Medical Companies Rush to File IPOs: Kailion Biopharma, Aide Medical, Tong Ren Tang Healthcare Among New Wave

Previously, VCBeat noted that China’s capital markets had resumed acceptance of initial public offering (IPO) applications after a hiatus of nearly six months. Overnight, long-silent healthcare companies flocked back to the capital markets. Between June 27 and 28 alone, four healthcare firms had their IPO applications accepted by the Beijing Stock Exchange, while two others submitted listing applications to the Hong Kong Stock Exchange.

The response was remarkably swift, clearly indicating that these companies had been long prepared. Enterprises from various sectors—including innovative drugs, active pharmaceutical ingredients (APIs), medical devices, and traditional Chinese medicine—are at the forefront, poised for action. Some have repeatedly ventured into the capital markets despite previous setbacks, while others are embarking on their first attempt to launch a new commercialization cycle. All are eager to seize this rare IPO window of opportunity.

So, will this wave of companies rushing forward, triggered by the resumption of IPO application reviews, herald a new IPO boom, or will it quickly fade back into silence? We attempt to find the answer by examining these companies that have moved the fastest after being suppressed.

Following the resumption of IPOs, it was the familiar faces in the capital markets that moved first. During the years when healthcare IPOs surged and then slowed, these companies navigated multiple capital markets but found themselves lacking in luck.

Since 2020, amid a favorable environment for innovation, the healthcare industry has entered a peak year for initial public offerings (IPOs), with ringing the bell on the capital market becoming almost a standard milestone in every entrepreneur’s career plan. However, the capital market once seemed out of reach.

On one hand, since the second half of 2022, there have been continuous reports of tightening IPO regulations, ranging from the ChiNext Board of the Shenzhen Stock Exchange to the STAR Market of the Shanghai Stock Exchange. Medical enterprises’ innovative attributes and operational capabilities have been subject to repeated inquiries, and an increasing number of companies have ultimately failed to secure registration even after completing the listing committee review process. On the other hand, companies themselves are experiencing growing pains. The macroeconomic environment in which medical innovation enterprises operate is undergoing significant changes, spanning market demand, procurement rules, and payment methods. This has led to a sudden increase in operational pressure and made revenue growth unpredictable.

On June 27, AND’s IPO application submitted to the Beijing Stock Exchange was accepted, marking its second attempt at going public. In September 2022, AND had previously filed for an IPO on the ChiNext board; however, six months later, before responding to the first round of inquiries, it voluntarily withdrew its application. During this period, the ChiNext board was also undergoing revisions to its listing standards, placing greater emphasis on sector positioning, corporate growth potential, and R&D capabilities. As a result, some companies that had applied to list on ChiNext experienced significant delays in obtaining registration approval.

Meanwhile, the operating environment for AND has also changed, resulting in weak performance. According to the prospectus, AND is primarily engaged in the research and development, production, and sales of medical devices, with a focus on orthopedic consumables. Its main products include orthopedic medical consumables such as spinal, trauma, and sports medicine implants, as well as wound repair products for wound healing. In 2021 and 2022, AND’s net profit after deducting non-recurring gains and losses exceeded RMB 80 million each year. However, under the pressure of centralized volume-based procurement (VBP) for medical consumables, AND’s net profit after deducting non-recurring gains and losses dropped significantly to RMB 50 million in 2023. In the first three months of 2024, AND’s profitability continued to shrink, with its net profit after deducting non-recurring gains and losses declining by 35.71% year-on-year.

However, after years of deep commitment to innovation in orthopedic consumables, AND has grown into a leading enterprise in its niche segment. According to data from Yixiehui, in 2023, AND ranked third among domestic manufacturers of spinal vertebroplasty systems and sixth among domestic manufacturers of spinal implantable medical devices. It is perhaps this competitive advantage established in its vertical sector that has given AND the confidence to re-enter the capital markets.

Another company affected by the macroeconomic environment is JiaChuang Biology, based in Wuhan. Its application for listing on the Beijing Stock Exchange was also accepted on June 27.

Public information shows that Jiachuang Biotechnology had previously sought listings on the STAR Market and the ChiNext board before ultimately setting its sights on the Beijing Stock Exchange. In December 2020, Jiachuang Biotechnology filed for an IPO on the STAR Market but was rejected at the review meeting in April of the following year. One year later, the company submitted a listing application to the ChiNext board, only to voluntarily withdraw it six months afterward.

