Huichuang Medical Secures Over RMB 100 Million in Series B Funding to Accelerate Development of fNIRS-Based Brain Disorder Diagnosis and Therapy Platform

Recently,Danyang Huichuang Medical Equipment Co., Ltd. ("Huichuang Medical" for short) Completes Over 100 Million Yuan in Series B Financing，Led by Weifang Zhongke Haichuang Equity Investment Partnership (Limited Partnership), with ADDOR, existing shareholder Tsingyuan Investment, and KinghandCapital Management(beijing)CO.,Ltd. following the investment.This round of financing will be mainly used for further advancing the construction of the company's near-infrared (fNIRS) brain function imaging product as the leading brand in China, and for clinical trials of transcranial light regulation therapy for degenerative diseases.Changhai Capital continues to serve as the exclusive financial advisor for the company's financing.

In the era of accelerated and in-depth exploration of brain research, brain function detection equipment has become a key cornerstone for the development of the discipline. fNIRS brain function imaging equipment, known as "functional MRI worn on the head," has gained rapidly increasing attention in both scientific research and clinical settings in recent years due to its advantages of being non-invasive, portable, and accurate. According to statistics from Google Scholar, the number of publications related to fNIRS globally exceeded 5,400 in 2022, with an annual compound growth rate of nearly 20%. Renowned institutions such as the University of Tokyo, Stanford University, Harvard Medical School, and the Mayo Clinic have each published more than a dozen high-impact articles. Clinically, the application of fNIRS in China now covers nearly 1,000 tertiary hospitals and is widely used in departments such as psychiatry, rehabilitation, neurology, and pediatrics. It holds significant potential as a next-generation biomarker for detecting and evaluating conditions like depression, autism, cognitive impairment, and stroke rehabilitation.

 Figure: Statistics on the Publication Trend of Near-Infrared Related Literature

Huichuang Medical was founded in 2016 and is the leader in China's domestically produced fNIRS industry.Professor Wang Daifa, the founder and chairman of the company, has been deeply engaged in fNIRS for over 20 years and is a pioneer in academic research and industry translation within the field; Mr. Guo Genmiao, the CEO, is a former senior executive and chief engineer of Mindray Medical, with extensive experience in R&D, production and sales system building, enterprise management, and industry mergers and acquisitions.Led by two leading figures in the industry, the company has built a high-quality team of nearly 200 people, with a master's and doctoral degree ratio exceeding 30%. It has consistently adhered to efficient independent research and innovation, breaking the monopoly of fNIRS devices by Japanese manufacturers and achieving remarkable results in establishing itself as the leading Chinese-produced brand.

Academic LeadershipHuichuang has always adhered to academic promotion as its core strategy, actively promoting the exploration of cutting-edge fNIRS applications and clinical transformation. As of the end of September 2023, Huichuang's near-infrared devices have supported user experts in publishing 160 SCI papers in top journals such as *Nature Human Behaviour* and *NeuroImage*, with an average of one high-level article being published every three to five days. The Huichuang brand has been widely recognized by experts across various disciplines, and its influence continues to grow. This leading position in scientific research has enabled Huichuang to gain a strong reputation among customers and compete favorably with international brands.

A complete hardware + software ecosystem with strong scalability.In terms of hardware, Huichuang Medical has established the most comprehensive product matrix produced in China, covering small portable devices to full-brain detection equipment with the highest 157 channels in China. In terms of software, the company's self-developed NirSpark software is the first one-stop fNIRS data processing software on the market that requires no programming. Users can perform various customized analyses such as data preprocessing, hyperscanning, and brain functional connectivity analysis through a visual interface, greatly expanding the application scenarios of fNIRS in scientific research and clinical work. Currently, the application of Huichuang’s fNIRS products has long broken through the limitations of traditional paradigms in psychiatric departments, and has been applied in multiple departments such as rehabilitation, pediatrics, and neurology, continuously iterating new paradigms and usage scenarios.

Establish a clear position commercially.After years of accumulation, Huichuang has transformed its role in the industry from an "explorer" to a "pioneer." Huichuang's annual sales volume of fNIRS ranks first among domestic brands in China, achieving comprehensive commercial success across various niche markets. Currently, Huichuang's fNIRS devices have been widely applied in medical clinics and academic research fields, covering a total of over 800 leading institutions, including clinical departments of top hospitals such as Peking University Sixth Hospital and West China Hospital, as well as renowned universities nationwide like Tsinghua University, Beijing Normal University, and Beihang University. Moreover, many clients have made repeat purchases. Additionally, in 2023, the company successfully completed its first overseas order, paving the way for accelerating the global expansion of its fNIRS devices.

