Recently, Suzhou Become Medical Co., Ltd. (hereinafter referred to as "Become Medical") passed the Hong Kong Stock Exchange hearing and updated its prospectus after the hearing on January 17. It is understood that the total amount of funds raised by Baikang Medical Plan is up to 250 million US dollars (about 1.95 billion Hong Kong dollars).
Beduo Finance learned that the main product of Beikang Medical is test-tube baby genetic testing kits. As of now, Beikang Medical is still at a loss. In 2018, 2019, and the first three quarters of 2020, its accumulated net loss in the past three reporting periods was 1.544 billion yuan.
It is worth noting that Beikang Medical’s previously disclosed financing scale has "fighted" with the data in the prospectus, especially the B round and C rounds of financing. According to public reports, its Series B and Series C financings were 100 million yuan and 150 million yuan respectively, while the prospectus indicated that the corresponding financing was 70 million yuan and 100 million yuan respectively.
Focus on NGS genetic testing
According to the data, the full name of Become Medical is Suzhou Become Medical Co., Ltd., and its founder is Liang Bo. It is a limited liability company incorporated on December 14, 2010, and was restructured into a joint stock company on August 27, 2020. , The registered capital is 200 million yuan.
According to the prospectus, Become Medical is a Chinese assisted reproductive genetic testing solution company, with a high-throughput gene sequencing (NGS) product line covering the entire reproductive cycle, and its PGT-A kit can screen embryos before embryo implantation Whether the development is normal (a chromosomal disease often associated with IVF implantation failure).
Currently, Beikang Medical is registering PGT-M and PGT-SR kits, and it is expected to obtain registration certificates from the National Food and Drug Administration in 2022 and 2024, respectively. By then, the two products will be combined with the PGT-A kit to form a kit series that fully covers the needs of the third-generation test tube genetic testing.
According to Beikang Medical, among its five internally developed genetic testing kit products, the PGT-A kit has obtained the National Medical Products Administration's Class III medical device registration certificate, while the other four products are undergoing registration testing or clinical trials. Pre-stage.
During the reporting period, Beikang Medical sold these products to hospitals and reproductive clinics for limited scientific research purposes. Among them, most of the products are sold directly to hospitals and reproductive clinics. Secondly, genetic testing kits are also sold to distributors, who then sell the products to hospitals and reproductive clinics.
According to the prospectus, Become Medical directly enters into sales agreements with hospitals, reproductive clinics and third-party medical laboratories for direct sales. In 2018, 2019, and the first three quarters of 2020, its direct sales of test kits to hospitals and reproductive clinics accounted for 47%, 33% and 63% of total revenue, respectively.
At the same time, Become Medical sells an appropriate amount of products through distributors, who in turn sell its products to hospitals and reproductive clinics. During the reporting period, 14.2%, 11.4% and 15.1% of its total revenue came from sales of test kits to distributors.
Beikang Medical said that during the corresponding reporting period, it had hired two, five and 13 distributors in 10 provinces in China. Among them, all distributors are independent third parties, and none of them are controlled by their current or former employees, nor have they received any major advances or financial assistance from them.
Cumulative losses exceed 1.5 billion yuan
Overall, Beikang Medical's revenue in 2018 and 2019 were 32.61 million yuan and 55.68 million yuan respectively. In the first nine months of 2020 (first three quarters), Beikang Medical’s revenue was 57.24 million yuan, and its revenue for the same period in 2019 was 41.86 million yuan.
Among them, Beikang Medical’s total sales to its five major customers were 21 million yuan, 24.4 million yuan and 26.4 million yuan, accounting for 64.4%, 43.8% and 46.1% of its revenue respectively. In the same period, sales to the largest customer were 6.2 million yuan, 6.6 million yuan and 6.7 million yuan, accounting for 18.9%, 11.9% and 19.7% of the corresponding revenue respectively.
As of the end of the reporting period, Beikang Medical was still at a loss, with a cumulative loss of 1.544 billion yuan in the past three reporting periods. Among them, the net losses in 2018 and 2019 were 158 million yuan and 534 million yuan respectively; the net loss in the first three quarters of 2020 was 852 million yuan, and the net loss in the same period in 2019 was 373 million yuan.
