Novast Completes Nearly RMB 1 Billion Private Equity Financing to Advance Drug Delivery and Modified-Release Formulation Development; Files IPO Prospectus

VCBeat has learned that on May 9, 2020, Nantong Novast Pharmaceutical Co., Ltd. and its holding company, Novast Holdings Ltd. (collectively referred to as “Novast”), announced the completion of a private equity transaction worth nearly RMB 1 billion (the “Transaction”). The Transaction was jointly invested by Legend Capital, Shiyu Capital, Xiamen C&D Corporation, China International Trade Service Fund, HighSpring Capital, and Highsino, with China Renaissance serving as the exclusive financial advisor for the deal.

NOVAST was founded in Nantong, Jiangsu Province, in 2005 by Dr. Zhang Guohua, President, and his technical management team. The team comprises scientists and engineers from China, the United States, Canada, and India, bringing extensive international managerial and technical expertise in the pharmaceutical industry. Since its establishment, the company has been dedicated to research and product development in drug delivery systems and modified-release formulations. Throughout their careers, team members have successfully developed more than 180 new drugs and generic pharmaceutical formulations for the global pharmaceutical industry. From its inception, NOVAST has emphasized the Quality by Design (QbD) concept, achieving zero-defect compliance in five consecutive U.S. FDA cGMP (Current Good Manufacturing Practice) inspections. The company maintains production lines and management systems that meet Chinese, European Union, and U.S. standards. Its facility located in the Nantong Comprehensive Bonded Zone has an annual production capacity of over 4 billion oral controlled-release tablets and more than 1 billion oral hormonal tablets, providing high-quality medicines to patients worldwide.

As of April 2020, NOVAST had obtained U.S. FDA approval for the marketing of 40 pharmaceutical formulations, including more than 30 hormonal products and nine extended- or controlled-release products, several of which hold leading market shares in the United States. In response to the implementation of the consistency evaluation for generic drugs and volume-based procurement policies in China, the company has actively expanded into the Chinese market in alignment with the policy trend of domestic substitution. Currently, multiple products, such as Metoprolol Extended-Release Tablets, Quetiapine Extended-Release Tablets, and Levonorgestrel Tablets, have been submitted to the National Medical Products Administration (NMPA) for review, with several additional product applications expected to be filed annually in the future.

“Fifteen years ago, we came to Nantong to establish NOVAST (Nantong Lianya Pharmaceutical Co., Ltd.). Together with an international technical and management team, we have worked diligently to innovate and achieve two strategic goals. The first goal was to break new ground in the internationalization of high-end oral solid dosage forms researched and developed in China, providing high-quality, cost-effective prescription drugs to the U.S. market. The second goal is to introduce these high-end formulations that have entered the U.S. market back into the domestic Chinese market and expand them into other global markets, thereby benefiting humanity,” stated Dr. Zhang Guohua, Founder and President of NOVAST. “We were fortunate to attract distinguished early-stage investors during the initial phase of NOVAST’s establishment. With their companionship and support, we built a comprehensive international R&D, production, and quality management system. Since our first prescription drug successfully entered the U.S. market in 2012, we have largely fulfilled our first objective. In addition to the concerted efforts of our team and employees, we deeply recognize that these achievements are inseparable from the attention and care shown by our original investors and shareholders, to whom we extend our heartfelt gratitude.” Dr. Zhang further added, “Currently, we have begun to strive for and lay the groundwork to achieve our second goal. We are honored to welcome new investors led by Legend Capital and Shiyu Capital at this stage. We believe that with their participation and support, NOVAST will reach new heights and achieve our second ambitious goal as soon as possible.”

“NOVAST has selected multiple high-end formulations approved by the U.S. FDA to initiate drug registration filings in China, aiming to achieve breakthroughs within the next two years. Meanwhile, we have also begun seeking partners in other countries to expedite the introduction of these FDA-approved high-end formulations into additional international markets. We will continue to uphold our operational model and development strategy of ‘Quality First, Science-Based, Market Leadership,’ and work diligently with all existing and new shareholders to maximize value for patients, partners, investors, and employees,” stated Mr. Prasad Pinnamaraju, Co-founder and Chief Operating Officer of NOVAST.

Mr. Zhou Hongbin, Managing Director of Legend Capital, stated, “We are honored to participate in the exciting venture of NOVAST! Dr. Zhang is a highly respected world-class scientific entrepreneur in the industry. The core team he leads, spanning China, the United States, Canada, and India, has accumulated over 30 years of R&D experience in the field of modified-release formulations. Over the 15 years since its establishment in China, the company has remained focused, leveraging internationally leading drug design capabilities and formulation technologies to capture more than 50% market share for multiple products in the U.S. market, thereby demonstrating globally competitive quality and efficiency at scale. Currently, the company has begun to expand into the Chinese market. We look forward to NOVAST continuing to advance China’s high-end formulation industry and exerting significant industry influence while meeting societal healthcare needs. We also extend our gratitude to the company’s management team and existing investors for their support of this financing round!”

Mr. Yang Hongbing, Founding Partner of Shiyu Capital, stated: “Under Dr. Zhang’s leadership, NOVAST has remained focused on the research, development, and manufacturing of complex formulations for many years. The company’s extended-release, controlled-release, and hormonal products have demonstrated their competitiveness in the mature U.S. generic drug market, establishing NOVAST as a highly successful international pharmaceutical enterprise. With the rationalization of medication patterns among patients in China and the increasing substitution rate of generic drugs, high-end formulations such as extended-release and controlled-release products—which offer greater convenience and more stable drug release—will undoubtedly play a larger role in meeting patient needs. We are delighted to assist Dr. Zhang and the NOVAST team in expanding into the domestic market, enhancing the quality and standards of essential medicines, and driving the transformation and upgrading of China’s pharmaceutical industry!”

Mr. Xie Yijing, Managing Director and Head of the Healthcare and Life Sciences Group at China Renaissance, stated, “We are honored to have assisted NOVAST in completing this round of private equity transaction. We firmly believe that, through the joint efforts of its management team and both new and existing investors, NOVAST will make greater contributions to China’s pharmaceutical industry and benefit patients worldwide.”