Huamai Tech Aborts Sci-Tech Innovation Board IPO Despite Backing from 20+ Investors

Dec 26, 2023 18:05 CST Updated 18:05

Percutek Therapeutics

Developer of Minimally Invasive Cardiovascular Treatment Devices

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Source: Medical Investment Tribe

At the end of 2023, the IPO anxiety in the medical industry continues.

On December 25, 2023, Beijing Percutek Therapeutics Medical Equipment Co., Ltd. ("Percutek Therapeutics") terminated its STAR Market IPO.

On December 30, 2022, Percutek Therapeutics, an innovative medical device company, submitted its IPO materials to the STAR Market, planning to adopt the fifth set of listing standards of the STAR Market.

"Standard Five" Medical Device Company with Multiple Products Already on the Market

Percutek Therapeutics is a company focused on the innovative research, development, and application of products and therapies in the fields of aortic, peripheral and coronary, neuro-intervention, and access. It currently has 8 marketed products, including thoracic and abdominal aortic stent graft systems, and more than 20 products under development.

Generally speaking, most innovative drug companies or innovative medical device companies that go public using the "Standard Five" criteria often have core products that have not yet been launched. Therefore, they have no revenue and certainly no profit.

However, Percutek Therapeutics is slightly different. Its core products, the abdominal aortic stent graft system and the thoracic aortic stent graft system, were approved for marketing in 2017 and 2019, respectively, which is 3-5 years before its IPO application.

As of the date of signing its prospectus, Percutek Therapeutics has obtained NMPA medical device product registration certificates for 8 products and EU CE certification for 2 products.

Despite having multiple products already on the market, with the first core product having been launched approximately five years ago, Percutek Therapeutics still has not generated any profit. Therefore, it has opted to apply for the STAR Market using the "Standard Five" criteria, which has no requirements for net profit.

From 2019 to the first half of 2022, the operating revenue of Percutek Therapeutics was 48.94 million yuan, 50 million yuan, 88.83 million yuan, and 60.84 million yuan respectively, while the net profits were -32.81 million yuan, -126 million yuan, -120 million yuan, and -27.54 million yuan respectively.

Among them, the proportion of the aortic stent graft system in the main business revenue of Percutek Therapeutics for each period was 100%, 100%, 83.16%, and 86.70%, respectively, making it the company's primary source of income.

Core product market share is at a disadvantage

The reason for the lackluster revenue and profits lies in the highly competitive landscape of the very niche market for thoracic/abdominal aortic medical devices, which includes not only foreign giants but also multiple China-produced companies. In comparison, Percutek Therapeutics does not hold a significant market share advantage.

According to public information, in the 2021 market for thoracic/abdominal aortic medical devices, the combined market share of foreign brands exceeded 50%, with Medtronic maintaining a long-standing leading position in the industry. Its market share in thoracic and abdominal aortic interventional medical devices was over 30% and 45%, respectively.

Even among domestic manufacturers, Percutek Therapeutics ranks only third in market share, following Shanghai MicroPort Endovascular MedTech and Lifetech Scientific.

In the IPO review inquiry, the regulatory authority explicitly pointed out:

The company's thoracic aortic stent graft was approved for marketing in 2019, suitable for endovascular repair of Type B dissections with a 10mm anchoring zone length, surpassing most competing products which typically require a 15-20mm anchoring range.But the proportion of surgical volume and sales in the Chinese market is not high;

The company's abdominal aortic stent graft was approved for marketing in 2017. It can treat short-neck aneurysms with a neck length greater than 10mm and a renal angle in the range of 0-75 degrees, surpassing the common indications of similar competing products, which generally require a neck length greater than 15mm and a renal angle in the range of 0-60 degrees.But the proportion of surgical volume and sales in the Chinese market is not high;

In this regard, the regulatory authorities explicitly requested in their inquiry that Percutek Therapeutics: provide an explanation of the number of newly covered patients, surgical volume, and proportion compared to major competing products, and whether it meets significant clinical needs; apart from the anchoring zone length, compare the advantages and disadvantages of the issuer's product with competing products in terms of other performance aspects, and analyze whether there are alternative surgical methods or product combinations; based on the aforementioned factors, cautiously evaluate the clinical value and market potential of the issuer’s thoracic aortic stent.

In short: Since there are such or those advantages compared to competitors, why can't the market share increase? Please give me a reasonable explanation.

More Than 20 Investment Institutions Enter the Market

It is worth mentioning that Percutek Therapeutics has a very successful financing history in the primary market: since its establishment, the company has completed at least 9 rounds of private placements in the primary market, attracting more than 20 investment institutions, including several top-tier professional investment institutions in China.

Strict Enforcement of "Standard Five" on the Sci-Tech Innovation Board

At the end of June this year, multiple media reports mentioned that the fifth set of listing standards for the Sci-Tech Innovation Board may tighten. The regulatory authorities will conduct stricter reviews on companies that submit applications using the fifth set of listing standards.

Regarding the possible tightening of the "Standard Five" review, a senior investment banking professional stated: On one hand, companies that have already gone public under the fifth set of standards have mostly performed poorly, so it is reasonable for regulators to reconsider the listing of such companies; on the other hand, the number of IPOs in the Shanghai and Shenzhen markets has approached 6,000, creating a need for a phased slowdown.

Some investment bankers also pointed out that the fifth set of standards for the Sci-Tech Innovation Board was never meant to be universally applicable; it was designed as an opening for star projects. A large number of companies claiming to meet the fifth set of standards have not yet reached the stage suitable for becoming publicly listed companies.

Judging from the situation of the STAR Market's application and review process in the past six months, this rumor is highly likely to be true.

END

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