Four Medical Companies Halt IPOs in April: Landu Instruments, Acon Biotech Among Those Affected

 

　　Largev Instrument Corp.,ltd.
 

On the evening of April 10, the Shanghai Stock Exchange (SSE) website showed that Largev Instrument Corp.,ltd.'s STAR Market IPO has been terminated. The SSE stated that due to Largev Instrument Corp.,ltd. and its sponsor, Dongxing Securities Co., Ltd., submitting a withdrawal request for the issuance and listing application, the issuance and listing review was terminated in accordance with the relevant provisions of Article 63 of the "Shanghai Stock Exchange Stock Issuance and Listing Review Rules."
 

The prospectus shows that the main business of Largev Instrument Corp.,ltd. is the research, development, production, and sales of medical cone-beam CT and its supporting software. Its current main products are dental cone-beam CT and related image processing software. Largev Instrument Corp.,ltd. had planned to raise 330 million yuan, of which 140 million yuan would be used for the construction of a medical cone-beam CT (Haining) production base project, 132 million yuan for the R&D center construction project, and 50.23 million yuan for the marketing network construction project.
 

In terms of performance, the prospectus shows that Largev Instrument Corp.,ltd.'s revenue in 2019, 2020, and 2021 was 222 million yuan, 215 million yuan, and 405 million yuan respectively; net profits were 20.45 million yuan, 18.1 million yuan, and 64.1889 million yuan respectively; net profits after deducting non-recurring gains and losses were 16.79 million yuan, 10.22 million yuan, and 56.7277 million yuan respectively.
 

　　AI KANG
 

Nearly one and a half years after submitting the application, AI KANG, an IVD (in vitro diagnostics) company planning to go public on the Sci-Tech Innovation Board, also voluntarily withdrew its IPO application on April 8, bringing the process to an end.
 

Data shows that AI KANG is a medical device enterprise engaged in the business of in vitro diagnostic instruments, in vitro diagnostic reagents, and consumables. It owns branded in vitro diagnostic instruments such as fully automatic enzyme immunoassay analyzers, fully automatic blood typing analyzers, as well as related in vitro diagnostic reagents and disposable laboratory consumable products. Among these, the fully automatic enzyme immunoassay analyzer and the fully automatic blood typing analyzer are AI KANG's two core products.
 

In terms of performance, in 2021, the domestic epidemic briefly eased, leading to a decrease in the selling price and sales volume of its related products. That year, AI KANG achieved a revenue of 397 million yuan, a slight increase of 7.30% year-on-year, with a net profit of 55.9482 million yuan, a year-on-year decrease of 25.24%.
 

Industry insiders indicate that the fundamental issue currently faced by AI KANG does not lie in the unsustainable performance caused by occasional pandemic impacts, but rather in the niche market of its core products. Compared to the overall IVD market size, the specific segment where AI KANG's core products are situated appears too narrow with limited growth potential. For instance, in the enzyme immunoassay analyzer segment, China’s automated enzyme immunoassay analyzer market was valued at 474 million yuan in 2021, with an expected compound annual growth rate (CAGR) of 9.6% from 2021 to 2025. Based on this calculation, the market size for enzyme immunoassay analyzers will not exceed 700 million yuan by 2025.
 

　　Zumax
 

On April 4, the Shenzhen Stock Exchange announced that due to Zumax Medical and its sponsor broker Haitong Securities' application to withdraw the IPO application documents, the Shenzhen Stock Exchange has decided to terminate the review of Zumax Medical's initial public offering and listing on the ChiNext Board.
 

Zumax Medical is a company dedicated to surgical operations.MicroscopeA company engaged in R&D, production, and sales, with main products including dental surgical microscopes,Surgical OperationMicroscopes, optical diagnostic instruments, etc. The company originally planned to issue no more than 15,460,700 shares on the ChiNext Board of the Shenzhen Stock Exchange, with a proposed fundraising amount of 508,114,700 yuan. The funds were intended for the Phase I expansion project for the annual production of 10,000 surgical microscopes, the R&D center upgrade project, and replenishment of working capital.
 

In terms of performance, the prospectus shows that during the reporting period, Zumax Medical's operating revenue was 176.1961 million yuan, 223.2079 million yuan, 274.3407 million yuan, and 153.7081 million yuan, respectively; the net profit attributable to parent company was 38.1257 million yuan, 43.0487 million yuan, 60.2981 million yuan, and 27.2395 million yuan, respectively.
 

It is reported that the prospectus and reply to the review inquiry letter disclosed by Zumax Medical previously showed that during the reporting period (referring to 2020 to 2022 and January to June 2023), the proportion of distributor revenue of Zumax Medical exceeded 80%. In addition, compared with peer companies in the same industry, the overall level of R&D expense ratio of Zumax Medical was relatively low during the reporting period, and its sales expenses were higher than the R&D expenses in the same period.
 

　　Shihe Gene
 

On the evening of April 2, the Shanghai Stock Exchange website showed that Nanjing Shihe Gene Biotechnology Co., Ltd.'s STAR Market IPO has been terminated. Industry insiders stated that Shihe Gene’s attempt to go public this time also coincided with a tightening of the IPO pace — first, stricter reviews for IPOs involving nucleic acid testing companies, and later, the CSRC tightened regulations on IPOs for unprofitable companies, making its chances of going public even slimmer.
 

Data shows that Nanjing Shihe Gene Biotechnology Co., Ltd., a tumor NGS company striving for an IPO in the A-share market, mainly engages in clinical testing services, research and development services, as well as the sales of instruments and reagents.
 

The prospectus of Shihe Gene shows that from 2019 to 2021, its revenues were RMB 395 million, RMB 406 million, and RMB 517 million respectively; the net profits attributable to parent company were -RMB 2.61 million, -RMB 92.04 million, and -RMB 68.48 million respectively. Among them, clinical testing services contributed about 70% of the revenue, with income proportions in the three years being 69%, 72%, and 73% respectively, making it the main source of income.
 

It is reported that the company's large revenue failed to turn a profit, mainly due to the excessively high proportion of sales expenses and R&D expenses in revenue. From 2019 to 2021, the company's period expenses amounted to approximately 288 million yuan, 449 million yuan, and 472 million yuan respectively, accounting for 73.04%, 110.43%, and 91.35% of revenue.
 

Regarding pharmaceutical companies terminating their IPOs, industry insiders have stated that changes in the investment environment may affect the financing plans and strategies of pharmaceutical enterprises. The tightening of IPO regulations might cause some companies to delay or abandon their listing plans, impacting their financing and development. Other industry experts have noted that as the difficulty of going public increases, an IPO is not the only option for many pharmaceutical companies, leading them to activate a "withdrawal mode."
 

Disclaimer: In any case, the information or opinions expressed in this article do not constitute investment advice to any person.