Figure: Professor Wang Daifa, Founder of Huichuang Medical, Speaks at the 7th Academic Symposium on Emotion and Health Psychology

In July 2023, Eisai Co., Ltd. and Biogen Inc. launched Lecanemab, the first new Alzheimer's disease (AD) drug to receive full FDA approval in 20 years, bringing new hope to this long-stagnant field. The drug slows the rate of cognitive decline in patients by clearing excess Aβ protein plaques in the brain. Despite the excitement surrounding the new therapy, the high cost of the drug will undoubtedly impose a significant financial burden on China’s over 10 million patients and 173 million people at potential risk. Therefore, the exploration of an effective and affordable Alzheimer's treatment is imperative.

In addition to drugs, the use of photobiomodulation to treat Alzheimer's disease is also a very promising treatment route. Among these, the device developed by Cognito, founded by Professor Li-Huei Tsai’s team at MIT, performed exceptionally well in previous Phase 2 clinical trials, slowing down the decline rate of ADCS-ADL scores by 84% after six months of treatment. Cognito is also highly regarded by the capital market and completed a $73 million Series B financing round in March 2023. Huichuang Medical applied for the first principle patent for near-infrared light therapy for degenerative diseases in China as early as 2019, conducting extensive foundational validation and research before the trend took off. Over the past three to four years of development, Huichuang has focused on solid commercial operations to ensure stable growth in different economic environments while avoiding chasing trends, refining its products to the extreme, and thoroughly verifying their performance.Currently, Huichuang Medical's phototherapy AD product has completed scientific clinical trials on dozens of patients.The effect is significantly better than existing drugs, and the product has been granted special review (Green Channel) as a national innovative medical device.Is expected to become one of the earliest phototherapy AD products to be launched in China. In addition to AD, the company has also conducted scientific research on other degenerative and psychiatric brain diseases such as autism and depression, all of which have shown promising efficacy.

As a company rooted in Danyang High-tech Zone, Jiangsu, Huichuang Medical has benefited from the great attention and strong support of local leaders at all levels to the development of small and medium-sized enterprises, which has enabled it to continuously burst with vitality and develop upward.

Danyang High-tech Zone Party Working Committee Secretary Jing Donggen said,Huichuang Medical settled in the High-tech Zone through technology and talent policies in early 2016. As an innovative national high-tech enterprise transformed from the scientific research achievements of Beihang University, it has undertaken three National Key R&D Programs and worked with the National Medical Products Administration to formulate the first national mandatory standard for near-infrared brain imaging. After years of efforts, Huichuang Medical has grown into a leader in China's near-infrared brain imaging technology and an international pioneer in brain science R&D and the medical application of near-infrared technology. Its products are used in over 800 hospitals and institutions such as the 301 Hospital, Peking Union Medical College Hospital, Tsinghua University, and the Chinese Academy of Sciences system, with an annual sales growth rate of approximately 100%. Huichuang is a representative of outstanding growth enterprises in the High-tech Zone and also epitomizes the zone’s focus on project introduction and development momentum. The High-tech Zone will firmly establish the service concept that "everyone is part of the business environment," providing maximum support for the construction of the Yangtze River Delta Collaborative Innovation Center for Huichuang Brain Science Medical Equipment, steadfastly serving as the "attendant and servant" for innovative enterprise development, and maximizing the efficiency of technology transfer.

Zhongke HaichuangRepresentation: The development of brain science has always been a key project supported and laid out by the state, with profound social significance in revealing brain functions and exploring the diagnosis and treatment of brain-related diseases. Huichuang Medical, with functional near-infrared spectroscopy (fNIRS) technology as its core, continues to broaden the boundaries of infrared-based diagnosis and treatment for brain function diseases. The company's core product, an fNIRS brain function imaging device, is the first ultra 100-channel near-infrared brain function imaging device to obtain NMPA registration certification, breaking the monopoly of imported technologies. With broad application prospects, the product provides precise and effective objective evaluation indicators for various diseases in the fields of psychiatry, rehabilitation, and gynecology and pediatrics, earning widespread recognition from academia and clinical experts. Its sales network now covers all of China. Weifang Zhongke Haichuang Equity Investment Partnership (Limited Partnership) looks forward to working hand in hand with Huichuang Medical to help create greater value for patients with brain function diseases worldwide.

ADDORRepresentation: In recent years, the field of brain science has received increasing attention. Innovative companies have emerged in the industry, and major global powers have successively introduced policies to support research in the field of brain science. However, in contrast, human understanding of the brain is still at a relatively early stage. There is a lack of efficient and convenient methods for detecting brain function in both scientific research and clinical practice. Functional Near-Infrared Spectroscopy (fNIRS), as an emerging method for brain function detection in the past two years, has become a powerful tool for conducting brain science research, diagnosing brain functional diseases, and evaluating rehabilitation in scientific research and clinical settings. The Huichuang team has nearly 20 years of technical accumulation in the fNIRS field, with outstanding product performance. Professor Wang Daifa, the actual controller, has demonstrated unique insights in both fundamental technology development and product commercialization operations. General Manager Guo Genmiao has nearly 30 years of mature management experience in the industry. At the same time, the company has attracted many senior talents in the industry to join. We believe that Huichuang will be able to proceed steadily and go far on the path of fNIRS, and further open up new markets.

