The vaccine for Chinese men is going to IPO in Hong Kong

The first "North + H" shares are coming.

The "Beijing Stock Exchange" rushed to the "Hong Kong Stock Exchange" and fired the first shot.

On July 10, Kangle Guard, a company listed on the Beijing Stock Exchange, announced that the company planned to issue no more than 108 million overseas listed ordinary shares and list them on the Hong Kong Stock Exchange. On the same day, the China Securities Regulatory Commission (CSRC) confirmed the filing information of the enterprise's overseas issuance and listing.

Although the overseas issuance and listing still needs to obtain the approval and approval of relevant government agencies, regulators and stock exchanges such as the Securities and Futures Commission of Hong Kong and The Stock Exchange of Hong Kong Limited, there is still uncertainty about the IPO of Connaught Guardian in Hong Kong. But once successfully listed, Kangle Guardian will also become the first share of "North + H".

It is worth mentioning that Kangle Guardian is also the first listed company on the Beijing Stock Exchange to submit a statement to the Hong Kong Stock Exchange.

On June 29, 2023, the Beijing Stock Exchange and the Hong Kong Stock Exchange signed a Memorandum of Understanding (the "MOU") in Beijing. According to the MoU, the Beijing Stock Exchange and the Hong Kong Stock Exchange will support eligible listed companies in each market's application for listing in each other's markets. The two institutes will also cooperate in project research, marketing, personnel training and exchanges, and investor services.

Half a year after the signing of this memorandum, Kangle Guardian submitted an application to the Hong Kong Stock Exchange in January this year for the issuance of overseas listed foreign shares (H shares) and listing on the main board of the Hong Kong Stock Exchange, becoming the first listed company on the Beijing Stock Exchange to submit an application for H-share listing.

At present, with the increase in the threshold for A-share listing, the pace of IPOs has slowed down, and setting sights on the overseas IPO market has become one of the important ways for many enterprises to seek financing expansion and achieve international development. Looking at it, there are many giants such as SF Express, Midea, Liuliufu, and China Resources Beverage in the team rushing to overseas IPOs.

Will the overseas capital market give them the green light this time?

The first "HPV vaccine for men" is on the way

As the first "North + H" crab-eating Kangle Guard, it is actually still an HPV vaccine company that has not yet achieved commercial products.

On the road to the commercialization of vaccine products, although Kangle Guardian has been walking for 16 years, it has not yet seen the dawn of victory.

As stated in the annual report, "The Group has been in the stage of drug research and development since its inception and has no profit record. The trivalent and 9-valent human papillomavirus ("HPV") vaccines developed by the Group are in phase III clinical trials, and the other R&D pipelines are in different stages of preclinical research, and no products have yet entered commercial production. ”

Kangle Guard, which is unable to obtain revenue from the sale of vaccine products, mainly uses bank loans, equity financing and other financing means to ensure normal business activities and the capital needs of various R&D pipelines at this stage. According to the financial report, from 2021 to 2023, Kangle Guardian will achieve operating income of 274,800 yuan, 1.9006 million yuan, and 1.78 million yuan respectively through technology transfer and sales of scientific research reagents. However, in 2023, 13.6066 million yuan will be credited to the "other income" item.

Kangle Guard, which relies on external financing means to maintain capital needs, is experiencing the dilemma of further widening losses due to rising R&D expenses. According to the data, from 2021 to 2023, its R&D expenditure will be 218 million yuan, 237 million yuan, and 439 million yuan respectively, while the company's net loss attributable to the parent company will reach 380 million yuan, 293 million yuan, and 301 million yuan in the same period.

However, for most of the companies currently engaged in the research and development of vaccine products in the mainland, the goods have not been commercialized, the operating conditions are loss-making, and they rely on external financing...... It's the norm.

