Image source: Picture Worm Creative
Blue Whale financial reporter Shao Yuting
On the evening of December 26, Kangle Guardian (833575. BJ) announced that it plans to issue overseas listed foreign shares (H shares) and apply for listing on the Hong Kong Stock Exchange. This is the first company to prepare for the dual listing of "North + H" after the signing of a memorandum of understanding on cooperation between the Beijing Stock Exchange and the Hong Kong Stock Exchange this year.
According to the announcement, Kangle Guardian plans to issue no less than 57,014,300 new H shares, accounting for 16.87% of the total number of shares after the issuance. The proceeds are intended to be used for clinical trials and approvals of products, ongoing preclinical research and development of multiple preclinical projects, pre-production preparation and production process enhancement of the Kunming industrialization base.
The road to the "north" is full of twists and turns
Founded in 2008, Kangle Guardian is an innovation-driven biopharmaceutical company engaged in the research, development and industrialization of new vaccines, and currently has 10 recombinant human vaccine research projects, including the popular HPV vaccine, new crown vaccine, multivalent norovirus vaccine, herpes zoster vaccine, etc. The actual controller is Tao Tao, who controls 30.58% of the company's voting rights in total.
On March 15 this year, Kangle Guardian landed on the Beijing Stock Exchange, which is the first company to break through the fourth set of standards of "market value + R&D investment" since the opening of the Beijing Stock Exchange, but its listing road is not smooth.
Originally, Kangle Guardian was expected to become the largest IPO on the Beijing Stock Exchange, with a planned amount of about 3.008 billion yuan to 3.459 billion yuan. However, shortly after the meeting, Kangle Guardian revised the issue price from 77.68 yuan per share to 45.00 yuan per share, and the financing amount shrank by nearly nine yuan to 315 million yuan to 362 million yuan.
On March 15, Kangle Guardian successfully landed on the Beijing Stock Exchange at an issue price of 42 yuan per share, with an issue of 8.05 million shares and a fundraising amount of 338.1 million yuan, and a total of 308 million yuan after fully exercising the over-allotment option.
With the shrinkage of the amount of funds raised, the purpose and amount of funds raised have also been greatly modified, especially the investment in R&D projects and the replenishment of working capital.
Before the adjustment, Kangle Guardian plans to invest 1.1 billion yuan in HPV vaccine research and development projects, 450 million yuan in innovative recombinant vaccine research and development projects, 230 million yuan in Kunming production base construction repurchase projects, and 600 million yuan in supplementary working capital. After the adjustment, the raised funds will only be used for the HPV vaccine R&D project and the Kunming production base construction repurchase project, of which the HPV vaccine research and development project is 70 million yuan, and the Kunming production base construction repurchase project is 230 million yuan.
As for the reason for the sharp shrinkage of the financing amount, Kangle Guardian said that it was made with reference to the recent capital market situation, combined with the company's business development plan, and fully considering the on-demand financing and the diversification of future financing channels after the public offering of shares and listing on the Beijing Stock Exchange.
Despite lowering the reserve price of the issue, Kangle Guardian still suffered a break on the first day of listing. On March 15, Kangle Guardian closed at 35.52 yuan per share, down 15%, with a total market value of about 5 billion yuan.
"Southbound" went to Hong Kong to raise funds and return blood
After the listing, the performance of Kangle Guardian was still in the red, and the monetary funds could not cover the short-term debt, and the cash flow was under pressure.
According to the financial report, in the first three quarters of 2023, Kangle Guardian achieved an operating income of 1.6011 million yuan, a year-on-year increase of 80.33%, and a net loss of 225 million yuan, a year-on-year increase of 6.76%.
Since Kangle Guardian has not yet launched its products, the source of operating income is mainly the sales of testing reagents for scientific research. In addition, Kangle Guardian also received a government subsidy of 12 million yuan from listed companies on the Beijing Stock Exchange, but it is still difficult to bail out.
As of the end of the reporting period, the monetary funds of Kangle Guardian decreased by 61.95% year-on-year to 253 million yuan, short-term borrowings were 60.2122 million yuan, non-current liabilities due within one year were 6.0492 million yuan, accounts payable were 84.7779 million yuan, and other payables were 156 million yuan.
At present, Kangle Guardian has a total of 10 recombinant human vaccine research projects, and the R&D expenditure is high. During the reporting period, the R&D expenses of Kangle Guardian were 177 million yuan, and the net cash flow from operating activities was -116 million yuan. In addition, due to the investment in the clinical project of the 9-valent HPV vaccine (male indication), an additional development expenditure of 153 million yuan was added.
According to the prospectus, the trivalent vaccine, nine-valent vaccine (female indication) and nine-valent vaccine (male indication) of Kangle Guardian have all entered clinical phase III, and the 15-valent vaccine has obtained the clinical trial approval notice. According to the open source securities research report, the trivalent and nine-valent vaccines of the core vaccines under development of Kangle Guardian will be launched around 2026 and 2028 respectively.
The trivalent vaccine developed by Kangle Guardian is benchmarked against the commercially available bivalent and quadrivalent vaccines in terms of product positioning, but adds the prevention of HPV 58 infection and related diseases. At present, only Kangle Guardian is developing a trivalent vaccine in China. In addition, the 9-valent vaccine (male indication) under development by Kangle Guardian is also the first clinical product for male indications in China.
However, it is reported that as of the end of 2022, there are 20 HPV vaccines in the clinical research stage. Among them, there are 3 bivalent vaccines, 1 trivalent vaccine, 5 quadrivalent vaccines, 1 hexavalent vaccine, 6 9-valent vaccines, and 1 11-valent vaccine, 14-valent vaccine, 15-valent vaccine and 17-valent vaccine.
For Kangle Guard, which is under pressure on cash flow and has a high demand for funds, it is urgent to expand financing channels, so it chooses to list in Hong Kong.
On June 29, the Beijing Stock Exchange and the Hong Kong Stock Exchange signed a memorandum of understanding on cooperation to launch the "North + H" mechanism to support eligible enterprises in both markets to apply for listing in each other's markets.
Sui Qiang, general manager of the Beijing Stock Exchange, previously said that the launch of the "North + H" listing arrangement in Beijing and Hong Kong is an important measure to promote the institutional opening of the capital market, continue to deepen the reform of the Beijing Stock Exchange, and respond to market demand under the overall planning of the China Securities Regulatory Commission, which will further broaden the scope of benefits of the "A+H" model in the mainland and Hong Kong, and facilitate more enterprises to accelerate their development with the help of the Beijing and Hong Kong markets.
According to the Listing Rules of the Hong Kong Stock Exchange, as a non-profitable biopharmaceutical company, Connaught Guardian should comply with Chapter 18A of the Main Board Listing Rules, that is, at least one core product of a biotech company has passed the concept stage.
Kangle Guardian said in the announcement that the issuance and listing still needs to be submitted to the company's general meeting of shareholders for deliberation, and needs to obtain the China Securities Regulatory Commission and the Hong Kong Stock Exchange and other relevant government agencies, regulators, stock exchanges and other relevant government agencies, approvals or filings.
As the first innovative unprofitable enterprise listed in accordance with the fourth set of standards of the Beijing Stock Exchange, Kangle Guardian represents the financing and development support of the Beijing Stock Exchange for "specialized, special and new" small and medium-sized enterprises. If it can be successfully listed in Hong Kong, Kangle Guardian may alleviate the current difficulties.