Shanghai Hanyu Medical Withdraws STAR Market IPO Amid Commercialization Challenges for Its Mitral Valve Clip System

IPOs in the pharmaceutical sector seem to be getting harder.

On January 16, the Shanghai Stock Exchange announced thatShanghai Hanyu Medical Technology Co., Ltd. Voluntarily Withdraws Application for STAR Market IPO, Terminating STAR Market Listing Process.

Since the beginning of 2024, this is the 14th company to withdraw its IPO application.

Hanyu Medical mainly engages in the research, development, production, and commercialization of interventional devices for structural heart disease and electrophysiology products. According to information from the official website of the National Medical Products Administration (NMPA),Shanghai Hanyu Medical Technology Co., Ltd.'s "Mitral Valve Clip" System Approved for Marketing on September 8, applicable to patients with degenerative mitral regurgitation who have been assessed by a professional cardiac team as having a high surgical risk and whose mitral valve anatomy is suitable.

Unlike other innovative pharmaceutical companies, Hanyu Medical's core product has been approved for marketing, but the company has yet to achieve profitability. According to the prospectus,From 2019 to the first three quarters of 2022, the company's net losses reached 56.44 million, 90.69 million, 113 million, and 53.14 million yuan, respectively.Moreover, Hanyu Medical is expected to continue incurring losses for some time in the future.

Hanyu Medical had hoped to raise 1.722 billion yuan for production, research and development, and sales. However, it seems that the market is not giving it this opportunity. The industry generally believes that Hanyu MedicalThe revenue from core products is basically negligible, and the commercialization prospects are full of uncertainty.Regulators must carefully consider the risks after the product is on the market.

Led by top experts in China

Hanyu Medical is a typical clinical physician-founded enterprise. The company's chairman and general manager, Dai Yufeng, was formerly a surgeon at Suzhou Municipal Hospital. In 2006, he transitioned to marketing and planning roles, and in 2016, he founded Hanyu Medical.

The company's "second-in-command," Yang Huixian, holds positions such as supervisor and office director.Yang Huixian became the "second-in-command" because of her husband, Pan Wenzhi.Pan Wenzhi is a deputy chief physician of the Cardiology Department at Zhongshan Hospital, Fudan University, and a disciple of Ge Junbo, an expert in the field of cardiovascular diseases. He is one of the earliest clinical experts in China to participate in transcatheter valve implantation and replacement.The first inventor of the original patent for Hanyu Medical's core product, the "Mitral Valve Clip System."

However, due to identity issues,Pan Wenzhi did not complete the onboarding process,Instead, he was hired as a clinical medical advisor by Hanyu Medical, with an annual salary of 20.518 million yuan collected on his behalf by Yang Huixian.

Essentially, Hanyu Medical is a platform company for the technical transformation of clinical physicians.

Mitral regurgitation is a common heart valve disease. According to the Hanyu Medical official website: In July 2018, the company completed the first transapical mitral valve clip surgery in China; in August of the same year, the company completed 12 exploratory clinical trials with a 100% success rate and effectiveness rate; in October 2021, the company's transfemoral mitral valve clip entered the FIM clinical stage.

Predictive data disclosed by the relevant team of Zhongshan Hospital Affiliated to Fudan University shows,China has approximately 5.5 million patients with severe mitral regurgitation, with an actual treatment rate of only 0.5%.Currently, in this market, only Abbott and Hanyu Medical have products available.

It appears to be a promising quasi-monopoly market, but many medical device companies are also actively developing mitral regurgitation products.More than 20 interventional devices for mitral regurgitation have entered the clinical trial stage.The competitive landscape of Hanyu Medical is not optimistic.

Notably, mitral regurgitation occurs not only in humans but also requires interventional surgery for pets. During the three years from 2022 to 2022,Hanyu Medical's only revenue of 6.06 million yuan all came from the "mitral valve clip system" product in the pet market.

Attempted to go public twice

As early as two years ago, Hanyu Medical hoped to alleviate the pressure on the company's cash flow through the capital market.

In April 2021, Hanyu Medical submitted its prospectus to the Hong Kong Stock Exchange and passed the listing hearing in September of the same year. However, considering factors such as market liquidity and market environment,The company voluntarily abandoned its plan to list on the Hong Kong stock market.

In recent years, Hanyu Medical has continuously invested in research and development funds. According to the prospectus,The company's R&D expenses were 30.40 million yuan, 43.77 million yuan, 66.28 million yuan, and 43.55 million yuan, respectively.And indicated that large-scale and continuous R&D investment will still be needed in the future. The tight cash flow has forced Hanyu Medical to choose to embrace the capital market once again.

Coincidentally, in 2022, the Shanghai Stock Exchange revised the fifth set of listing criteria for the STAR Market, opening the door for unprofitable medical device companies to go public and raise funds. Hanyu Medical promptly shifted its focus to a STAR Market IPO. With the guidance of CICC (China International Capital Corporation), it once again launched an initiative to access the capital market and successfully passed the first round of inquiries from the Shanghai Stock Exchange.

In the reply letter, Hanyu Medical made great efforts to prove the company's strong R&D capabilities, but the products are still in the research stage, and most of the product invention patents are from Shanghai Zhongshan Hospital or Wuxi Second People's Hospital.At the same time, Hanyu Medical acknowledged that its short-term value depends on the market performance of the "mitral valve clip system" product.

According to the Frost & Sullivan report,In 2022, the market size in China for the "mitral valve clip system" product was only 1.53 billion yuan, which would still not enable Hanyu Medical to turn a profit even if it captured the entire market.

Perhaps, this proactive withdrawal of the IPO is a wise move for Hanyu Medical.

"The product line is too单一 and competition among similar products is fierce, making it impossible for IPO companies to secure substantial financial support in the capital market." Some market observers believe that there is a trend of批量撤回 applications among拟IPO companies applying under the fifth set of standards of the科创板, and this trend will likely continue in the future.Not optimistic about the approach of rushing to the capital market solely based on an innovative product.

Author｜Xiaomi

Editor｜Jiang Yun, Jia Ting

Operation｜Valley

Image source: Visual China