Recbio, which is also an innovative vaccine company and focuses on the research and development of 9-valent HPV vaccine, although it was successfully listed in Hong Kong as early as 2022 with the halo of "the first share of domestic HPV 9-valent vaccine", its operating income is "0" so far, and it is expected that this loss state will continue to exist in the future, "We have suffered a large net loss since its establishment, and it is expected that it will continue to generate net losses in the foreseeable future, and it may not be able to achieve or maintain profitability." ”

Fortunately, both Recbio and Kangle Guardian are currently leading companies in the progress of domestic 9-valent HPV vaccines, and some of their products under development have entered phase III clinical trials. For example, the 9-valent HPV vaccine of Kangle Guardian plans to submit a BLA (Biologics Marketing Authorization Application) in China in 2025, and is expected to be one of the first domestic 9-valent HPV vaccines approved for women. In other words, if the normal pace is maintained, it is expected that the company will be commercialized and profitable in a short period of time.

"On the one hand, we will promote the clinical trial process of products with high quality and efficiency, ensure that the products in the clinical trial stage reach the clinical endpoints as scheduled, and simultaneously accelerate the construction of industrialization bases and commercialization networks to ensure the commercialization of products as scheduled, so as to realize the transformation of the company from a vaccine R&D enterprise to a vaccine industrialization enterprise; On the other hand, in order to ensure sustainable and rapid development, the company will accelerate the development of differentiated vaccines that can meet major medical needs, build a multi-disease spectrum optimization pipeline, create an innovative technology platform in line with the development trend of the industry, and continuously improve its core competitiveness. In addition to organic growth, the company will continue to seek BD cooperation to enhance the global public health and commercial value of its pipeline vaccine products. ”

Kangle Guard, which is about to become the first listed company in the "North + H" two places, has also been enriching its product structure in the past few years.

As of the end of 2023, the company has a total of 8 recombinant vaccine candidates under development, of which trivalent HPV vaccine, 9-valent HPV vaccine (female indication) and 9-valent HPV vaccine (male indication) have entered phase III clinical trials, 9-valent HPV vaccine is also in phase III clinical trials for women in Indonesia, 15-valent HPV vaccine has obtained clinical trial approval notice approved by the State Food and Drug Administration, and the company has a number of other research projects in the preclinical research stage.

It is worth mentioning that Kangle Guardian is also the first domestic HPV vaccine R&D company to carry out clinical trials of 9-valent HPV vaccine for male indications in China.

The Phase III clinical trial of the 9-valent HPV vaccine (male indication) officially launched in December 2022 is the latest progress disclosed to the public is to enroll subjects. If the phase III clinical trial of this product is successful, the 9-valent HPV vaccine of Kangle Guardian may be expected to become the first domestic 9-valent HPV vaccine product that can be used for male vaccination.

Seize the domestic "first nine-valent vaccine"

Among the product lines of Connaught Guard, the HPV vaccine is progressing the fastest.

After 16 years of hard work, Kangle Guardian has a rich HPV vaccine product portfolio, which can meet the different needs of different genders and different groups, and is still ranked in the first echelon of HPV vaccine research and development in China.

Among them, the trivalent HPV vaccine, which is close to commercialization, is an HPV vaccine designed for women in East Asia, which can increase the prevention rate of cervical cancer in East Asian women from 70% to 78% compared with the existing bivalent and quadrivalent HPV vaccines on the market, and is expected to be submitted to BLA in China in 2024.

In addition, the nine-valent HPV vaccine of Kangle Guardian plans to submit to BLA in China in 2025, which is expected to become one of the first domestic nine-valent HPV vaccines approved for women, and Kangle Guardian is also the first domestic HPV vaccine research and development enterprise to carry out clinical trials of nine-valent HPV vaccine for male indications in China, in addition, Kangle Guardian actively deploys overseas markets, and will take the lead in launching the phase III clinical trial of nine-valent HPV vaccine for women in Indonesia in 2023. Expected to submit BLA to BPOM Indonesia in 2025; The 15-valent HPV vaccine jointly developed by Kangle Guardian and Chengda Biologics is the highest-priced HPV vaccine that has entered the clinical research stage in the world, covering all high-risk HPV types defined by the International Agency for Research on Cancer (IARC), and can increase the prevention rate of cervical cancer to more than 96%.

If the 9-valent HPV vaccine of Kangle Guardian is successfully launched, it will break the long-standing monopoly pattern of overseas HPV vaccines.

At present, the market competition for the 9-valent HPV vaccine is still intensifying.

