down nearly 93% from their market debut at the end of 2021.

Kintor is in the same ballpark, with its shares now down more than 90% from their IPO price. The stock has also defied the broader market for drug stocks, down 2.7% over the last year compared with a 16.5% rise over that time for the Hang Seng Health Care Index.