Beikang Medical stated in its prospectus that its net loss in 2020 will increase compared to 2019, mainly due to the promotion of business development, which has continued to incur a large amount of costs and expenses; it has continued to conduct clinical development of candidate products, and Seek regulatory approval, etc.
Beikang Medical said that it will further promote product development and commercialization in 2020, and it is expected that R&D costs and marketing expenses will continue to increase, which may affect its operating results in 2021. Due to the further advancement of the clinical development, preclinical research and development business of the products under research, it is expected that a large amount of expenses and operating losses will be incurred in the future.
Beikang Medical said frankly that after taking into account the group’s available financial resources (including cash and cash equivalents of 201.5 million yuan as of November 30, 2020), available financing credits and use for working capital and general corporate purposes, it will have Sufficient working capital to maintain financial soundness for at least 12 months from the date of the prospectus.
The scale of financing does not match the publicity
Previously, Become Medical completed A, B, C, and D rounds of financing in February 2015, September 2017, May and July 2020. Investors include Yuansheng Venture Capital, Daoyuan Capital, and Bohua Asset , Juming Venture Capital, Hillhouse Capital, etc. Among them, the B round and C rounds raised 100 million yuan and 150 million yuan respectively.
According to the prospectus, Beikang Medical received 24 million yuan in Series A financing in December 2014, 70 million yuan in Series B financing on September 5, 2016, 100 million yuan in Series C financing in March 2020, and July 2020. It received 297.5 million yuan in D round of financing this month, which is not in line with the scale of its public promotion.
For fundraising purposes, Beikang Medical stated that it uses the proceeds to fund research and development activities and daily operations. As of the Latest Practicable Date, Beikang Medical has fully used the proceeds from Series A, B and C financing and 14.25% of the proceeds from Series D financing.
In this Hong Kong listing, the funds raised by Become Medical will be mainly used for core products PGT-A kits and PGT-M kits, upgrade existing production machines and equipment, and purchase and install new automated operating equipment required for core products And machinery, as well as the development, clinical trials and registration of other genetic testing kit products.
Beikang Medical said that its products need to complete the determination of urgent clinical needs, preclinical research and development, product registration inspection, clinical trials and clinical registration. Since its establishment, it has consumed a lot of cash. During the reporting period, its operating activities used net cash of 26.7 million yuan, 38.1 million yuan, 34.3 million yuan and 47.1 million yuan respectively.
Among them, R&D costs are the largest expenditure of Beikang Medical. According to the prospectus, Baikang Medical’s research and development costs accounted for 57.7%, 35.7%, 34.4% and 38.4% of the total revenue in the same period. The ability to obtain profits from business activities depends to a large extent on the successful commercialization of its product portfolio.
In terms of equity, before the IPO, Beikang Medical’s founder, chairman and general manager Liang Bo directly held 27.62% of the shares and indirectly held approximately 10.52% of the shares, making him the largest shareholder and actual controller. Among them, Beikang Investment, in which Liang Bo participates (about 58.31%), holds 18.05%.
At the same time, the second phase of Zhongcheng Fangyuan under Hengrui Fangyuan holds 7.59% of the shares, Hillhouse Hong Kong holds 6.82% of the shares of Hillhouse Capital, and Yuanhe Yuandian, a subsidiary of Yuanhe Holdings, holds 6.15%; the executive director Xu Wenbo holds shares through Bohua Investment. At 5.98%, Yuansheng Ventures holds 5.71% of shares through Suzhou Xinjian Yuan, and the remaining shareholders hold less than 5%.
According to the prospectus, Baikang Medical’s executives also include technical director Kong Lingyin, operations director Rui Maoshe, and financial director Dai Jing. According to the introduction, Dai Jing used to be the senior audit manager of PricewaterhouseCoopers Zhongtian Certified Public Accountants (Special General Partnership) and one of the co-secretaries of Become Medical. The other was Yan Luojun.