China's Domestic Electrophysiology Leader Jinjiang Electronics Updates IPO Filing with Reduced Fundraising Target

Jan 04, 2024 17:49 CST Updated 17:49

Jinjiang Electronic

Developer of electrophysiology products

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On December 29, 2023, the Shanghai Stock Exchange STAR Market's public information website for issuance and listing showed that Sichuan Jinjiang Electronic Medical Device Technology Co., Ltd. (hereinafter referred to as "Jinjiang Electronic")Updated financial information and other data, with a financing amount of 1.95 billion yuan.

Screenshot from the SSE official website

Public information shows that Jinjiang Electronic's listing application was accepted by the Shanghai Stock Exchange in June 2023. At that time, the company planned to raise 2.69 billion yuan. In the updated information this time,The company's IPO fundraising was reduced by 700 million yuan, and its sponsor representative has changed.

It is reported that at the beginning of the listing application, Jinjiang Electronic chose to adopt the fifth set of listing standards, which allows the company to file for listing without being profitable. The financial data of Jinjiang Electronic shows,The company has experienced losses twice in the past three years, with operating revenue of only about 60 million yuan.

Data shows that Jinjiang Electronic, established in 2002, is an innovative enterprise specializing in the research, production, and sales of high-end medical devices for diagnosis and ablation in the cardiac electrophysiology field. The quality and performance of its core products fully match international leading standards, and it has now developed into a leading company in China’s cardiac electrophysiology sector.

Fundraising Reduced by 700 Million Yuan

The controlling shareholder's family once cashed out 269 million yuan

On June 12, 2023, Jinjiang Electronic's IPO was accepted by the Shanghai Stock Exchange. However, in the following half year,Its review process has stalled, and the first round of inquiries has not been disclosed to date.In its latest submission of relevant financial documents,The planned fundraising amount was reduced from 26.91 billion yuan to 19.5 billion yuan, with a decrease of approximately 7.41 billion yuan.

According to the previous prospectus, Jinjiang Electronic originally planned to allocate 26.91 billion yuan for three major projects: R&D and Technology Center for Medical Devices, Medical Device Production Base Project, and E-marketing Network and Marketing Capability Construction, with proposed investments of 9.58 billion yuan, 9 billion yuan, and 3.33 billion yuan respectively. The remaining 5 billion yuan would be used to supplement working capital.And after this reduction, it is currently unknown how the raised funds will be used.

Screenshot from the prospectus

In addition,The sponsor representative of Jinjiang Electronic has also changed.Previously, the sponsor representatives of the company were Hu Chaofeng and Zhao Dongtian from CITIC Securities.After this update, the sponsoring representatives are Zhao Dongtian and Shao Caijie.

It is reported that the fifth set of listing standards adopted by Jinjiang Electronic,This standard does not emphasize financial indicators and does not set specific requirements for revenue and net profit. Instead, it emphasizes that the core technology of the proposed listed company should align with China's medical device scientific and technological innovation strategy.Support "hard tech" medical device companies that have not yet reached a certain revenue scale to go public on the STAR Market.

However, since the second half of 2023, the number of companies adopting this standard for listing has dropped to a freezing point. Industry analysts believe that even with the adoption of the fifth set of standards, companies with continuous losses are not welcomed in the capital market.It should be noted that previous IPO applications by companies reducing their fundraising amounts were based on inquiries raised by regulatory authorities.And currently, Jinjiang Electronic has not completed the first round of inquiries and has already taken the initiative to reduce its fundraising amount. The industry believes that this may be related to the company's loss of performance.

Financial data shows that from 2020 to 2022, the operating revenue of Jinjiang Electronic was 41.339 million yuan, 60.6159 million yuan, and 59.159 million yuan, respectively.Net profits were RMB 24.7252 million, -RMB 16.5897 million, and -RMB 1.0424 million, respectively;Net cash flow from operating activities was 1.8814 million yuan, -29.4652 million yuan, and -75.0258 million yuan, respectively, with the scale of cash outflow expanding year by year. It can be seen that,The company's net profit has suffered losses twice. In addition, its prospectus also stated that the company cannot guarantee profitability in the short term.