Jiachuang Bio’s core business is providing cell characterization and virus clearance process validation services to biopharmaceutical companies, medical institutions, and research institutes. As one of the earliest third-party specialized service providers in China to enter the field of cell quality control, assessment, and testing for biological products, Jiachuang Bio has accumulated extensive industry experience. During the COVID-19 pandemic, it provided technical support to numerous vaccine and diagnostic reagent manufacturers, leading to a surge in performance and marking its entry into the capital markets.

However, Jiacre Biotech’s performance growth failed to sustain. The prospectus shows that from 2021 to 2023, Jiacre Biotech’s net profit after deducting non-recurring gains and losses declined continuously, dropping from RMB 63 million to RMB 43 million. In the first three months of 2024, its net profit after deducting non-recurring gains and losses fell by 42.47% year-on-year. On the ChiNext board, which increasingly emphasizes corporate growth potential, such operational performance inevitably lacks competitiveness.

Coincidentally, Chicheng Biology, whose IPO application was accepted by the Beijing Stock Exchange on the same day, also transferred from the ChiNext board and is currently grappling with a sharp decline in performance.

In 2015, Chicheng Bio listed on the National Equities Exchange and Quotations (NEEQ). In April 2021, Chicheng Bio terminated its NEEQ listing, citing “the need to improve operational decision-making efficiency and reduce corporate operating costs in accordance with its long-term development strategy.” In July 2021, Chicheng Bio submitted pre-IPO tutoring materials for a ChiNext listing to the China Securities Regulatory Commission (CSRC) but did not proceed to the formal IPO application stage. Notably, in November 2023, following the opening of the Beijing Stock Exchange (BSE), Chicheng Bio re-applied for NEEQ listing with the National Equities Exchange and Quotations Company, paving the way for its subsequent IPO application to the BSE.

As a plant extraction enterprise, Chicheng Biology’s core products include tannic acid, gallic acid series products, and derivative compounds, which are primarily used as raw materials, auxiliary materials, and additives in industries such as pharmaceutical intermediates, animal feed, and food. According to the prospectus, tannic acid, when used as a feed additive, was once a significant source of revenue for Chicheng Biology, generating RMB 82 million in 2021 and accounting for 22.89% of its total revenue. However, by 2022, revenue from this product plummeted to RMB 21 million, representing a decline of 290.48%. The slump in sales of core products has naturally placed pressure on Chicheng Biology’s path to going public.

"In a sense, the more lenient listing requirements of the Beijing Stock Exchange have provided greater room for those healthcare companies currently undergoing growing pains."

Yaojie Ankang, which has made three attempts to enter the capital markets, was the only one among six healthcare companies that sought a listing on the STAR Market. In August 2021, after completing nine rounds of primary market financing and achieving a post-money valuation of RMB 4.59 billion, Yaojie Ankang formally submitted its prospectus to the Hong Kong Stock Exchange (HKEX), aiming for a main board listing. However, the company did not schedule a hearing, did not initiate the offering process, and the IPO has now been effectively terminated. Subsequently, in October 2022, Yaojie Ankang signed an IPO tutoring agreement with CITIC Securities, planning to formally submit its prospectus as early as the first quarter of 2023, but no further progress was made.

Founded in 2014, Medicenna Therapeutics is a typical biotech company. Guided by clinical needs, Medicenna focuses on the discovery and development of innovative small-molecule therapies for oncology, inflammation, and cardiometabolic diseases, with its key pipelines currently in registrational clinical trials. After missing out on the IPO boom on the Hong Kong Stock Exchange and the STAR Market, Medicenna has become even more eager to go public.

According to the prospectus, Adagene has established a pipeline comprising six clinical-stage candidate products and one preclinical-stage candidate product. Its core product, Tinengotinib (TT-00420), is a uniquely self-developed multi-target kinase (MTK) inhibitor currently in the registration stage, with the potential to become a global first-in-class drug. At present, Adagene plans to first commercialize Tinengotinib for the treatment of cholangiocarcinoma in China and is preparing to establish an internal commercial team.

Biotech’s Return to the HKEX: The Positive Signal Sent by This Move Will Clearly Inspire More Than Just Investors in Allist Pharmaceuticals.

Among the healthcare companies rushing to the capital markets in this wave, Elpiscience and Tongrentang Medical & Elderly Care are newcomers making their debut. Behind them, we see new narrative threads for innovative medical enterprises. In the past, people favored zero-to-one innovation, using ingenious creations to disrupt existing medical paradigms. Today, however, innovation attempts with more controllable outcomes are becoming increasingly attractive.

