HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

Zylox-Tonbridge Medical Technology / Equity Capital Markets

On March 23, <a href="https://www.smartkarma.com/entities/zylox-tonbridge-medical-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:32974:1" rel="noopener">Zylox-Tonbridge Medical Technology (ZYL HK)</a> submitted its listing application to the Hong Kong Stock Exchange and plans to be listed on the main board. Zylox-Tonbridge was founded in 2012. Since its inception, the Company has adopted and executed the strategic business model of developing innovative medical devices and solutions, focusing on the neuro- and peripheral-vascular interventional medical device market in China. The following mainly included insights on industry characteristics, business analysis and financial position.

On March 23, Zylox-Tonbridge Medical Technology (ZYL HK) submitted its listing application to the Hong Kong Stock Exchange and plans to be listed on the main board. Zylox-Tonbridge was founded in 2012. Since its inception, the Company has adopted and executed the strategic business model of developing innovative medical devices and solutions, focusing on the neuro- and peripheral-vascular interventional medical device market in China. The following mainly included insights on industry characteristics, business analysis and financial position. 

Pre-IPO Zylox-Tonbridge Medical Technology - Promising Market with Challenges

Shanghai Bio-Heart Biological Technology / Equity Capital Markets

On Feb. 26, 2021, <a href="https://www.smartkarma.com/entities/shanghai-bio-heart-biological-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:32174:1" rel="noopener">Shanghai Bio-Heart Biological Technology (BHT HK)</a> applied to list on the main board of the Hong Kong Stock Exchange. In China, cardiovascular medical device market is a very promising market with large growth potential. Domestic leading companies include <a href="https://www.smartkarma.com/entities/lepu-medical-technology-a" target="_blank" data-smartkarma-citation="entities:16654:1" rel="noopener">Lepu Medical Technology A (300003 CH)</a> and <a href="https://www.smartkarma.com/entities/microport-scientific-corp" target="_blank" data-smartkarma-citation="entities:4487:1" rel="noopener">Microport Scientific (853 HK)</a>. Bio-heart’s business mainly focuses on bioresorbable scaffolds (BRS) and renal denervation (RDN). So how about Bio-heart compared with other strong players in the market? The following mainly analyzed both the strengths and the concerns of the Company.

On Feb. 26, 2021, Shanghai Bio-Heart Biological Technology (BHT HK) applied to list on the main board of the Hong Kong Stock Exchange. In China, cardiovascular medical device market is a very promising market with large growth potential. Domestic leading companies include Lepu Medical Technology A (300003 CH) and Microport Scientific (853 HK). Bio-heart’s business mainly focuses on bioresorbable scaffolds (BRS) and renal denervation (RDN). So how about Bio-heart compared with other strong players in the market? The following mainly analyzed both the strengths and the concerns of the Company.

Pre-IPO Shanghai Bio-Heart Biological Technology - Here Are the Strength and Concerns

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Shanghai Bio-heart Biological Technology is a China-based leading interventional cardiovascular device provider. It has two near commercial stage products and is looking to raise up to USD 200m via a Hong Kong listing.We look at the company's two core products Bioheart and Iberis 2nd. Bioheart is a second generation bioresorbable DES that can be used in the PCI procedure. We think the DES segment is facing very intense competition from the early generation of DES that is non-bioresorbable as well as bioresorbable DES. As the price gap is huge, we are of the view that the product ramp-up will be slow and the patients will be sensitive to the pricing. Another near commercial stage product, Iberis 2nd, is used to treat uncontrollable hypertension. For this, there has been no commercialized product in the market as of now. The technology aspect that it can help to reduce the blood pressure by ablating the nerve in the kidney artery is interesting but we are skeptical of the market potential given that this is unlikely to be included in the reimbursement list and the patient group has already been non-compliant to the medication. The company's management were mainly ex-employee from Microport Scientific, a leading international medical device player in China. It has a decent investor backing but we think it is short of blockbuster products.

Shanghai Bio-heart Biological Technology is a China-based leading interventional cardiovascular device provider. It has two near commercial stage products and is looking to raise up to USD 200m via a Hong Kong listing.We look at the company's two core products Bioheart and Iberis 2nd. Bioheart is a second generation bioresorbable DES that can be used in the PCI procedure. We think the DES segment is facing very intense competition from the early generation of DES that is non-bioresorbable as well as bioresorbable DES. As the price gap is huge, we are of the view that the product ramp-up will be slow and the patients will be sensitive to the pricing. Another near commercial stage product, Iberis 2nd, is used to treat uncontrollable hypertension. For this, there has been no commercialized product in the market as of now. The technology aspect that it can help to reduce the blood pressure by ablating the nerve in the kidney artery is interesting but we are skeptical of the market potential given that this is unlikely to be included in the reimbursement list and the patient group has already been non-compliant to the medication. The company's management were mainly ex-employee from Microport Scientific, a leading international medical device player in China. It has a decent investor backing but we think it is short of blockbuster products.

