Full-Service CRO Sun-Novo Files for STAR Market IPO with Comprehensive Drug R&D Offerings

VCBeat has learned that on September 2, 2020, Beijing Sunshine Nohe Drug Research Co., Ltd. applied to the Shanghai Stock Exchange for an initial public offering on the STAR Market. The company plans to issue no more than 20 million shares, with post-issuance shares accounting for over 25% of its total share capital.

Beijing Sunshine Nohe Drug Research Co., Ltd. (hereinafter referred to as “SunNovo”) was established in 2009. It is a comprehensive CRO company that provides end-to-end drug R&D services, covering both preclinical and clinical stages, with a focus on delivering CRO services related to generic and innovative drugs. The company’s core business encompasses chemical drug development, technology transfer and collaboration, API intermediate manufacturing and trading, clinical research services, and import registration services.

According to the financial data in the prospectus, SunNovo’s net profit for the past two years has far exceeded RMB 50 million, thereby meeting the Shanghai Stock Exchange’s STAR Market listing requirements for issuers. The company plans to raise RMB 484 million through this IPO.

SunNovo’s core business is providing customized pharmaceutical R&D services to pharmaceutical companies, dedicated to helping Chinese pharmaceutical manufacturers accelerate import substitution and independent innovation. Its services are mainly divided into pharmaceutical research, clinical research, and bioanalysis, which are delivered through its subsidiaries.

SunNovo's Full-Process Comprehensive CRO Services

Primarily focusing on generic drug development and consistency evaluation, SunNovo and its subsidiary Nuoheshengtai, together with Hongsheng Pharmaceutical, undertake related business commissions to provide pharmaceutical research services to clients. Additionally, these services include assisting clients with drug registration filings and other related tasks.

The services mainly include bioequivalence studies and Phase I–IV clinical trials. Entrusted by sponsors, the subsidiary SunNovo Demei is responsible for developing clinical trial protocols, monitoring clinical trial processes, performing data management and statistical analysis, and preparing final clinical study reports.

It not only supports SunNovo’s own clinical trial operations but also independently accepts external commissions. This business is conducted by its subsidiary, Sunshine Demei, and covers pharmacokinetics, immunogenicity, pharmacodynamics, biomarkers, and other related studies for innovative large- and small-molecule drugs, as well as providing bioanalytical services for preclinical and clinical samples.

The drug discovery services business is primarily conducted by the subsidiary, Nuoheshengtai. In the field of drug discovery, Nuoheshengtai possesses chemical research capabilities and facilities encompassing innovative drug molecule design and development, peptide drug development, and small nucleic acid drug synthesis and quality control development. It has established a specialized R&D team proficient in the innovative design, synthesis, and purification of peptide molecules. Currently, Nuoheshengtai focuses its innovative drug R&D efforts on peptides and small nucleic acids, with all R&D targets originating from internally initiated projects. As of the date of signing this prospectus, the Company’s drug discovery services business had not yet generated any revenue.

SunNovo typically collects payments in stages while providing pharmaceutical R&D services to clients, recognizing revenue based on R&D progress or upon final delivery of deliverables. Currently, its three core business segments have achieved comprehensive profitability, with the profit contributions from pharmaceutical research services and clinical trial and bioanalytical services gradually converging. The company’s end-to-end CRO services are gaining industry recognition.

In the first quarter of 2020, SunNovo’s revenue from principal business activities amounted to RMB 73.7695 million, with pharmaceutical research services accounting for 58.28% of its total principal business revenue for the quarter.

According to the prospectus, since 2015, SunNovo has obtained a total of 133 clinical trial approvals or clinical trial filing numbers for generic drugs. Among these, one innovative drug has entered Phase III clinical trials as part of the “National Major Science and Technology Project – Major New Drug Creation Project,” and another innovative drug has entered Phase II clinical trials. In addition, the company has secured 56 acceptance numbers for generic drug registration applications, with five of these generic drugs being the first to obtain drug registration approval or the first to pass the consistency evaluation.

In 2017, 2018, and 2019, SunNovo was consecutively awarded the title of “Top 20 Chinese Pharmaceutical R&D Companies” by the Pharmaceutical Industry Chamber of Commerce of the All-China Federation of Industry and Commerce, demonstrating strong market influence among integrated CRO companies specializing in both pharmaceutical sciences and clinical development.

According to the prospectus, SunNovo and its subsidiaries nearly doubled their performance over the past three years, with net profit rising from RMB 1.12 million in 2017 to RMB 47.93 million in 2019. Although the COVID-19 outbreak in early 2020 severely impacted various industries, SunNovo continued to invest in research and development (R&D). In the first quarter of 2020, the company’s R&D expenses amounted to RMB 3.98 million, accounting for 5.4% of its total operating revenue for the quarter. Moreover, SunNovo’s performance continued to climb, achieving a net profit of RMB 16.56 million in the first quarter of 2020 alone. Financial report data indicate that SunNovo’s operational status is on an upward trajectory.

SunNovo meets and has chosen to list under the first set of listing criteria: an estimated market capitalization of no less than RMB 1 billion, with positive net profits in each of the last two years and cumulative net profits of no less than RMB 50 million; or an estimated market capitalization of no less than RMB 1 billion, with a positive net profit in the most recent year and operating revenue of no less than RMB 100 million.

The funds raised in this offering will be used to comprehensively expand and deepen the Company’s existing core business, further completing its CRO industry service chain. The proceeds are proposed to be invested in the “Special Formulation R&D Platform Project,” “Drug Innovation R&D Platform Project,” “Clinical Trial Service Platform Construction Project,” and “Innovative Drug PK/PD Research Platform Project.”

The R&D platform for specialized formulations and the drug innovation R&D platform together accounted for more than half of the total funds raised. The R&D platform for specialized formulations is one of the company’s core businesses and will focus on enhancing its capabilities in specialized formulation development and pilot-scale manufacturing services. Drug innovation R&D will be undertaken by the subsidiary Nuoheshengtai, which will primarily provide R&D services for innovative peptide and small nucleic acid drugs.