Among them, Elpiscience, founded in 2017, is also a clinical-stage biopharmaceutical company dedicated to innovating cancer treatments globally through next-generation therapies. The distinction lies in the fact that Elpiscience’s R&D pipeline is closer to commercialization and cash flow generation. Rather than persisting in bringing entirely novel technologies from the laboratory to clinical settings, Elpiscience appears more committed to developing medicines that address urgent clinical needs. In this process, Elpiscience’s core team has demonstrated strong business development capabilities.

According to the prospectus, Elpiscience’s innovative pipeline comprises six core assets, with four in clinical stages and two in preclinical stages. The last time Elpiscience stepped into the spotlight was at the end of 2023, when it completed a business development (BD) deal. According to statistics from the VCBeat Orange Database, this transaction ranked fourth in total value among all BD deals completed by Chinese biotech companies in 2023.

On December 28, Elpiscience announced that it had entered into a collaborative development and license agreement with Astellas regarding its novel BiME (Bispecific Macrophage Engager) platform, the candidate drug ES019, and another molecular program. The two parties will collaborate to complete the development of these two projects, and Elpiscience retains the option to grant Astellas rights to collaboratively develop two additional products.

Under the agreement, Elpiscience will receive an upfront payment and option exercise fees totaling $37 million from Astellas. In addition, Elpiscience will receive additional R&D funding from Astellas to advance project development. Upon Astellas’ exercise of all options, Elpiscience will be eligible for potential development, regulatory, and commercialization milestone payments totaling more than $1.7 billion. Elpiscience will also receive tiered royalties ranging from high single digits to low double digits on global net sales of the licensed products.

In addition to out-licensing its proprietary pipeline, Elpiscience has built its core portfolio through in-licensing. In 2018, Elpiscience licensed ES102 from a Nasdaq-listed company. ES102 is specifically indicated for cancer patients who respond poorly to immune checkpoint inhibitors (ICIs) and currently constitutes Elpiscience’s core pipeline.

As an advanced clinical hexavalent OX40 agonist antibody, ES102 has demonstrated favorable safety and antitumor activity in clinical trials, both as a monotherapy and in combination with programmed cell death protein 1 (PD-1) antibodies, including in patients with non-small cell lung cancer (NSCLC) and esophageal squamous cell carcinoma (ESCC) who are resistant to PD-1 checkpoint inhibitors. Currently, Elpiscience has completed two Phase I clinical trials of ES102 in China involving patients with advanced solid tumors.

For investors who increasingly value certainty, biotech companies capable of better controlling and optimizing their high-quality assets undoubtedly hold particular appeal.

Tongrentang Medical and Elderly Care Group, which submitted its listing application to the Hong Kong Stock Exchange on June 28, is a wholly-owned second-tier subsidiary under Tongrentang Group. Officially established in 2019 with pharmaceutical manufacturing as its core business, it constitutes an important component of Tongrentang’s “1+N” big health industry landscape, focusing on the development of medical and elderly care services. If Tongrentang Medical and Elderly Care successfully lists, the century-old brand Tongrentang will have four listed entities: Tongrentang, Tongrentang Technologies, Tongrentang Chinese Medicine, and Tongrentang Commercial.

Beyond its household-name traditional Chinese medicine brands, the most prominent hallmark of Tongrentang Medical and Elderly Care has been achieving stable, rapid growth through industrial mergers and acquisitions. In 2015, Tongrentang established Beijing Tongrentang Investment Development Co., Ltd., a platform integrating industry with finance and fostering new business areas, to position itself in the healthcare, elderly care, and broader health sectors. This entity served as the predecessor to Tongrentang Medical and Elderly Care.

Through medical industry funds issued by its subsidiary medical investment company, Tongrentang Medical and Elderly Care has set its sights on M&A-driven expansion in the traditional Chinese medicine (TCM) sector. In 2022, Tongrentang Medical and Elderly Care acquired Yiwu Sanxitang, then the largest single TCM clinic in China, and subsequently obtained a 49% equity stake in its Second TCM Hospital and the Nansanhuan Zhonglu Pharmacy through a transfer from Tongrentang. In February 2024, Tongrentang Medical and Elderly Care completed the acquisition of equity in Shanghai Chengzhitang, a subsidiary of the time-honored TCM brand Wan Chengzhitang, for RMB 91 million.

According to the prospectus, Tongrentang Medical and Elderly Care has now become the largest group of traditional Chinese medicine (TCM) hospitals in China. Between 2022 and 2023, its gross profit margin continued to rise, primarily driven by the acquisition of Sanxitang. On one hand, certain medical products sold by Sanxitang Pharmacy, such as premium and fine herbal materials, contributed higher gross margins; on the other hand, the integration of Sanxitang Healthcare Center spurred economies of scale for Tongrentang Medical and Elderly Care.