As we all know, cervical cancer is the fourth most common cancer in women worldwide, usually associated with human papillomavirus (HPV) infection, and HPV vaccination is the most effective means of preventing cervical cancer. Therefore, the HPV vaccine is also a best-selling vaccine product in China and even the world, and is one of the most successful commercialized vaccines in the world.

There are three main types of HPV vaccines on the market: bivalent, quadrivalent and nine-valent, "valence" represents the type of virus subtype covered by the vaccine, the higher the "valence", the more virus types are covered, and the HPV nine-valent vaccine represents that it can prevent more than 90% of cervical cancer.

At present, a total of 5 HPV vaccines have been approved for marketing in China, three imported and two domestically produced. They are Merck Sharp & Dohme's quadrivalent HPV vaccine Gardasil, Merck's nine-valent HPV vaccine Gardasil9, GlaxoSmithKline's bivalent HPV vaccine Cirex, Wantai Biologics' bivalent HPV vaccine Xinkonin, and Walvax's bivalent HPV vaccine Wozehui.

Originally, since the HPV vaccine was approved for marketing in mainland China in 2016, the phenomenon of "hard to find" vaccine has always existed. However, because the first domestic bivalent HPV vaccine was approved for marketing by the China Food and Drug Administration in 2019, there will be a second domestic HPV vaccine approved for marketing in 2022. It is worth mentioning that recently, the marketing application of quadrivalent HPV vaccine of Chengdu Institute of Biological Products, a subsidiary of Sinopharm Group, has been accepted by the State Food and Drug Administration, which is expected to break the situation of foreign company Merck & Co., Ltd. monopolizing the domestic market.

As manufacturers' capacity reserves are further enhanced, price wars are inevitable. In March this year, the Jiangsu government procurement network showed that Wantai Bio won the bid for the procurement project of 499206 bivalent HPV vaccine at a price of 86 yuan per piece, which was the first time that this type of vaccine fell below the 100 yuan mark.

After less than half a year, this price has "broken through" downwards again.

On August 2, the electronic trading platform of public resources in Shandong Province disclosed that the procurement of bivalent human papillomavirus (HPV) vaccine for school-age girls in Shandong Province in 2024 was announced. Among them, Zerun Biotech, a subsidiary of Walvax Biotech, won the bid for 1.0162 million pieces with 27.9465 million yuan, which was converted into a single price of 27.5 yuan. Recently, the topic of "domestic HPV vaccine price reduced to a cup of milk tea price" has appeared on the Weibo hot search list, causing heated discussions.

The intensification of the involution of the domestic bivalent HPV vaccine has also made everyone focus on the domestic nine-valent HPV vaccine, which is still blank.

The competition in the nine-valent HPV vaccine market is not easy, and many vaccine manufacturers have entered the nine-valent "finals" to compete for the "first launch" of domestic nine-valent HPV.

According to the statistics of Southwest Securities, among the top companies in the current domestic nine-valent HPV vaccine, Walvax Biotech, Ruike Biotech, Kangle Guard, Wantai Biotech, and Shanghai Bowei have all entered clinical phase III. In other words, the expected approval time of the 9-valent HPV vaccine of these companies is almost the same.

"In the future, if the company's HPV vaccine products can successfully complete phase III clinical trials and obtain drug registration certificates, they will need to carry out fierce market competition with similar products of international pharmaceutical giants and domestic enterprises, and there is a risk of intensified market competition." ”

But what is certain is that whoever can market the "first domestic nine-valent HPV vaccine" will be able to stand out from the "finals".

"North + H", a new attempt

This is not the first time that Kangle Guard, which went to the Hong Kong Stock Exchange, has made a fundraising attempt in the capital market.

Past data shows that as early as 2015, Kangle Guardian was listed on the New Third Board. From 2019 to 2021, Kangle Guardian has successively raised funds through private placements. According to the data, since its listing on the New Third Board in 2015 and before its listing on the Beijing Stock Exchange, the company has raised 1.655 billion yuan in the open market through multiple private placements to independent third-party investors.

In 2022, Kangle Guardian will launch an impact on the Beijing Stock Exchange. In March 2023, Kangle Guardian landed on the Beijing Stock Exchange with an issue price of 42 yuan per share, and a total of 281 million yuan was raised for the research and development of HPV vaccines and the repurchase project of the Kunming production base.

