Kanghua Bio Launches IPO on ChiNext with Human Diploid Cell Rabies Vaccine Generating Over RMB 500 Million in Annual Revenue

VCBeat learned that on June 16, 2020, Chengdu Kanghua Biological Products Co., Ltd. (hereinafter referred to as “Kanghua Bio”) was listed on the ChiNext Board of the Shenzhen Stock Exchange, with the stock abbreviation “Kanghua Bio” and stock code “300841”. Kanghua Bio issued a total of 15 million shares in this listing at an issue price of RMB 70.37 per share, raising approximately RMB 1.056 billion in total funds.

Kangh hit the daily limit shortly after the market opened, reaching the 44% cap on first-day gains for new listings. The opening price was RMB 84.44 per share, with the current price at RMB 101.33 per share and a current market capitalization of RMB 6.08 billion.

(Image from Tiger Brokers)

From 2017 to 2018, Kanghua Biology received three rounds of investment from Winco Capital. Winco Capital is a well-known health industry investment institution in China, which has invested in enterprises such as Haihe Biopharma, Genor Biopharma, Sanyou Medical, Primarius Technologies, Changfeng Hospital, Hanyu Medical, AccuraBio, Besta, and Jinghong Technology.

Kanghua Biological is an integrated vaccine manufacturer engaged in comprehensive research, development, and commercialization. The company initiated the R&D of its freeze-dried human rabies vaccine and ACYW135 group meningococcal polysaccharide vaccine in 2005, and has since become the first vaccine enterprise in China to produce human diploid cell rabies vaccine.

Over the next three years, Kangh plans to center on R&D while basing its operations on production and quality control, striving to become a leading enterprise in human diploid cell rabies vaccines and a premier biotechnology company in China.

Kanghua Biologics’ main business products include the freeze-dried human rabies vaccine and the ACYW135 group meningococcal polysaccharide vaccine, with the freeze-dried human rabies vaccine (human diploid cell) being the company’s core product. According to the company’s prospectus, sales of the freeze-dried human rabies vaccine began in 2014, while sales of the ACYW135 group meningococcal polysaccharide vaccine commenced in 2011.

The freeze-dried human rabies vaccine obtained the approval for clinical drug trials in June 2008, received the New Drug Certificate and Drug Registration Approval in April 2012, and its production line passed the Good Manufacturing Practice (GMP) certification for pharmaceuticals in April 2013. The ACYW135 group meningococcal polysaccharide vaccine obtained the approval for clinical drug trials in December 2006, received the New Drug Certificate and Drug Registration Approval in June 2010, and its production line passed the Good Manufacturing Practice (GMP) certification for pharmaceuticals in January 2011.

In addition to the two vaccine products already on the market, Kanghua Biologics has six major projects under development, including the “Immobilized Bioreactor Culture Process for Human Rabies Vaccine.”

Human diploid cell rabies vaccine is hailed by the World Health Organization as the gold-standard vaccine for rabies prevention. It elicits a reliable immune response, generating high titers of neutralizing antibodies without causing severe adverse reactions. Kanghua Biological’s freeze-dried human rabies vaccine employs China’s leading “100L large-volume bioreactor microcarrier technology for scaled-up culture and expansion of human diploid cells,” followed by chromatographic purification. As the first human diploid cell rabies vaccine marketed in China, it breaks the long-standing reliance on animal cell-based production methods in the country. The vaccine offers advantages such as “no introduction of residual DNA or proteins from animal-derived cells,” high safety, strong immunogenicity, and prolonged duration of protection.

During the reporting period, Kanghua Biological leveraged the competitive advantages of its freeze-dried human rabies vaccine to rapidly adapt to changes in sales models and achieve rapid growth in sales revenue. This was accomplished by expanding its in-house marketing team, complemented by specialized academic promotion, and strengthening collaborations with major third-party pharmaceutical logistics enterprises such as Sinopharm Group Pharmaceutical Logistics Co., Ltd. In 2017, 2018, and 2019, the sales volumes of the company’s freeze-dried human rabies vaccine were 910,100 doses, 2,072,600 doses, and 2,027,800 doses, respectively.

In 2017, 2018, and 2019, Kanghua Biologics’ freeze-dried human rabies vaccine accounted for 1.28%, 3.34%, and 4.04% of batch releases, respectively, indicating significant potential for market share growth. With national economic development and improvements in living standards, consumers have become increasingly aware of disease prevention and vaccine safety, driving stronger demand for high-quality, safe vaccines. Human diploid cell rabies vaccines represent the industry’s development trend. The Company plans to expand production capacity through this fundraising investment project, thereby further increasing its market share.

To enrich its product portfolio and create new profit growth drivers, Kangh has undertaken the research and development of multiple projects leveraging its advanced cell culture bioreactor technology platform, expertise in large-scale cell cultivation, and core manufacturing processes. Over the next three years, Kangh will advance the implementation of R&D initiatives such as “Establishment of Human Embryonic Lung Fibroblast Cell Lines” and “Immobilized Bioreactor Culture Process for Human Rabies Vaccine,” while also conducting research to improve existing vaccine production technologies.

Kanghua Biological’s performance more than doubled over the past three years, rising from approximately RMB 260 million in 2017 to RMB 550 million in 2019. Net profit also increased from RMB 74.46 million in 2017 to RMB 180 million in 2019. According to the company’s prospectus, Kanghua Biological’s asset-liability ratio declined from 31.44% in 2017 to 16.61% in 2019. Based on these financial indicators, Kanghua Biological is currently in sound operational condition.

Kangh’s R&D expenditure has increased substantially in line with its revenue growth, with R&D expenses rising from RMB 4.274 million in 2017 to RMB 22.7858 million in 2019.

The funds raised from this listing will be primarily used for the construction of the Wenjiang vaccine production base and R&D center.