For both Elpiscience and Tongrentang Medical & Elderly Care, the scope of innovation is expanding from purely technological and business model innovations to a more multidimensional approach that integrates asset management and project management. Currently, the operational certainty delivered by proficient asset trading and management has become a new narrative increasingly sought after by investors.

In contrast to the bustling activity on the Beijing Stock Exchange and the Hong Kong Stock Exchange, the STAR Market and the ChiNext remain relatively subdued. A divergent landscape is taking shape among capital markets, with each developing its capacity to provide financial support to different types of innovative enterprises.

On the one hand, the listing rules for the STAR Market and the ChiNext Board have become increasingly stringent following multiple rounds of adjustments. Admittedly, the ChiNext Board has always been a relatively distant prospect for most early-stage medical innovation enterprises. However, the tightening of registration-based oversight has now made it difficult even for some more mature medical innovation companies to list on the ChiNext Board.

Since its launch in 2019, a major highlight of the STAR Market has been that Listing Standard V allows unprofitable companies to go public. However, since 2023, there have been frequent reports in the industry that applications under Listing Standard V are no longer being accepted, and subsequently, almost no unprofitable biotechnology companies have listed on the STAR Market through this standard.

Although regulatory authorities have not yet clarified adjustments to the standards, the capital market has continuously issued more detailed and stringent requirements for companies applying for listing on the STAR Market. For instance, in the "Decision on Amending the 'Guidelines for Evaluating Sci-Tech Innovation Attributes (Trial)'", the cumulative R&D expenditure over the past three years was adjusted from "more than RMB 60 million" to "more than RMB 80 million"; the requirement for "at least five invention patents applied to the company's core business" was revised to "at least seven invention patents applied to the company's core business and capable of industrialization"; the compound annual growth rate (CAGR) of operating revenue over the past three years was raised from "reaching 20%" to "reaching 25%"; and the criterion of "a total of at least 50 invention patents (including national defense patents) that constitute core technologies and are applied to the core business" was modified to "a total of at least 50 invention patents (including national defense patents) that constitute core technologies, are applied to the core business, and are capable of industrialization."

In this sense, while the STAR Market requires companies to possess stronger scientific and technological innovation attributes, it also emphasizes the potential for industrialization. For some early-stage medical innovation enterprises, meeting the STAR Market’s requirements is already considerably challenging.

On the other hand, the Beijing Stock Exchange and the Hong Kong Stock Exchange have continuously adjusted their listing standards, bringing more medical innovation enterprises closer to the prospect of an IPO.

On September 1, 2023, the Beijing Stock Exchange (BSE) officially released the “19 Measures for Deepening Reform,” explicitly permitting high-quality small and medium-sized enterprises (SMEs) that already meet listing conditions to conduct initial public offerings (IPOs) and list on the BSE, provided they align with the exchange’s market positioning. Against the backdrop of generally elevated listing standards, the BSE has offered a new listing avenue for a large number of innovative SMEs, characterized by its high inclusiveness, compact and controllable timelines, and rapid review process.

Meanwhile, since 2024, listing in Hong Kong has once again become a hot topic in the innovation and entrepreneurship community. According to media statistics, as of the end of May, 84 companies had submitted listing applications to the Hong Kong Stock Exchange. These companies are primarily from sectors such as healthcare, finance, artificial intelligence, and consumer goods, with over 90% being mainland Chinese enterprises.

The underlying reason lies in the intensifying regulatory support for Hong Kong’s capital market. Previously, the China Securities Regulatory Commission (CSRC) unveiled five measures to enhance cooperation between mainland and Hong Kong capital markets: expanding the scope of eligible Stock Connect Exchange-Traded Funds (ETFs) under the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect programs; including Infrastructure Real Estate Investment Trusts (REITs) in the Stock Connect scheme; supporting the inclusion of RMB-denominated stock trading counters into the Southbound Trading link; optimizing the Mutual Recognition of Funds arrangement; and encouraging leading mainland industry enterprises to list in Hong Kong, all aimed at stimulating vitality in Hong Kong’s capital market.

At present, the Beijing Stock Exchange and the Hong Kong Stock Exchange are becoming hotbeds for initial public offerings (IPOs). Whether these capital markets can fulfill the high expectations of entrepreneurs and investors remains to be seen.