NovoMatrix SciTech: China's First Microsphere Materials Stock Soars Over 10x on Debut, Attracting Investor Confidence

On June 23, 2021, NanoMicro Technology, a provider of core microsphere materials and related technical solutions, listed on the STAR Market, becoming the first company in the industry to complete an initial public offering (IPO).

NanoMicro Technology opened at 93 yuan, surging 1,052.42% above its issue price. As of press time, its shares were trading at 93.5 yuan each, representing a gain of 1,058.61%.

(Image source: Screenshot from Sina Finance)

According to VCBeat, NanoMicro Technology is a high-tech enterprise specializing in the R&D, large-scale production, sales, and application services of high-performance nanosphere materials. It provides core microsphere materials and related technical solutions to customers in fields such as biopharmaceuticals, flat-panel displays, analytical testing, and in vitro diagnostics. Since its establishment, the company has focused on research into the preparation and application technologies of high-performance nanospheres, striving to become a globally leading microsphere brand.

Previously, NanoMicro Technology received investments from renowned institutions such as Yuansheng Venture Capital, Huaxing New Economy Fund, Hillhouse Ventures, Sequoia Capital, WuXi AppTec, SDIC Chuanghe Investment, and Huimei Capital. Among them, Yuansheng Venture Capital, as the earliest investor in NanoMicro Technology, is also currently its largest institutional shareholder.

Dr. Jiang Biwang, Founder of NanoMicro Technology: “Since its inception, NanoMicro has continuously advanced key technologies in nanospheres, striving to overcome the critical bottlenecks in this field. We forwent shortcuts and chose the most challenging path. We are proud to state that NanoMicro now offers the world’s most comprehensive portfolio of nanosphere products, with multiple technologies ranking first globally, and some even being unique worldwide. We have not only resolved global challenges and broken the long-standing monopoly held by foreign companies but also made our contribution to the global nanosphere industry. The development journey of NanoMicro would not have been possible without the support from the Suzhou Industrial Park and the Changshu government, without the backing of customers across various downstream industries, without the trust and investment from our investors, and above all, without the dedication and hard work of our team. Thank you all. The honor and joy of NanoMicro’s listing today belong to everyone.”

Mr. Chen Jie, Partner at Yuansheng Venture Capital: “As NanoMicro’s largest and earliest institutional investor, Yuansheng Venture Capital has invested in NanoMicro through every RMB-denominated fund since 2016, accompanying the company throughout its growth journey. We are delighted to witness NanoMicro’s listing today and extend our congratulations to NanoMicro and Dr. Jiang’s team for achieving this milestone after a challenging entrepreneurial journey. We believe that the IPO is merely the beginning of NanoMicro’s rapid development. As China’s biopharmaceutical industry continues to advance, NanoMicro, as a provider of critical consumables, has broken the long-standing monopoly held by foreign companies. We are confident that NanoMicro’s future prospects will be even more brilliant.”

Sequoia Capital China Fund is a key investor in NanoMicro Technology,

As the first publicly listed company in China specializing in microsphere materials, what are the prospects for NanoMicro Technology? What constitutes its core competitiveness? This article will reveal all.

According to the prospectus of NanoMicro Technology, the company has overcome technical challenges in the precise preparation of microspheres, achieving accurate control over particle size, pore size, and surface properties of microsphere materials. It has successfully applied its products in numerous fields, including biopharmaceuticals, flat-panel displays, analytical testing, and in vitro diagnostics. This breakthrough has ended the long-standing technological and product monopoly held by leading foreign enterprises, accelerated the domestic production of high-performance chromatography media and spacer microspheres, and facilitated the entry of independently developed Chinese products into markets in Europe and other developed countries.

High-performance microsphere materials are indispensable core foundational materials in fields such as biopharmaceuticals, flat-panel displays, analytical testing, and in vitro diagnostics. Their preparation and application have been listed by Science and Technology Daily as one of the 35 “chokehold” technologies constraining China’s industrial development.

For a long time, China has relied heavily on imported core materials such as chromatographic packing resins and microspheres for the separation and purification of biologic macromolecule drugs or small organic molecule drugs. The persistently high costs have constrained the development of China’s biopharmaceutical industry. Therefore, high-performance domestically produced microsphere materials that can serve as substitutes for imported products hold significant market potential.

Through more than a decade of cross-disciplinary R&D innovation, technological advancement, and product accumulation, NanoMicro Technology has established a comprehensive system for the R&D, application, and industrialization of precision microsphere preparation technologies. The company has independently developed multiple core proprietary technologies and is one of the few companies worldwide capable of simultaneously manufacturing high-performance inorganic and organic nanosphere materials at scale. According to reports, NanoMicro Technology can precisely control the size, morphology, material composition, and surface functionalization of microsphere materials based on key application requirements in relevant fields, enabling precise and customized production.

