2021 Financial Report Season | CardioNexus Medical: Expanding from Neurointerventional Treatment to Prevention, Replicating R&D Strategy to Enter Three New Therapeutic Areas

Jingyuan Duan / Text

HeartCare Releases 2021 Earnings Report. During the reporting period, the company achieved revenue of approximately RMB 90.1 million, a year-on-year increase of 517%. The net loss attributable to the company's equity holders was approximately RMB 197.9 million, a year-on-year decrease of 8%. Gross profit was RMB 54.95 million, a year-on-year increase of 675.36%. Research and development expenses were approximately RMB 76.3 million, a year-on-year increase of 49%.

Financial report information shows that the significant increase in HeartCare's revenue last year was mainly due to two aspects: one was the substantial growth in sales revenue from the full set of commercialized ischemic stroke thrombectomy devices (mainly including the company's Captor™ thrombectomy device and ExtraFlex™ distal access catheter); the other was the additional revenue generated from the commercialization of intracranial artery stenosis treatment devices (including the OpenVas intracranial balloon dilation catheter and ThruVas carotid artery balloon dilation catheter).

Recently, a relevant person in charge of HeartCare introduced, "In the field of neurointervention, around the five major areas of stroke treatment and prevention, the four products—thrombectomy stents, distal access catheters, occlusion balloons, and microcatheters—have enabled the company to establish a brand advantage in the market. In terms of intracranial artery stenosis treatment devices, the company has already obtained certification for two balloon dilation catheters and one embolic protection device. Last year, the two balloon dilation catheters also began contributing to revenue."

According to the information obtained by Finance Network at the meeting, regarding the breakdown of HeartCare's revenue last year, the distal access catheter in the thrombectomy device category alone contributed 60% of the income.Taking the ExtraFlex™ Distal Access Catheter, which was commercialized for the first time last year, as an example, "The market share was expected to be around 5% last year," according to HeartCare. "The company hopes to use this rapidly growing single product to drive the sales growth of more products and enhance brand image." From the company's perspective, achieving such a market share in the first year of commercialization is a "satisfactory" result.

In fact, this also reflects the current situation of China's neurointerventional market. The market is growing rapidly but still has significant room for penetration. Under the current competitive landscape, multinational corporations remain the largest players, capturing over half of the market share. On the other hand, competition among domestic companies is also intensifying as they strive to challenge the market position of early entrants while facing an increasingly fierce market environment.

"There are many细分 fields in the neurointerventional sector, with a vast market and a relatively flat pipeline status quo; the layouts of different companies vary. However, in recent years, as multiple companies have expanded their product pipelines and advanced commercialization and market entry, there will be交叉and overlap in the fields they cover," a relevant负责人from HeartCare admitted at the conference. "In the past, the rhythm of research and development and market entry for products in the neurointerventional field might have been one product every two to three years, but now it’s completely different—competition among everyone will accelerate."

"It is difficult for a single product to exceed one billion in sales in the neurointervention field," a characteristic determined by the industry itself. To break through the industry's "bottleneck," Caijing Network has observed that HeartCare’s current approach is — on the R&D front: upgrading core products and expanding business areas. On the other hand, during earnings calls, HeartCare's management has repeatedly emphasized the need to possess the capability of "stable supply."

According to a company representative, a series of products already launched by HeartCare are undergoing iterative upgrades, including thrombectomy stents and distal access catheters, among others. "This year, the company will have 11 products available for sale in the market." The R&D pipeline disclosed by the company shows that there are currently four products in the registration phase — intracranial thrombus aspiration catheters, neuro microcatheters, support catheters, and left atrial appendage occluders.

Notably, among the four products in the aforementioned registration phase, one is the "Left Atrial Appendage Occluder" — a preventive protection device used for ischemic stroke prevention."In addition to the treatment field, prevention is also a very important strategic direction, which is a distinctive feature of HeartCare," the company's head pointed out.

Caijing.com also noticed that in the IPO prospectus of HeartCare, it mentioned, "planning to achieve a one-stop solution for stroke treatment and prevention."

"The field of neurointervention has been the foundation of the company's pipeline since its establishment, but we must also consider what kind of products the company needs to deliver 3-5 years from now to provide sustained momentum for its development," the aforementioned person in charge stated directly.

Apart from the neurointervention field, HeartCare has expanded into three business segments—cardiac intervention, pulmonary intervention, and computer-assisted technology. Why were these three new areas chosen? According to a senior executive at HeartCare, "The logic is the same as when we first chose the neurointervention field: we select disease types with high incidence rates in China, where related procedures are growing rapidly. Against the backdrop of massive demand and evolving procedural techniques, the development and launch of products can bring continuous revenue to the company."

As the product pipeline for neurointerventional surgeries gradually becomes complete, HeartCare has expanded into the cardiac intervention field, enabling a one-stop solution for stroke and atrial fibrillation treatment as well as left atrial appendage closure. Cardiac intervention inevitably involves the valve space, and HeartCare recently announced an investment of 34.8 million yuan to acquire shares in Yuban Medical, achieving product deployment in the mitral and tricuspid valve areas. In pulmonary intervention, focusing on pulmonary embolism, pulmonary artery stenosis, and related venous diseases, HeartCare has drawn from its experience in the neurointerventional field to establish a presence in thrombectomy, aspiration, and balloon catheter technologies. Additionally, leveraging the advantages of consumables and end-user channels across multiple interventional fields, there is a need for navigation and planning systems in neurosurgery, prompting HeartCare to strategically expand into the field of computer-assisted technology.

HeartCare's representative believes, "Only when there are enough products in the pipeline can a scaled synergistic effect be formed, which can further amplify the advantages of R&D and efficient iteration at the product pipeline end."

It is worth mentioning that the upstream and downstream of medical devices are connected to the supply chain and commercial channels.

It is undeniable that in the past, multinational companies occupied more than half of the market share. However, with the rapid rise of Chinese manufacturers, increasing in number, the thin line between low penetration rates and market saturation has become apparent. For medical devices, especially high-value consumables, the key to achieving rapid business channel expansion remains gaining the recognition of doctors.

"In the past, we focused more on platform building and didn’t spend heavily on acquiring products or technologies because only by nurturing our own team and mastering core technologies in our hands can we understand and control the technologies. Obtaining the registration certificate is just the first step; the key is how to ensure a continuous and stable supply, improve brand quality, gain recognition from doctors, and form a virtuous cycle," said a relevant company official.

Another element frequently mentioned at the earnings communication meeting is the "supply chain." HeartCare believes that only the stability and reliability of the supply chain can boost production capacity, which will be a key competitive advantage in the neurointervention field over the next few years. "In the Chinese market, regardless of whether they are domestic or foreign enterprises, many raw materials are supplied by only one or two overseas suppliers. As production and sales continue to grow, internalizing some upstream materials will be crucial for ensuring stable supply," HeartCare noted.

[Author: Duan Jingyuan](Edited by Duan Jingyuan)