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Chairman of KinghandCapital Management (Beijing) Co., Ltd., Zhang DafengBrain imaging is a prerequisite for studying and intervening in the brain. fNIRS, with its high spatiotemporal resolution, strong anti-interference ability, good portability, and cost-effectiveness, has rapidly developed in recent years to become one of the mainstream brain imaging technologies. It provides new diagnostic tools for clinical departments such as psychiatry, rehabilitation, pediatrics, and neurology. Huichuang Medical has deep expertise in the fNIRS field, with its commercially available fNIRS products making smooth progress and continuous growth in performance. The highly anticipated clinical applications of its key R&D product, phototherapy for AD, are promising. Relying on the NIRS technology platform, the company is expected to become a platform enterprise for diagnosing and treating brain functional diseases.

Wang Keshu, Partner of Changhai CapitalExpressed: Very pleased to have continued a three-year cooperation with Huichuang; Huichuang has consistently adhered to the dual drivers of financial stability and high technological barriers. Even in the current capital winter, it has still gained favor from many investment institutions. On the basis of maintaining a healthy cash flow and achieving 100% performance growth, the company also places extreme importance on innovation, continuously launching new diagnostic and therapeutic products. After growing into the number one brand in fNIRS, its phototherapy products have also become part of the top tier domestically. It is hoped that in the future, Huichuang will be able to develop more products for the benefit of more patients.

Weifang Zhongke Haichuang Equity Investment Partnership (Limited Partnership) is one of the venture capital sub-funds established by the National Science and Technology Achievement Transformation Guidance Fund. The National Science and Technology Achievement Transformation Guidance Fund, set up by the Ministry of Science and Technology and the Ministry of Finance, aims to support the transformation of scientific and technological achievements through the establishment of venture capital sub-funds, as well as to support the transformation of scientific and technological achievements formed using government funding. Under the guidance and management of the National Science and Technology Risk Development Center, which is directly under the Ministry of Science and Technology, Weifang Zhongke Haichuang Equity Investment Partnership (Limited Partnership) is committed to providing equity investment for non-listed high-tech enterprises that transform scientific and technological achievements. It has currently invested in several leading high-tech achievement transformation enterprises within China.

ADDOR, established through the internal mixed-ownership reform of Jiangsu High-Tech Investment Group, a well-known veteran venture capital institution, ranks among the top in the industry for its capabilities in industry research, asset management scale, and investment specialization. It is one of the most influential venture capital institutions in China. In the past three years, ADDOR has consistently won awards such as "Annual China Venture Capital Institution," "Best China Venture Capital Institution," "Most Competitive Venture Capital Institution," "Outstanding Achievement Award for Excellent Venture Capital Institutions," and "Top 10 Best Venture Capital Institutions" on prestigious lists by Zero2IPO Group, ChinaVenture, Securities Times, China Venture Capital Association, Forbes, and others, firmly maintaining its position in the first tier of domestic venture capital institutions.

Shenzhen Qingyuan Investment Management Co., Ltd. (hereinafter referred to as "Qingyuan Investment") is a venture capital fund manager independently established by the original investment management team of Shenzhen Tsinghua University Research Institute's subsidiary, Shenzhen Lihua Venture Capital Co., Ltd., after restructuring. Qingyuan Investment currently manages funds with a cumulative scale exceeding 10 billion RMB. The core team of Qingyuan Investment has deep roots in Tsinghua University and has been focusing on technology-related and early-stage project investments since 1999. It is one of the earliest professional management teams in China that specializes in technology-related and early-stage project investments. The team has cumulatively invested in more than 200 companies across fields such as generalized IT, advanced manufacturing, healthcare, and clean technology, among which 32 have successfully gone public in domestic and international capital markets.

KinghandCapital Management (Beijing) Co., Ltd. is a leading private equity investment institution focused on the medical and health sector. It is committed to leveraging the power of capital and industry resources to help outstanding medical and health enterprises grow rapidly, providing better medical products and services to society, and promoting human health.

Currently, KinghandCapital Management(beijing)CO.,Ltd. manages 16 RMB funds and 3 USD funds, with a total of 84 outstanding projects invested, including 16 IPO projects (one of which has obtained the CSRC registration approval). These include Provia Eye Hospital (301239), Jinxin Fertility (HK.1951), Sinomed Medical (688108), TiRobot (688277), Viva Biotech (HK.1873), Innovax (688253), Aipu Biology (688393), Clover Biopharmaceuticals (HK.2197), and Agis Technology (688581), among others. As of the latest date in 2023, one company has filed for a STAR Market IPO and been accepted; over the next two years, more than 10 invested companies are expected to be listed on major stock exchanges domestically and internationally.

Changhai Capital is a financial advisor focused on the healthcare sector, providing companies with in-depth, customized financing strategies and services. The team has extensive industry experience in the fields of life sciences, medical devices, IVD, and healthcare services. They have led and participated in the financing of several high-profile companies, assisting them in rapid growth and maximizing their value.