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健世科技二次递表港交所:核心产品未获批上市短期盈利难 LuX-Valve研发进度领先

Jianshi Technology Secondary report HKEx: core products are not approved for listing and short-term profit is difficult for LuX-Valve to lead the progress of research and development.

新浪財經綜合 ·  Dec 23, 2021 05:16

Product: Sina Finance listed Company Research Institute

Author: IPO refinancing Group / Chen

After a period of six months, the initial public offering materials submitted by Jianshi Technology to the HKEx expired on December 21, 2021, and on the same day, Jianshi Technology submitted its second form to the HKEx for the production and commercialization of core products LuX-Valve and Ken-Valve, R & D and registration of other products under research, acquisition and investment to expand business, working capital and general corporate uses. China International Capital Corporation and Citigroup act as co-sponsors.

According to reports, the Hong Kong stock prospectus is valid for six months. Due to various reasons such as the expiration of the audit report, it is not uncommon for listing application materials to become invalid during the IPO period. Prospective issuers can re-apply for "one-click activation" listing procedures by updating the information. The invalidation of the prospectus does not mean the failure of listing, and it is not directly related to the operation of the company.

As of December 21, 356 companies have submitted forms on the main board of the HKEx this year, of which 168 IPO materials are being processed, 62 have been listed, 4 have been withdrawn, and 122 IPO materials are invalid. Under the influence of the trend of listing in Hong Kong by enterprises in high-prosperity fields such as AI health care, health care and biotechnology, and the increase in the number of companies listed in US stocks to Hong Kong, there has been a large accumulation of invalid documents in the prospectus of the Hong Kong Stock Exchange this year.

According to Ryan Capital statistics, excluding repeated forms, backdoor listing and withdrawing listing applications, 221 companies submitted forms on the main board of the Hong Kong Stock Exchange in 2020, and as of August 15, 2021, 131 passed hearings, with a pass rate of 59.3%. One was rejected, with a rejection rate of 0.5%. In 2021, there are 34 enterprises that resubmit forms, accounting for 15.4%. There are two cases of enterprises that re-submit forms, one is to re-submit the form after 6 months of failure, and the other is to refinance and then redeliver the form after failure.

  The progress of core product research and development is ahead of schedule. No product has been approved for listing.

Jianshi Technology focuses on minimally invasive intervention of structural heart disease, and its two core products LuX-Valve and Ken-Valve are in deterministic clinical trials and have not been registered. LuX-Valve is a transcatheter tricuspid valve replacement (TTVR) system, which is suitable for high-risk patients with severe tricuspid regurgitation and not suitable for surgery. the advantage is that there is no need for routine thoracotomy, and artificial valve stents can be used to replace patients with dysfunctional primary tricuspid valve function.

LuX-Valve is the world's first product under study to complete confirmatory clinical trials, and it is expected to become one of the first commercial transcatheter tricuspid valve replacement products in the world. According to the classification standard of the State Drug Administration, LuX-Valve belongs to Class III medical devices. This has laid the foundation for its future commercialization.

But it is worth noting that, according to the prospectus citing CE certification, Frost Sullivan analysis data, as of the date of disclosure of the prospectus, there are three types of tricuspid valve repair products worldwide have been approved, Edward Life Sciences Cardioband in 2018 CE certification, with the company's Pascal in 2020 CE certification, the United States Abbott Laboratories's TriClip in 2020 CE certification.

Although LuX-Valve, owned by Jianshi Technology, has great advantages over transcatheter tricuspid valve repair products in limiting the primary valve condition of patients and the range of potential target patients, both products are aimed at the same indication of tricuspid regurgitation, and there is a certain competition between products.

On the other hand, although LuX-Valve is the only transcatheter tricuspid valve replacement product known to be in clinical trials in China, it faces close catch-up from international competitors in the progress of research and development. As of the date of disclosure of the prospectus, EVOQUE under Edward Life Sciences has also entered the stage of deterministic clinical trials, and the first release of Jianshi Technology is only about a month behind.

In August 2021, the enrollment of LuX-Valve confirmatory clinical trial subjects has been completed, and as of the date of disclosure of the prospectus, EVOQUE confirmatory clinical trials are under way. Whether Jianshi Technology can maintain the world's leading research and development progress depends on the effectiveness of clinical trials.

Another core product of Jianshi Technology, Ken-Valve, is a transcatheter aortic valve replacement system for severe aortic regurgitation, which also belongs to the third category of medical devices in the classification standard of the State Drug Administration. As of the date of disclosure of the prospectus, 24 major transcatheter aortic valve replacement products have been approved for commercialization worldwide, while there are eight approved commercial transcatheter aortic valve replacement products in China, including VenusA-Valve and VenusA-Plus of Qiming Medical, J-Valve of Suzhou Jiecheng, VitaFlow and VitaFlow Liberty of minimally invasive Xintong Medical, TaurusOne and TaurusElite of Peijia Medical and SAPIEN 3 of Edward Life Sciences.