Screenshot from the prospectus

In addition, from 2020 to 2022,Jinjiang Electronic implemented a total of five equity transfers and three capital increases in the two years prior to its IPO application.Through a series of equity transfers, institutional shareholders entered, raising the company's valuation.The Lee family had already cashed out part of their equity before the IPO, amounting to over 200 million yuan.

Specifically, in three equity transfers conducted by Li Chusen in January 2020, December 2021, and February 2022, he cashed out 9 million yuan, 50 million yuan, and 130.2 million yuan respectively, totaling 189.2 million yuan; Li Chuya, Li Chuwu, Li Chuyu, and others cashed out between 7 million yuan to 23 million yuan each in a January 2022 transaction; In the fifth equity transfer in April 2022, Li Chuyu cashed out 20 million yuan.Thus, the Li family cashed out 269 million yuan in just over two years.

Focus on Cardiac Electrophysiology

The product technology is in a leading position in the industry.

Founded in 2002, Jinjiang Electronic is a high-tech enterprise among the first group of national-level companies specializing in the R&D, production, sales, and service of advanced medical devices and consumables in the field of cardiac electrophysiology. After more than two decades of development, the company has become a leading enterprise in China's cardiac electrophysiology sector, providing safe and efficient comprehensive diagnosis and treatment solutions for patients with rapid arrhythmia worldwide.

Throughout its development history,Whether it was the collaboration with Bard in 2004 or the acquisition of CARDIMA, a Nasdaq-listed company in the United States, by Jinjiang Electronic in 2011, both events had a significant impact.Through its collaboration with Bard, Jinjiang Electronic not only broke through the core technology of multi-pole discharge (one of the underlying PFA technologies), but more importantly, the performance of the equipment has seen a leap in improvement. The acquisition of CARDIMA allowed it to fully obtain international leading R&D and production capabilities for a complete set of consumables, and based on this, it successfully built a comprehensive electrophysiology technology platform integrating devices and consumables, achieving a full breakthrough in products offering solutions for complex arrhythmias.

In 2013,It launched the first domestically produced cardiac 3D mapping system in China, breaking the monopoly of imported products.On this basis, a new generation of LEAD-Mapping® Cardiac Electrophysiology 3D Mapping System adopting magnetoelectric fusion technology was launched in December 2022.

In November 2021, Jinjiang Electronic successfully completed the patient enrollment for the LEAD-PFA Pulsed Field Ablation System registration clinical trial.Becoming the first company in the Chinese market to complete patient enrollment for the PFA product registration clinical trial.Subsequently,The LEAD-PFA® Cardiac Pulse Field Ablation System and PulsedFA® Single-Use Cardiac Pulse Field Ablation Catheter have entered the special review process for innovative medical devices in China.

Take the lead

Leading PFA Cardiac Electrophysiology Technology

As a pioneer in China's cardiac electrophysiology industry, Jinjiang Electronic continues to innovate its technology matrix and expand its product lines, establishing seven core technology platforms: a simulation and validation technology platform, a medical electronics technology platform, a mapping and navigation technology platform, an RF ablation energy technology platform, a pulsed electric field ablation energy technology platform, a catheter technology platform, and a system integration technology platform.Possesses independent R&D capabilities for a full range of cardiac electrophysiology devices and consumables, and is expanding into the pain management field.

In the emerging PFA cardiac electrophysiology technology field, the company maintains a leading position in China in terms of the registration and application progress of PFA cardiac electrophysiology products.On December 27, 2023, Jinjiang Electronic's LEAD-PFA Cardiac Pulse Field Ablation Instrument and Pulsed FA Single-Use Cardiac Pulse Field Ablation Catheter received marketing approval from the National Medical Products Administration (NMPA) in China.

Data shows,PFA, as a revolutionary technology, is a major disruption to existing ablation methods and also the hope for the next generation of atrial fibrillation ablation.Unlike traditional radiofrequency ablation and cryoablation, PFA has attracted significant attention from many medical device R&D companies due to its higher safety, more reliable efficacy, and shorter learning curve.