Currently, NanoMicro Technology offers uniform microspheres with specific sizes, structures, and functional groups, featuring particle sizes ranging from a few nanometers to hundreds of micrometers and pore sizes ranging from a few nanometers to several hundred nanometers. Its core products include chromatography resins/media for large-scale separation and purification in biopharmaceuticals, chromatography columns for pharmaceutical impurity analysis and testing, and spacer microspheres for controlling the cell gap thickness of LCD panels. Additionally, the company provides technical services for separation and purification to its customers.

NanoMicro Technology stated: “The company’s core products have broken the long-standing monopoly by foreign manufacturers on key materials in fields such as biopharmaceuticals and flat-panel displays. Domestically, it has established collaborations with multiple large and renowned pharmaceutical enterprises, including Hengrui Medicine, Livzon Pharmaceutical Group, Fosun Pharma, Better Pharmaceutical, and Hisun Pharmaceutical, thereby facilitating import substitution of key materials, reducing production costs, and contributing to the enhancement of production process standards, resource utilization efficiency, and industrial value-added within China’s pharmaceutical industry. Internationally, its products have been expanded into developed markets such as Europe, the United States, and South Korea.”

It is understood that NanoMicro Technology’s products and services primarily target two major application areas: biopharmaceuticals and flat-panel displays. In the biopharmaceutical sector, the company mainly provides key separation and purification materials for large-scale drug production, while also offering separation and analytical chromatography columns, along with related instruments and equipment, for drug quality testing and scientific research.

(NanoMicro Technology's Service Products in the Biopharmaceutical Field)

According to the prospectus of NanoMicro Technology, the drug separation and purification process is closely related to drug quality, and the associated investments constitute a major component of drug production costs. Particularly in the field of biopharmaceuticals, due to the poor stability of biomolecules, high impurity levels, complex structures, and high sensitivity to external environments, the technical challenges of separating and purifying biologics are significant. This often becomes the primary bottleneck and cost driver in the production process. Chromatography resins/chromatographic media are at the core of separation and purification, serving as key factors that determine the efficiency of drug separation and purification as well as product quality. Chromatography columns, meanwhile, are the most critical consumables for drug quality testing and laboratory separation analysis. Therefore, both industrial-scale separation and purification in biopharmaceutical manufacturing and drug quality testing rely heavily on chromatography resins/chromatographic media and chromatography columns.

Chromatography can be divided into preparative chromatography and analytical chromatography. The former is used for industrial separation and purification; when pharmaceutical companies use preparative chromatography for large-scale separation and purification, they typically purchase packing materials directly. The latter is used for laboratory analysis and testing; laboratories and other institutions generally require suppliers to pre-pack the packing materials into columns for their use.

NanoMicro Technology’s product portfolio includes various chromatography resins/media required for large-scale separation and purification of pharmaceuticals, as well as chromatography columns and related supporting instruments and equipment used for pharmaceutical quality control and laboratory separation analysis.

According to data from MarketsandMarkets™, the global market size of the chromatography media industry was USD 1.978 billion in 2018, with a projected compound annual growth rate (CAGR) of 7.16% from 2019 to 2024, reaching USD 2.993 billion by 2024. In the coming years, market growth for chromatography media will be primarily driven by increasing demand from downstream biopharmaceutical and food industries. Furthermore, the development of contract manufacturing organizations (CMOs) and contract research organizations (CROs) in the pharmaceutical sector, the growing market demand for biosimilars and pre-packed chromatography columns, and the widespread adoption of liquid chromatography-mass spectrometry (LC-MS) technology in analytical research and development will all provide significant market opportunities for the further development of the chromatography media industry.

From a geographical perspective, as one of the largest economies and consumer markets in the Asia-Pacific region, China holds immense market potential and demonstrates strong growth momentum in the chromatography industry. In 2018, Japan held the largest share of the chromatography resin market in the Asia-Pacific region, accounting for 40.45%, with the Chinese market following closely at 25.17%. Driven by factors such as the rapid development of the biopharmaceutical market, the Chinese market is projected to maintain a high growth rate of 11.30% by 2024, with its market size share reaching 28.03%.

NanoMicro Technology stated, “In the field of biopharmaceuticals, chromatography is virtually the sole means for separation and purification; the manufacturing of high-purity, high-activity biological products relies fundamentally on chromatographic separation technology.”

According to the prospectus of NanoMicro Technology, the proportion of revenue from its biopharmaceutical products increased year by year during the reporting period, rising from 65.48% in 2017 to 71.24% in 2018, 76.76% in 2019, and 81.53% in the first nine months of 2020. It is understood that NanoMicro Technology’s customers in the biopharmaceutical sector include pharmaceutical manufacturers, research institutes, chromatography column manufacturers, and CROs, with pharmaceutical manufacturers being its primary clientele.

In terms of products, its silica gel chromatography media have demonstrated strong market performance, generating operating revenues of RMB 5.2005 million, RMB 11.3746 million, RMB 14.5036 million, and RMB 17.1310 million during the reporting period, respectively. The compound annual growth rate (CAGR) from 2017 to 2019 was 67%, positioning the company to capture a larger market share in the future. Revenue from its core product, polymer chromatography media, has increased year by year, accounting for a significant proportion of total revenue and showing an overall upward trend. Meanwhile, sales volume of its chromatography columns has surged substantially, driven by the subsidiary’s gradual introduction of new models and specifications.

