HeartCare Medical Officially Listed on HKEX, Bolstered by Multiple Core Capabilities Amid Fierce Competition in a Vast Blue Ocean Market

3 Unicorn Early Insights iponews

｜Insights Leverage New Capital｜

HeartCare (06609.HK) was listed on the Hong Kong Stock Exchange today, with an issue price of HK$171 per share. In yesterday's grey market trading, HeartCare closed down 14.9% at HK$145.5.

HeartCare announced that the H Shares initially offered under the International Offering have been oversubscribed, representing approximately 8.3 times the total number of H Shares initially available for subscription under the International Offering. The Hong Kong Offer Shares initially offered under the Hong Kong Public Offering have been substantially oversubscribed. A total of 235,040 valid applications were received for a total of 219.9 million Hong Kong Offer Shares, representing approximately 333.14 times the total number of H Shares initially available for subscription under the Hong Kong Public Offering.

On its listing debut, HeartCare opened down 23.27% at HK$131.2, with a market capitalization of HK$5.095 billion.

Editor | Arti

This document is for informational purposes only and does not constitute any trading or investment advice.

*Reply "HeartCare" to the Official Account to obtain the complete prospectus.

Pursuant to the relevant cornerstone investment agreements, the cornerstone investors of HeartCare have subscribed for a total of 3,000,600 H Shares, representing in aggregate approximately 7.73% of the Company's issued share capital immediately following the completion of the Global Offering and approximately 45.45% of the number of Offer Shares in the Global Offering, in each case assuming the Over-allotment Option is not exercised.

HeartCare intends to allocate approximately 45.3% of the net proceeds from this Hong Kong IPO to the Company’s core products; approximately 39.9% of the net proceeds are expected to be allocated to other pipeline products under development; approximately 4.8% of the net proceeds will be used to fund the enhancement of R&D capabilities through internal research and the continuous expansion of the product portfolio; and approximately 10.0% of the net proceeds are expected to be used for working capital and general corporate purposes.

Globally, stroke is a leading cause of death and disability. With the progressive aging of the population, the incidence of stroke in China has continued to rise in recent years, becoming the leading cause of death in 2019. On the other hand, innovations in neurointerventional technology are also driving a fundamental transformation in the treatment and prevention strategies for this critical disease.

HeartCare is a pioneer in neurointerventional medical devices in China, maintaining a leading position in the domestic neurointerventional market through a comprehensive portfolio of commercialized and pipeline products. Its core products include the Captor Thrombectomy Device, indicated for acute ischemic stroke to remove blood clots or thrombi from cerebral vessels; and the Left Atrial Appendage Occluder, designed for atrial fibrillation to prevent thromboembolism originating from the left atrial appendage.

Founded in June 2016, HeartCare boasts a broad product portfolio comprising three commercialized products and 20 pipeline products, covering all major stroke subtypes and procedural approaches in the neurointerventional field. The Company’s pipeline products for ischemic stroke prevention also enable it to capture demand in the cardiovascular disease market. All of the Company’s commercialized and pipeline products are independently developed in-house, encompassing the entire process from the design phase through product registration to commercialization.

The Company began selling thrombectomy devices, distal access catheters, and microcatheters in its product suite in 2020, and commenced sales of balloon occlusion catheters in April 2021. In addition, the Company expects to commercialize nine pipeline products in 2021, and an additional 10 pipeline products between 2022 and 2025, including the world’s first rapamycin-eluting intracranial drug-coated balloon catheter for the treatment of intracranial arterial stenosis.

HeartCare commenced commercial sales of its products in the first quarter of 2020. During the Track Record Period, all of the Company’s revenue was generated from the sales of the ExtraFlex™ distal access catheter, SupSelek™ microcatheter, and Captor. In 2020, revenue was RMB14.562 million, and gross profit was RMB7.087 million.

For 2019 and 2020, the total net losses were RMB75.5 million and RMB216 million, respectively.

Stroke is the most common and fatal intracranial vascular disease, classified into ischemic stroke and hemorrhagic stroke. In 2019, China ranked first globally in the number of stroke patients. The incidence rate recorded in recent years has continued to rise, largely due to the aging of China's population.

In recent years, innovations in neurointerventional technology are revolutionizing the treatment and prevention of stroke, leading to a fundamental shift from traditional anticoagulant therapy and intravenous thrombolysis to novel neurointerventional procedures with proven safety and significantly enhanced efficacy.

HeartCare's innovative and comprehensive product portfolio, coupled with a world-first and multiple China-first neurointerventional devices, positions it at the forefront of industry transformation.

According to data from CIC, in 2019, the number of stroke patients in China reached 14.08 million (including 11.90 million patients with ischemic stroke and 2.90 million patients with hemorrhagic stroke), and in 2019, the annual number of new ischemic stroke cases reached 2.30 million.

On the other hand, the penetration rate of neurointerventional procedures in China remains relatively low compared to that in developed countries. In the United States, as the American Heart Association (AHA) guidelines confirmed in 2015 that mechanical thrombectomy is a first-line treatment for ischemic stroke and an advanced technology, the penetration rate of the procedure rapidly increased from 1.4% in 2015 to 11.8% in 2019.

In contrast, the penetration rate of mechanical thrombectomy procedures in China stood at merely 1.7% in 2019, but is expected to benefit from the combined effects of technological innovation, favorable government policies, and the continuous growth of per capita disposable income and healthcare expenditure, reaching 42.9% by 2030.

As a leader in China's neurointerventional device market, HeartCare intends to seize the relevant growth opportunities to consolidate its leading market position.

Previously, the company has completed a total of five financing rounds, with three rounds of equity financing conducted last year alone. HeartCare's investors include CICC Pucheng,Fosun Pharma, SDIC Chuanghe and other investment institutions.

Overall, China's neurointerventional industry is currently in a phase of rapid expansion. Market participants are leveraging diverse strategies to bolster their product portfolios and distribution networks. Meanwhile, overseas enterprises holding a significant market share are also accelerating their initiatives, making it inevitable that industry competition will grow increasingly fierce in the future.

HeartCare's listing can, to a certain extent, effectively alleviate its financial pressure. However, industry monopoly remains the dominant theme in the current domestic market. For a sector that relies heavily on technological and capital backing, breaking market monopolies is by no means easy. In the long run, the low penetration rate in lower-tier markets has provided a window of opportunity for domestic players. The trend of domestic substitution in China's neurointerventional sector continues to strengthen, and may eventually foster a landscape where Chinese-made products compete on equal footing with foreign alternatives.

Responsible Editor: Zhang Haiying