Biopharma IPO Momentum Slows: Multiple Companies Withdraw Applications Since June

　　【Pharmaceutical Network Medical Stock Market】Under the influence of multiple factors, the pace of China's biopharmaceutical companies going public has slowed down. Since June, several biopharmaceutical enterprises have announced the termination of their IPOs.
 

On June 9, VivaChek Biotech (Hangzhou) Co., Ltd. ("VivaChek") terminated its registration. The reason for the termination was that VivaChek and its sponsor institution voluntarily requested to withdraw the registration application documents. According to regulations, the China Securities Regulatory Commission decided to terminate the ChiNext stock issuance registration process for VivaChek.
 

The prospectus shows that the main business of VivaChek is the research, development, production, and sales of POCT products. The company has established three major technology platforms: biosensor electrochemistry, immunoassays, and molecular diagnostics, and owns R&D achievements in areas such as dry chemistry. The POCT products from each platform cover dozens of testing items, including blood glucose monitoring, respiratory infectious diseases such as virus antibody detection projects, etc. The company plans to raise 775 million yuan through an IPO to invest in projects including the annual production of 1 billion blood glucose test strips, 3 million blood glucose meters, 2.5 million testing instruments, and 8 billion test reagents, as well as upgrading its marketing and service network system.
 

On June 6, the Beijing Stock Exchange website announced the decision to terminate the review of the initial public offering of Sundoc (Zhejiang Shengzhaoyao Pharmaceuticals Technology Co., Ltd.) and its listing on the Beijing Stock Exchange.
 

Sundoc mainly engages in the research and development and industrialization of complex injectables. It is one of the few companies in China that simultaneously possesses multiple clinical pipelines in the two major fields of long-acting sustained-release formulations and targeted formulations. The company originally planned to raise 1,274,880,000 yuan, which would be allocated to the R&D of complex injectable industrialization, the construction of the headquarters and the first-phase production line for high-end complex injectables, and the supplementation of working capital.
 

On June 5, the IPO of Sichuan Jinjiang Electronic Science and Technology Co., Ltd. ("Jinjiang Electronic") was terminated.
 

Jinjiang Electronic Focuses on the R&D, Production, and Sales of High-End Innovative Medical Devices in the Field of Cardiac Electrophysiology. It Originally Planned to Raise 2.69 Billion Yuan, Of Which 958 Million Yuan Would Be Used for the Construction of Jinjiang Electronic Medical Device R&D and Technology Center Project, 900 Million Yuan for the Jinjiang Electronic Medical Device Production Base Project, 333 Million Yuan for the Jinjiang Electronic Marketing Network and Marketing Capability Building Project, and 500 Million Yuan for Supplementing Working Capital.
 

On June 1, the Shenzhen Stock Exchange showed that the ChiNext listing application of Sichuan Meikang Pharmaceutical Software Research and Development Co., Ltd. (referred to as "Meikang Co., Ltd.") has been terminated.
 

Medcon is a company specializing in the construction and maintenance of pharmaceutical knowledge bases, as well as the research and development, sales, and technical services of clinical rational drug use systems. It had planned to raise 435 million yuan, of which 208 million yuan would be used for the development of disease diagnosis and treatment knowledge base products, 124 million yuan for the research and development center upgrade project, and 102 million yuan for the marketing service network and information technology project.
 

From the perspective of these enterprises that halted their IPO progress in June, both VivaChek and Meikang chose the first listing standard under Article 2.1.2 of the "Shenzhen Stock Exchange ChiNext Board Listing Rules (2023 Revision)," which stipulates that "net profits for the last two years must be positive, with a cumulative net profit of no less than 50 million yuan." According to the regulations, VivaChek will undergo review in accordance with the new rules.
 

According to financial data, VivaChek's operating income for the years 2020, 2021, 2022, and January to June 2023 was 671.9445 million yuan, 1,263.4796 million yuan, 828.7925 million yuan, and 178.8728 million yuan, respectively; the net profit was 160.1525 million yuan, 328.1947 million yuan, 102.1916 million yuan, and 26.4619 million yuan, respectively.
 

In 2020, 2021, and 2022, the revenue of Meikang Co., Ltd. was 126 million yuan, 157 million yuan, and 185 million yuan respectively; the net profit was 38.77 million yuan, 50.66 million yuan, and 72.3355 million yuan respectively; the net profit after deducting non-recurring gains and losses was 40.04 million yuan, 46.857 million yuan, and 65.8578 million yuan respectively. In the first half of 2023, the revenue of Meikang Co., Ltd. was 113 million yuan, and the net profit was 46.224 million yuan.
 

Sundoc, taking into account its scale, operating conditions, profitability, and other factors, chose the issuance conditions stipulated in Article 2.1.3(4) of the Listing Rules for this IPO: "(4) The estimated market value is not less than 1.5 billion yuan, and the total R&D investment in the past two years is not less than 50 million yuan." Prior to the termination of the IPO, Sundoc underwent two rounds of inquiries. Specifically, the issues of concern to the Beijing Stock Exchange included large-scale reductions by the actual controller and the stability of control, commercialization risks of the R&D pipeline, and related questions about R&D, production, and distribution models.
 

Financially, during the period from 2020 to 2022 (hereinafter referred to as the reporting period), Sundoc achieved operating revenues of 19.872 million yuan, 25.8799 million yuan, and 21.5937 million yuan respectively, with net profits of -118.0501 million yuan, -131.9896 million yuan, and -144.4645 million yuan respectively. The company's losses continued to increase, accumulating nearly 400 million yuan in losses over three years. The main factor leading to Sundoc's increasing losses was its persistently high research and development expenses. During the reporting period, Sundoc's R&D expenses were 86.7807 million yuan, 101.8206 million yuan, and 108.4909 million yuan respectively.
 

Jinjiang Electronic has chosen the specific listing standard as stipulated in Article (5) of the first paragraph of Rule 2.1.2 of the STAR Market Listing Rules: an expected market value of no less than RMB 4 billion. Meanwhile, the prospectus shows that the company meets the specific requirements of the "Guidance No. 7 on the Application of the STAR Market Issuance and Listing Review Rules of the Shanghai Stock Exchange - Medical Device Companies Applying the Fifth Set of Listing Standards."
 

Financially, Jinjiang Electronic's revenue in 2020, 2021, and 2022 was 41.339 million yuan, 60.6159 million yuan, and 59.159 million yuan respectively; net profits were 24.725 million yuan, -16.59 million yuan, and -1.04 million yuan respectively; net profits after deducting non-recurring gains and losses were 2.04 million yuan, -3.6 million yuan, and -3.4669 million yuan respectively.
 

Analysts pointed out that although the pace of IPOs for pharmaceutical companies has slowed down at present, companies should comprehensively consider their actual conditions and development strategies to choose a path suitable for themselves. Along this journey, they must continuously strengthen their core competitiveness and strive to enhance their innovation and commercialization capabilities.
 

Disclaimer: Under no circumstances shall the information or opinions expressed in this article constitute investment advice to any person.