Hanyu Medical Passes HKEX Listing Hearing: Pipeline Products Not Yet Commercialized, Core Patents Acquired

On September 13, information from the Hong Kong Stock Exchange indicated that Shanghai Hanyu Medical Technology Co., Ltd. (hereinafter referred to as "Hanyu Medical") passed the listing hearing. The updated prospectus shows that Hanyu Medical has supplemented the disclosure of financial data and other related information for the first quarter of 2021.

In the first quarter of 2021, Hanyu Medical's revenue was RMB 374,000, compared to RMB 53,000 in the same period of 2020; the loss for the period (net loss) was RMB 28.404 million, compared to RMB 16.619 million in the same period of 2020.

In 2019 and 2020, Hanyu Medical's operating revenues were RMB 0 and RMB 490,000, respectively, and its net losses were RMB 48.133 million and RMB 129 million, respectively. Hanyu Medical stated that it has not yet commercialized any pipeline products, and its 2020 revenue was primarily derived from veterinary treatment and pet healthcare services.

It is reported that Hanyu Medical, founded in 2016, is a medical technology company dedicated to the research, development, and commercialization of innovative medical devices in the field of structural heart disease. Its core product is the mitral valve interventional device, Valve Clamp, which is used for the minimally invasive interventional treatment of mitral regurgitation.

Previously, Hanyu Medical pursued a plan to list on the A-share market and engaged China International Capital Corporation (CICC) as its sponsor in December 2020. It underwent a listing tutoring period in preparation for the proposed A-share listing, which was subsequently terminated in March 2021. Hanyu Medical stated that, as of the latest practicable date, it has not submitted any application for an A-share listing to the China Securities Regulatory Commission (CSRC) or any stock exchange.

According to Frost & Sullivan, Hanyu Medical's core product, ValveClamp, is expected to become the first TMV device developed in China to be commercialized. However, Beiduo Finance has learned that the patents for both ValveClamp and another product under development, ReAces, were acquired through purchase.

The prospectus indicates that Hanyu Medical acquired the relevant patents for ValveClamp from Zhongshan Hospital in December 2018 for a total consideration of RMB 5 million, and acquired the relevant patent applications for ReAces from Zhongshan Hospital in February 2021 for a total consideration of RMB 4.6 million.

In January 2019, Hanyu Medical completed the exploratory first-in-man (FIM) clinical trial of ValveClamp, achieving a 100% surgical success rate, and initiated the confirmatory clinical trial of ValveClamp in February 2019.

According to the introduction, in March 2021, the confirmatory clinical trial for ValveClamp completed patient enrollment (102 subjects), with over 50% of the subjects having completed follow-up assessments. Hanyu Medical expects ValveClamp to complete registration and be launched in the first quarter of 2023.

In other words, Hanyu Medical will need another two to three years before it can expect to commercialize its pipeline products. Until then, the company is likely to face continued losses driven by research and development and administrative expenses. Hanyu Medical also disclosed this risk in its prospectus, noting that it expects to continue incurring net losses in the foreseeable future.

However, Hanyu Medical's V-clamp, an interventional device for mitral valve regurgitation in pets (particularly dogs), has entered the clinical application stage in China, the United States, Italy, Japan, Israel, and other countries, and is expected to achieve large-scale sales in the second half of 2021.

In 2019, 2020, and the first quarter of 2021, Hanyu Medical's R&D expenses were RMB 29.393 million, RMB 32.069 million, and RMB 15.642 million, respectively. The R&D expenses attributable to its core product, ValveClamp, accounted for 71.1%, 77.3%, and 46.3% of the total R&D expenses for the corresponding periods, respectively.

To date, Hanyu Medical holds 30 patents in China, including 8 invention patents and 22 utility models. Additionally, the company has 26 pending patent applications in China, including 20 invention patents and 6 utility models.

Regarding the equity structure, the parties acting in concert comprising Dai Yufeng, Founder, Chairman and General Manager of Hanyu Medical, and Yang Huixian collectively hold 28.29% of the shares, serving as the controlling shareholder of the company. Meanwhile, CITIC Industry Investment Fund under CITIC Securities holds 21.16% of the shares, and Taiyu Investment under Tigermed holds 6.17%.

Additionally, Shanghai Hehong Jinghui, Lize Fund, Yunfeng Capital, Zheshang Innovation Capital, Ruihua Capital, and Orient Securities are also shareholders of Hanyu Medical, but each individual shareholder holds less than a 5% stake. Among them, the founders of Yunfeng Capital include Jack Ma, Yu Feng, Shi Yuzhu, and others.

It is reported that in March 2021, institutions such as Yunfeng Capital and Ruihua Capital participated in Hanyu Medical's Series D+ financing round, with a total investment of 500 million RMB. Of this amount, Yunfeng Capital invested 200 million RMB, and Ruihua Capital contributed 65 million RMB.

Prior to the IPO, Yunfeng Capital held a 2.68% stake.