Shanghai Bio-Heart (上海百心安) Pre-IPO: Needs a Long Runway

Equity Bottom-Up

Lepu Medical Technology A / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/lepu-medical-technology-a" target="_blank" data-smartkarma-citation="entities:16654:1" rel="noopener">Lepu Medical Technology A (300003 CH)</a> did not perform well in 2020/2H mainly due to the intensive procurement of high-value medical consumables (the coronary stents). The market was concerned about the Company's uncertainty in business and subsequent decline in performance, leading to the continuous decrease of its stock price. Over the past six months, the share price of Lepu fell from around RMB47/share in July last year to around RMB26/share. However, the stock price has rebounded recently, reaching as high as RMB34.68/share. So is Lepu still worth looking forward to in the long term?

Lepu Medical Technology A (300003 CH) did not perform well in 2020/2H mainly due to the intensive procurement of high-value medical consumables (the coronary stents). The market was concerned about the Company's uncertainty in business and subsequent decline in performance, leading to the continuous decrease of its stock price. Over the past six months, the share price of Lepu fell from around RMB47/share in July last year to around RMB26/share. However, the stock price has rebounded recently, reaching as high as RMB34.68/share. So is Lepu still worth looking forward to in the long term?

Lepu Medical Technology A (300003 CH) - Does Not Have High Moat

Thematic (Sector/Industry)

1. Industry viewpoints:<ul>
<li>An important document supporting the development of the traditional Chinese medicine industry has been released recently.</li>
<li>The market size of cardiac pacemakers in China is expected to reach RMB28 billion in the future.</li>
<li>China's health care products market is expected to maintain rapid growth in the future. </li>
</ul>2. Company news:News about the progress of new drugs and strategic collaboration from <a href="https://www.smartkarma.com/entities/innovent-biologics-inc" target="_blank" data-smartkarma-citation="entities:27452:1" rel="noopener">Innovent Biologics Inc (1801 HK)</a>, <a href="https://www.smartkarma.com/entities/sihuan-pharmaceutical-hldgs" target="_blank" data-smartkarma-citation="entities:33:1" rel="noopener">Sihuan Pharmaceutical Hldgs (460 HK)</a> and <a href="https://www.smartkarma.com/entities/jiangsu-hengrui-medicine-co-ltd" target="_blank" data-smartkarma-citation="entities:14128:1" rel="noopener">Jiangsu Hengrui Medicine (600276 CH).</a>3. Market review:Last week, stock price for healthcare sector in A share increased 6.31%, while CSI 300 increased 5.91% over the same period of time.4. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

1. Industry viewpoints:
An important document supporting the development of the traditional Chinese medicine industry has been released recently.
The market size of cardiac pacemakers in China is expected to reach RMB28 billion in the future.
China's health care products market is expected to maintain rapid growth in the future. 
2. Company news:News about the progress of new drugs and strategic collaboration from Innovent Biologics Inc (1801 HK), Sihuan Pharmaceutical Hldgs (460 HK) and Jiangsu Hengrui Medicine (600276 CH).3. Market review:Last week, stock price for healthcare sector in A share increased 6.31%, while CSI 300 increased 5.91% over the same period of time.4. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

Chine Healthcare Weekly(Feb12)-TCM New Policy,Cardiac Pacemaker,Health Care Product,Innovent,Hengrui

China

Lepu Medical Technology (Beijing) Co., Ltd. develops, produces and sells medical devices and parts.  The Company also offers medical devices consulting services.  The company's products include stent system and blockage system.

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Lepu Medical Technology A (300003 CH)

Pre-IPO Zylox-Tonbridge Medical Technology - Promising Market with Challenges

This insights analyzed Zylox-Tonbridge Medical Technology in terms of the market potential, industry characteristics, business analysis, financial...

Xinyao (Criss) Wang

Pre-IPO Shanghai Bio-Heart Biological Technology - Here Are the Strength and Concerns

The article analyzed Shanghai Bio-Heart Biological in terms of strength (core product, market potential) and concerns (competition, intensive...

Xinyao (Criss) Wang

Shanghai Bio-Heart (上海百心安) Pre-IPO: Needs a Long Runway

The company's management were mainly from Microport Scientific. It has decent investor backing but we think it is short of blockbuster products.

Ke Yan, CFA, FRM