It is worth mentioning that Kangle Guardian is the first innovative biomedical company to adopt the fourth set of standards to apply and successfully listed since the opening of the Beijing Stock Exchange, and it is also the "first share of human vaccine" on the Beijing Stock Exchange, and the "first share of domestic nine-valent HPV vaccine" in A-shares.

But even so, the pressure on the flow of funds has not been alleviated. As of the end of 2023, the raised funds have accumulated 261 million yuan, accounting for 92.90% of the total raised funds.

It is not difficult to see that Kangle Guardian has raised nearly 2 billion yuan in the capital market in the past few years, but the cash flow of Kangle Guardian is still very tight when the product has not been commercialized. According to the latest financial report data, the company's cash and cash equivalents balance was 137 million yuan.

At the same time, the attitude of Kangle Guardian is still relatively positive, stating that "the Group mainly uses bank loans, equity financing and other financing means to ensure normal business activities and the capital needs of various R&D pipelines. The Group believes that the funds provided or able to be provided by the above financing methods will be able to support the normal operation and R&D activities of the Group for at least the next 12 months. ”

Now it seems that Kangle Guardian regards the Hong Kong Stock Exchange as a "blood bag".

Less than a year after landing on the Beijing Stock Exchange, Kangle Guardian once again sought to be listed in Hong Kong. In January this year, Kangle Guardian submitted the form, although the status of the application documents has become "invalid" after the six-month period has just arrived, but "invalid" does not mean "failure", and recently, Kangle Guardian received the notice of overseas issuance and listing issued by the China Securities Regulatory Commission.

The first "North + H" is ready to fly.

The "North + H" model is actually very new, as an extension of the previous "A + H" and "Three + H" models, it will only be implemented in June 2023. At that time, the Beijing Stock Exchange and the Hong Kong Stock Exchange successfully signed a memorandum of understanding, according to which Beijing Stock Exchange enterprises can apply for listing on the Hong Kong Stock Exchange, and Hong Kong Stock Exchange enterprises can also apply for listing on the Beijing Stock Exchange.

"The launch of the listing arrangement between Beijing and Hong Kong is an important measure for the China Securities Regulatory Commission to promote the institutional opening of the capital market, continue to deepen the reform of the Beijing Stock Exchange, and respond to market demand, which will further broaden the scope of the 'A+H' model in the mainland and Hong Kong, and facilitate more enterprises to accelerate their development through the Beijing and Hong Kong markets." Sui Qiang, General Manager of the Beijing Stock Exchange, pointed out that "the cooperation between Beijing and Hong Kong will also help build Beijing into an international science and technology innovation center, consolidate Hong Kong's status as an international financial center, better serve the real economy, and support the realization of high-level scientific and technological self-reliance and self-reliance." ”

As the first company to prepare for a dual listing, the company intends to use the proceeds from the IPO in Hong Kong for the research and development and commercialization of core products, the research and development of vaccine candidates, the construction of R&D bases, investment and repayment of existing loans.

It is worth mentioning that while planning for the dual listing, Kangle Guardian also applied for bank financing to supplement its capital needs. "At present, the company's raised funds, stock funds and funds raised through bank loans and other means can meet the company's current capital needs. The Company has submitted an application for H-share listing to the Hong Kong Stock Exchange, and will not rule out raising funds through refinancing or other means to meet the funding needs of future R&D projects. ”

However, Kangle Guardian is also well aware that there are no vaccine products on the market at present, and there is a risk of accumulated unmade losses and continuous losses, but it also said that the company will accelerate the HPV vaccine industrialization base and sales channels and team building in the future, and accelerate the phase III clinical trials of trivalent HPV vaccine, 9-valent HPV vaccine (female indication) and 9-valent HPV vaccine (male indication) in accordance with the requirements of the trial plan, regulatory regulations and guidelines, and strive to achieve vaccine marketing and sales as soon as possible and contribute cash flow and profits to the company.

Therefore, it is expected that Kangle Guardian will be successfully listed in Hong Kong this time, so as to provide a new path from the Beijing Stock Exchange to the Hong Kong Stock Exchange for other biotech companies.