Shanghai HeartCare Medical Technology Corporation, a neuro-interventional medical device maker, has passed the listing hearing with the Hong Kong stock exchange at the end of June.
Despite facing patent disputes, the Shanghai-based company is seeking to raise about US$300 million (HK$2.34 billion) from the initial public offering, according to IFR Asia.
Founded in 2016, HeartCare Medical has commercialized four products so far, with 19 product candidates covering all major stroke subtypes and surgical pathways in the neuro-interventional field, it said.
Stroke was the leading cause of death in China in 2019 with a rising incidence rate due to an aging population. China had 14.8 million stroke patients in 2019, the highest in the world, according to the China Insights Industry Consultancy. China's penetration rate of thrombectomy procedures was only 1.7 percent in 2019 and it is expected to increase to 42.9 percent in 2030, benefiting from technology innovation, favorable government policies, and rising per capita income and healthcare expenditure.
HeartCare Medical has two core products. Left atrial appendage (LAA) occluder, is for atrial fibrillation, a quivering or irregular heartbeat that often causes blood clots, stroke, heart failure and other heart-related complications. LAA occluder is undergoing a review by the National Medical Products Administration (NMPA).
Another core product, Captor thrombectomy device (Captor), is used for the treatment of acute ischemic stroke, a sudden loss of blood circulation to an area in the brain, causing a loss of neurologic function.
Captor was commercialized in mainland China last December, which contributed 4.79 million yuan (HK$5.76 million) for first quarter revenue. Captor is competing with 12 stent retrievers in the mainland, manufactured by four international companies and three other domestic firms. The top three players had eaten up over 80 percent of market share in 2019.
Meanwhile, HeartCare Medical is facing a lawsuit for patent infringement of Captor brought by US medical device maker Medtronic in March.
HeartCare Medical has hired a law firm to contest the claims. But in the worst case, it may pay 10 million yuan to Medtronic and bear litigation costs, giving up Captor and recalling all devices from the market. If the company loses, its cash will still be sufficient to fund operations for at least 21 months from March, it said.
Apart from the core products, HeartCare Medical had obtained NMPA approvals for four ischemic stroke treatment devices. The company expects to commercialize nine product candidates in 2021 and another 10 candidates between 2022 and 2025.
HeartCare Medical started generating revenue after commercializing its first three product last year. It reported revenue of 14.56 million yuan in 2020 and 13.62 million yuan in the first quarter.
But the company expects to continue to incur net losses in the near future, as it keeps investing in research and development, seeking regulatory approval for and commercializing pipeline products. Net loss expanded by 3.36 times to 39.8 million yuan in the first quarter, due to share-based staff compensation, financing fees, and selling and distribution costs.
The R&D costs remained at about 51.1 million yuan in the past two years.
HeartCare Medical has two manufacturing facilities in Shanghai. The Zhangjiang manufacturing facility is in operation with an annual production capacity of 12,000 units. Its Lingang manufacturing facility is being built and is expected to begin operations in the third quarter. It has a designed annual production capacity of over 100,000 units.
HeartCare Medical said it will use the net proceeds to fund R&D, manufacturing and marketing, as well as improvement of research capacity and portfolio expansion.