According to the prospectus citing Frost Sullivan, on the global market, J-Valve produced by Jiecheng Medical and Trilogy produced by JenaValve Technology as transcatheter aortic valve replacement products have included severe aortic regurgitation treatment into indications and realized commercialization. However, Ken-Valve has only progressed to the stage of confirmatory clinical trials.

  Lost 421 million yuan in the first three quarters

In addition to the two core products, Jianshi Technology also has eight products under development for valvular heart disease and heart failure respectively. For valvular heart disease, LuX-Valve Plus is a transcatheter tricuspid valve replacement (TTVR) system, which is expected to be commercialized in 2023. JensT-Clip is a transcatheter tricuspid valve repair (TTVr) system that is expected to be commercialized in 2025. KenFlex is a transcatheter aortic valve replacement (TAVR) system that is expected to be commercialized in the first half of 2025. JensClip is a transcatheter mitral valve repair (TMVr) system that is expected to be commercialized in 2024.

There are only two kinds of products under development for heart failure diseases, which are MicroFlux and AlginSys Endolnjex, both of which are in the preclinical stage. MicroFlux is an atrial septal perforation stent and delivery system that is expected to be commercialized in 2024. AlginSys Endolnjex is a myocardial filling hydrogel and injection system that is expected to be commercialized in 2025.

Under a large amount of R & D investment, Jianshi Technology has lost money year after year, and the range of loss has been expanding. From 2019 to 2020 and the first three quarters of 2021, the losses of Jianshi Science and Technology were 28 million yuan, 300 million yuan and 421 million yuan respectively, an increase of 975.14% (2020) and 138.29% (the third quarter of 2021) compared with the same period last year. In the same period, the R & D expenditure was 23 million yuan, 171 million yuan and 225 million yuan respectively, and the R & D investment accounted for the largest proportion of the expenditure during the period, and showed an increasing trend.

As the two core products are not expected to be commercialized until 2023 and 2024, Jianshi Technology's current revenue mainly comes from other income and income such as government subsidies, so it is difficult to make a short-term profit. In the third quarter of 2019, 2020 and 2021, other income and income of Jianshi Technology were 1.807 million yuan, 3.07 million yuan and 9.86 million yuan respectively, and the net cash flow of operating activities was-16.444 million yuan,-46.853 million yuan and-99.007 million yuan, respectively.

  Hillhouse is the largest institutional investor

Due to the leading research and development progress and obvious product advantages of the core product LuX-Valve, as an innovative biotechnology company, Jianshi Technology has received multi-capital blessing before IPO. After round C financing in 2021, the company was valued at $1.364 billion.

Prior to the IPO, Jianshi Technology has received investment from Hillhouse Capital, Chunhua Capital, Chende Capital, Cormorant, Huaxia Fund, Duckling Fund, L.P., China Life Insurance and PICC. As of the date of disclosure of the prospectus, the chairman of the board of directors, controlling shareholder Lu Shiwen and actors controlled 211 million yuan of registered capital, accounting for about 51.53% of the company's equity. Hillhouse Capital holds 40.3681 million of the company and 9.87% of the company, making it the largest institutional investor. Chende Capital and Chunhua Capital hold 6.14% and 6.09% of the shares, respectively.

In addition, in September 2020, in order to expand the heart failure business unit, Jianshi Technology conducted a restructuring, such as equity conversion to acquire 100% stake in Ningbo Dichuang. Ningbo Dichuang was founded in January 2014, focusing on the development of innovative medical devices for the treatment of heart failure.

It is worth noting that the prospectus shows that Ningbo Di was founded by Lu Shiwen and the people who acted in unison. At the beginning of its establishment, Ningbo Linyi, LV Shiwen, Li Qinrong, Zhong Wei and Wang Li owned 40%, 30%, 18%, 6% and 6% respectively, and then after equity transfer and capital increase, before this acquisition, Ningbo Dichuang's shareholding structure is 55.33% held by Lv Shiwen, 34.67% held by Ningbo Linyi and 10% held by Wu Danke.

In September 2020, Jianshi Technology and Lu Shiwen, Ningbo Linyi and Wu Danke exchanged shares with about 6.67% of the equity of Ningbo Dichuang to 1% of Jianshi Science and Technology. After the completion of the subscription, the concerted actor holds 86.06% of Jianshi Technology. Wu Danke holds 1.28% of Jianshi's equity, and other shareholders hold 12.66% of the equity. Jianshi Technology holds a 100% stake in Ningbo Dichuang.

The prospectus hinted at the risks of the restructuring, saying that if the company failed to integrate its recently acquired subsidiaries or future target companies into the relevant business, its post-acquisition performance and business prospects might be adversely affected. It is further explained that due to the influence of economy and competition, it is uncertain to integrate Ningbo Dichuang to achieve synergy with the company's original business. In addition, the synergies generated by future corporate acquisitions may be offset by costs arising from acquisitions, increases in other expenses, operating losses or other business problems.

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy. Read more
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