Cash-strapped Sirnaomics seeks lifeline in cosmetic treatments

The biotech is suing its former CEO over an ill-fated $20 million investment as it pursues a short-term pivot from skin cancer drugs to body-contouring therapies 

Key Takeaways:

• After the investment woes, loss-making Sirnaomics faces a financial squeeze that, according to its auditor, puts a question mark over its long-term survival
• The company is seeking to boost its finances by redirecting research towards fat-reduction therapies, but the commercial prospects remain highly uncertain

By Molly Wen

In a fall from grace that took less than five years, the founder of Sirnaomics Ltd. (2257.HK) lost control of the biotech and is now being sued by the company.

On Aug. 14, Sirnaomics filed suit against its onetime leader and biggest shareholder Lu Yang, along with other two other former executives, over a $20 million investment in an offshore fund that went sour.

The former boss and his ex-colleagues Xiaochang Dai and Yip Wing Kei are accused of breaching their fiduciary duties in deciding to buy shares worth $15 million in TradArt Flagship Investment SPC in 2022 and committing another $5 million the following year. With only $23.88 million in cash and cash equivalents at the end of 2023, the biopharmaceutical firm had invested the equivalent of about 80% of its reserves.

But when the company tried to redeem its shares in April 2024, it found the fund’s net asset value had plummeted. Three months later, the company warned that an issuer of debts in the fund was at risk of default. By that point, Sirnaomics had clawed back only $200,000 of its cash. An independent investigation found that the required due diligence and risk analysis had not been carried out beforehand, with only a background check conducted on the investment manager. It also established that alternative investment options had not been considered, nor had information about the fund and its holdings been disclosed to the board.

After the investment went awry, Sirnaomics did not immediately pursue the executives responsible for the decision but instead carried out sweeping management changes. Dai resigned as chief strategy officer in May, while Yip stepped down as chief financial officer. Lu relinquished his role as CEO in November that year. Meanwhile, individual investor Poon Hung Fai took over as CEO and invested HK$58.9 million ($7.5 million) in the company.

Lu resigned from all his positions at the company in 2025. In September that year, medical aesthetics powerhouse Bloomage Biotech (688363.SH) invested HK$138 million in Sirnaomics to become its second-largest shareholder. Poon was then promoted to chairman, putting him in overall control of the firm. It was not until August this year that Sirnaomics filed a writ with Hong Kong’s High Court alleging breaches of duty, authorization and due process by its former executives, seeking damages, interest and other relief.

Shift into aesthetics  

Specializing in RNA therapies targeting faulty genes, Sirnaomics was hailed as the first listed developer of nucleic-acid drugs when it made its Hong Kong market debut in 2021. But the stock has dropped more than 95% from its 2022 peak of HK$101, closing at HK$4.20 on Aug. 17 to value the company at about HK$470 million.

Sirnaomics reported no revenue in 2025 while posting a net loss of $14.61 million. At year end, the company could draw on just $13.52 million in cash and cash equivalents, while its net current liabilities and net liabilities stood at about $22.78 million and $24.49 million, pointing to severe liquidity pressure. Its auditor was unable to obtain enough evidence to verify the value of the assets related to the troubled investment. As a result, it issued a qualified opinion in the 2025 annual report, warning of a “material uncertainty regarding the company’s ability to continue as a going concern”.

The company is now rapidly shifting toward medical aesthetics and fat reduction as a way of generating much-needed cash. Its candidate drug STP705, originally developed to treat a type of skin cancer, is being repurposed as a therapy for targeted fat loss. A Phase Two trial of the drug for aesthetic use was launched at the end of July, when the first patient was enrolled. While oncology remains a long-term focus, medical-aesthetics products could reach the market sooner, improving cash flow, Poon said.

But commercial launch could still be far off for STP705, as the Phase Two trial gets fully underway, results are analyzed and regulatory approval secured. Its prospects therefore remain highly uncertain. Globally, very few drug candidates are being developed to reduce fat through local injections of nucleic acid, and no comparable product has yet been approved.

With slim cash holdings and annual net losses of more than $10 million, existing funds may not be enough to carry the company through to commercialization. If the results of clinical trials disappoint, or regulatory setbacks crop up, investors may need to weigh up whether the company can remain viable.

To subscribe to Bamboo Works weekly free newsletter, click here