According to the prospectus of NanoMicro Technology, its main competitors are all large foreign technology companies. Currently, there are no listed companies in China’s pharmaceutical separation and purification sector whose core business focuses on the research, development, production, and sales of nanosphere materials.

Furthermore, NanoMicro Technology benefits from policy advantages and high technical barriers, resulting in strong customer stickiness. Specifically, according to relevant regulations such as the *Technical Guidelines for the Management of Changes in the Manufacturing Process of Biological Products*, any changes to separation and purification methods must undergo relevant technical evaluations and validation.Therefore, pharmaceutical companies are required to report the manufacturers of relevant chromatography resins/media upon product approval. If a supplier is changed, the company must conduct trial production and testing of the product using the new materials and complete the corresponding change procedures with the National Medical Products Administration (NMPA). This regulatory requirement results in strong customer stickiness to chromatography resin and media suppliers in the biopharmaceutical sector.

NanoMicro Technology stated: “When the company’s chromatography resins/media enter the supply chains of downstream biopharmaceutical customers, they generally need to pass the customers’ internal qualification processes. Each new product sold to different customers requires separate qualification. The relevant qualification process involves multiple stages, including product performance evaluation and review of experimental data, resulting in a lengthy qualification cycle. Depending on the specific internal qualification requirements of each customer, the time required for qualification ranges from six months to three years. To date, NanoMicro Technology has passed the internal qualifications of 13 pharmaceutical companies.”

(NanoMicro Technology Products Obtained Internal Certification from Biopharmaceutical Enterprise Customers)

The prospectus shows that NanoMicro Technology has multiple advantages, including strong innovation capabilities, a rich variety of products, large-scale production, comprehensive technical services, and short response times.

Through continuous R&D and innovation, NanoMicro Technology has broken through and mastered the foundational technologies for the precise preparation of microspheres. This has enabled precise control over particle size and particle size distribution, accurate regulation of pore size, pore size distribution, and specific surface area, as well as the modulation of surface properties and functionalization, all scaled for industrial production and application. Leveraging these core microsphere preparation technologies, the company has developed silica-based chromatographic resins for the separation and purification of small molecules, as well as chromatography media for the separation and purification of large biomolecules. Its comprehensive product portfolio meets the diverse needs of various customers.

Currently, few domestic filler manufacturers are capable of large-scale production. NanoMicro Technology has established an R&D and production base of approximately 12,000 square meters in Suzhou Industrial Park, as well as a large-scale production base of around 18,000 square meters in the Changshu New Material Industrial Park. With its capacity for mass production, the company ensures a secure product supply. Meanwhile, it maintains a comprehensive quality control system and has obtained ISO 9001 certification for its quality management system. Some of its products have passed customer quality inspections and have been exported to developed countries and regions such as South Korea, Europe, and the United States.

In terms of comprehensive technical services, NanoMicro Technology has invested in establishing well-equipped laboratories for biopharmaceutical and chiral drug separation and purification, as well as a pilot-scale amplification platform. The company also boasts a professional applied technology team capable of providing personalized services such as chromatography resin screening, production cost assessment, product impurity analysis and testing, and customization of specialized chromatography products. Additionally, it offers process scale-up and holistic solutions covering all stages from “laboratory research to pilot trials and large-scale production.” Furthermore, leveraging its domestic manufacturing advantages, NanoMicro Technology achieves a supply lead time of only two weeks, demonstrating significant superiority in timeliness.

In terms of innovative R&D, leveraging years of technological accumulation, NanoMicro Technology has currently established a microsphere synthesis technology platform, a microsphere functionalization technology platform, and a microsphere application technology platform. The company has achieved breakthroughs in multiple high-end microsphere preparation technology fields, including monodisperse silica chromatography media, Protein A affinity chromatography resins, conductive gold microspheres, and magnetic microspheres.

The prospectus shows that during the reporting period, NanoMicro Technology's R&D expense ratios were 25.66%, 31.69%, 22.66%, and 18.42%, respectively. From 2017 to 2019, its R&D expenses increased year by year, with the proportion of R&D expenses to operating revenue remaining above 20%. In addition, NanoMicro Technology's R&D investment continued to grow. In 2018, R&D expenses increased by RMB 11.4523 million compared to 2017, a rise of 78.12%; in 2019, R&D expenses increased by RMB 3.2747 million compared to 2018, an increase of 12.54%.

The prospectus indicates that the proceeds from this offering will be used for the development and construction of R&D centers and applied technologies, the establishment of overseas R&D and marketing centers, and the supplementation of working capital.

NanoMicro Technology has established overseas R&D and marketing centers because it is optimistic about opportunities in emerging markets, and its products have already entered international pharmaceutical companies. In 2019, the company set up a subsidiary in India and formed an Indian sales team to strengthen its sales capabilities in the country. It stated, “We expect that the major customers we have expanded will continue to contribute to the company’s product sales revenue in the future.”