With a mature magnetic and electric fusion three-dimensional system, Jinjiang Electronic can directly and seamlessly connect with the former in the development of PFA.At the same time, based on the technical foundation of the consumables product Cardima, the catheter can be made thinner and smaller, with sufficient space to install positioning sensors, giving it a first-mover advantage in the industry.

It is reported that Jinjiang Electronic's PFA product is pulsed ablation under full magnetic positioning three-dimensional mediation, which has the following advantages:

Safer

PFA is a non-thermal ablation method that does not generate heat, causes virtually no heat-related damage, and is highly selective, without injuring the surrounding tissue.For the X-ray exposure issue that both doctors and patients care about most, it can also be observed clinically that, except for requiring a minimal amount of fluoroscopy during septal puncture and catheter manipulation, Jinjiang Electronic's PFA system is nearly zero-fluoroscopy. This ensures safety and efficacy while significantly reducing X-ray exposure time, benefiting both doctors and patients immensely.

At the same time,Based on the 3D platform combined with pulsed ablation, it enables a single catheter to complete the entire surgical procedure, including modeling, mapping, ablation, and validation.The surgical procedure is simpler and smoother, eliminating the need for multiple punctures, multiple sheaths, or repeated catheter exchanges.

More Efficient

The circular multi-electrode ablation catheter launched this time achieves ablation and isolation of the bilateral pulmonary veins.It belongs to simultaneous multi-point discharge, with each discharge only taking 0.3 milliseconds. Compared to radiofrequency and cryotherapy, it requires less time and offers higher efficiency.At the same time, under the real-time mediation of the three-dimensional mapping system, the ablation effect can be immediately displayed, and any problematic areas can be supplemented with additional ablation right away.

More Comfortable

The entire surgical process can optimize parameters for patient comfort. The surgery is performed under local anesthesia, with no significant pain or stimulation response, allowing the patient to comfortably complete the procedure.

More Convenient

PFA does not have strict requirements for contact, and the design of the circular catheter also aligns with the operating habits of most doctors today.To be able to perform atrial septal puncture, one can basically master the operational skills quickly, and the circular catheter does not need to use saline infusion throughout the surgery.Not only does it simplify the surgical process, but it also has advantages for patients who cannot tolerate saline.

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According to the Frost & Sullivan report, driven by factors such as the intensification of population aging, the increase in the number of patients with arrhythmia, and the popularization of ablation surgeries as well as the upgrading of ablation surgery consumables,The market size of electrophysiology devices in China increased from 1.48 billion yuan in 2015 to 4.67 billion yuan in 2019, with a compound annual growth rate of 33.2%. The compound annual growth rate from 2019 to 2024 is projected to be 32.1%.

China's electrophysiology market reached nearly 5 billion yuan in size in 2019, maintaining a 5-year compound annual growth rate of over 30%;With the aggravation of population aging, the increase in the number of patients in the arrhythmia market, and the popularization and technological upgrading of electrophysiological surgical products, the market scale of products related to electrophysiological surgery is expected to reach nearly 20 billion yuan by 2024.

However, it should be noted that the electrophysiology market in China is currently monopolized by multinational giants such as Medtronic, Johnson & Johnson, Abbott, and Boston Scientific.Johnson & Johnson, Abbott, and Medtronic, three major giants, occupy nearly 90% of the electrophysiology market in China.

However, with the continuous improvement of technical strength and product competitiveness of China's cardiac electrophysiology enterprises, as well as the support of national policies for local brands,Chinese electrophysiology companies, represented by MicroPort EP, HT Medical, Xincheng Nuopu, and Jinjiang Electronic, are beginning to rise.Among them,Jinjiang Electronic has become a leading Chinese cardiac electrophysiology company with a relatively complete product layout in the field of electrophysiological equipment.

So, what is the reason for Jinjiang Electronic's reduction in the amount of funds raised this time? Will Jinjiang Electronic be able to successfully complete its IPO in the future? As companies applying under the fifth set of listing standards continue to withdraw their applications, what will the future hold for Jinjiang Electronic’s capital market journey? The industry will remain attentive.

END

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