Behind the "holding marriage" of Beida Pharmaceutical, Kanangi: two increases in holdings, nearly 500 million yuan of capital injection, IDG Capital has accompanied the run for ten years

In just three months, after two acquisitions, the listed company Beida Pharmaceutical finally "took down" Kanangji Pharmaceutical.

The investment community (WeChat ID: pedaily 2012) learned on June 19 that Beida Pharmaceutical issued a morning announcement that it announced that it would publicly delist 13.5% and 9.09% of the equity of Kanangji held by the two companies for 108.43 million yuan with its own funds by signing the "Property Rights Transaction Contract" with two shareholders, Shanghai Zhangjiang Biomedical Industry Venture Capital Co., Ltd. and Shanghai Zhangjiang Technology Venture Capital Co., Ltd. The reserve price of the listing is 64.80 million yuan and 43.63632 million yuan.

In fact, as early as February 2017, Beida acquired 77.41% of the equity of Kanangji's existing shareholders in the form of 372 million yuan (including tax) in cash. So far, <b>Beida Pharmaceutical has achieved</b> <b>100%</b> <b>control</b> of Kanangji, with a cumulative investment of nearly 500 million yuan.

<b>What kind of company makes Beda so persistent? </b>

Large and small enterprises have begun to merge, some look at opportunities, and some adjust for the sake of adjustment, which is not a new thing in the industry.

In this acquisition incident, in addition to the big moves of the buyer Beida Pharmaceutical, the acquired party Kanangji has also attracted much attention.

According to public information, Kanangji Pharmaceutical was established in 2006, the company's main business is <b>to introduce and apply</b> <b>VIC</b> <b>innovative business model (VC </b><b>venture capital fund + IP </b><b>intellectual property project + CRO </b><b>research and development),</b> is a high-tech startup that relies on CRO R&D outsourcing services to engage in new drug research and development.

Over the past 10 years, Kanange has formed its own product line. These include <b>vegetant and anti-fundus lesions</b>, PDGF dual-target kinase inhibitor <b>CM082 </b><b>oral tablets</b>, and MET, ALK dual-targeted kinase inhibitor <b>CM118</b>, which <b>resist advanced malignancies</b>. It can be seen that Kanangji Pharmaceutical is a <b>research and development enterprise of new drugs for anti-tumor drugs</b>.

At that time, after the first capital injection by Beida Pharmaceutical, Kanange officially announced that it had completed the Phase I clinical trial of CM082 single drug and the extended group trial for the treatment of renal transparent cell carcinoma, and the efficacy may exceed all similar drugs.

According to Dr. Tang Ming, founder of Kanangji, cm082's biggest unique advantage over similar drugs is its rare extremely low toxicity side effects, so that it can be administered continuously, "the longest subject 001 has been administered daily for nearly 4 years continuously, and is still continuing to administer."

The most promising thing is that it is based on its extremely low toxicity, which can be combined with many other anti-tumor drugs. He believes that combination drugs are one of the two most promising research and development directions for new anti-tumor drugs, and CM082 is one of the few targeted anti-tumor new drugs with great potential for combination drugs.

However, from the previous public financial data of Kanangji Pharmaceutical, the revenue in 2016 was 0, and the net loss was 10.88 million yuan, which was normal for a new drug research and development company. The announcement said that Kanangji's core assets lie in its self-developed intangible assets of new drugs and related management research and development teams. There is no doubt that Beida will continue to undertake a long investment in research and development progress and unpredictable results.

<b>After receiving 4</b> <b>rounds of financing, IDG</b> <b>accompanied the run for ten years and changed hands to Beda</b>

Kanangi's new drug research and development in China actually began in 2004 with the establishment of Sandia, and the initial momentum was very strong, and within a year, it was supported by the investment support of the famous venture capital fund IDG to make new drugs. Unfortunately, when the money invested in venture capital was about to burn out for more than two years, it was found that this road could not be used for new drugs.

Subsequently, Sandia raised $20 million in investment and transformation to specialize in CRO outsourcing services, and the original new drug department was spun off to become Kanangji Pharmaceutical Company, introducing the CM082 project designed by Dr. Liang Congxin, and summarizing the new business model of VIC relying on CRO's full outsourcing research and development of new drugs.

Since its establishment in 2006, Kanangji has successively received A round of FINANCING from IDG Capital, Series B of Zhangjiang Technology Investment, Venture Capital of Zhangjiang Biomedical Industry, Shanghai Yuansu Investment Management Company of 20 million yuan, and Series D financing of Hong Kong Qikang International Company.

Among them, the Series A and Series B financing were both earlier, in 2007 and 2009 respectively. IDG Capital has accompanied Kanangji for ten years, but the drug has not yet been listed, the company needs to consider the way and channel for investors to exit, Kanangji transferred 77.4% of the equity to a listed company with growth potential at a valuation of 480 million yuan, which is also a good ending for investors.

After part of Kanangji's equity was transferred to Beda, Zhangjiang Science and Technology Investment and Zhangjiang Biomedical Industry Venture Capital still held 9% and 13% of the equity respectively, which shows that the two major shareholders still have confidence in Kanangji and are willing to continue to accompany them for a while.

The prospects are obviously promising, why choose this time to shoot? Earlier, Dr. Tang Ming said in an interview with the media that the reason why The Kanangi entrepreneurial team made the transfer of the company's equity was not because it was not optimistic about the CM082 project or lost its passion for entrepreneurship. On the contrary, the research and development of CM082 is progressing smoothly in the two major indications of tumor and fundus lesions.

And the change of owner of Beida Pharmaceutical, he once mentioned in a media interview, "in fact, there are plans." In the second half of 2011, as soon as the news that Beta Pharmaceutical's blockbuster anti-tumor new drug exetinib had been approved for production came out, Dr. Tang Ming sent an email to Ding Lieming, chairman of Beida, to discuss the possibility of cooperation in research and development of CM082, and on October 11 of that year, the two sides met for the first time in Hangzhou and signed the first confidentiality agreement.

In the years that followed, the two sides had several contacts, limited to the level of Beda's investment in Kanangi, but for various reasons there has been no result. On October 11, 2016, which happened to be the 5th anniversary of the first meeting, the two met again in Hangzhou, and the two sides entered the merger negotiations at once and for a short time, and negotiated the details in a very short time.

Founded on January 7, 2003, Beida Pharmaceutical is known as "China's first anti-cancer stock", listed on the Shenzhen Stock Exchange on November 7, 2016, the legal representative is Ding Lieming, the main business involves malignant tumors, diabetes, cardiovascular diseases and other fields of innovative drug research and development.

At that time, although Beida Pharmaceutical successfully IPOd with the sales of about 200 million yuan of anti-non-small cell lung cancer drug exetinib tablets, its product pipeline lack of stamina has always been a concern for investors.

Beda urgently needs to replenish its mature new drug product line, and Kanange's CM082 just fills the gap in Beda's kidney cancer and wet age-related macular degeneration; correspondingly, Beda's clinical team and sales team can make up for the shortcomings of Kanangji's team and business model. The two sides have synergies in their main business, and through epitaxial mergers and acquisitions, they can continuously increase their new drug project reserves and enrich their product lines.

This article is original for the investment community, author: Rica, original text: http://news.pedaily.cn/201706/20170619415589.shtml

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