Shanghai Junshi Biosciences Co.Ltd(688180)
(room 1003, 10th floor, building 2, No. 36 and 58, Haiqu Road, China (Shanghai) pilot Free Trade Zone) issued A-share shares to specific objects in 2022
Demonstration and analysis report of issuance scheme
March, 2002
Shanghai Junshi Biosciences Co.Ltd(688180) (hereinafter referred to as ” Shanghai Junshi Biosciences Co.Ltd(688180) ” or “company”) is a company listed on the science and Innovation Board of Shanghai Stock Exchange. In order to meet the capital needs of the company’s business development, increase the company’s capital strength and enhance its profitability, according to the provisions of relevant laws, regulations and normative documents such as the company law of the people’s Republic of China, the securities law of the people’s Republic of China and the measures for the administration of securities issuance and registration of companies listed on the science and Innovation Board (for Trial Implementation), It is planned to issue no more than 70 million shares (including the number of shares) to specific objects, and the total amount of funds raised will not exceed 3.98 billion yuan (including the number of shares). The net amount of funds raised after deducting the issuance expenses will be used for innovative drug R & D projects, Shanghai Shanghai Junshi Biosciences Co.Ltd(688180) science and technology headquarters and R & D base projects. 1、 Background and purpose of this issuance of shares to specific objects (I) background of this issuance to specific objects
1. The scale of biological medicine industry is growing rapidly and the market prospect is broad
With the improvement of Chinese residents’ economic level and health awareness, people’s demand for biological drugs has further increased. China’s biopharmaceutical market reached 345.7 billion yuan in 2020. According to frost Sullivan’s prediction, the scale of China’s biopharmaceutical market is expected to reach 811.6 billion yuan by 2025, and the annual compound growth rate from 2020 to 2025 is expected to be 18.6%. The global biopharmaceutical market has increased from US $220.2 billion in 2016 to US $297.9 billion in 2020, with a CAGR of 7.8% from 2016 to 2020. Driven by factors such as the expansion of patient population and the improvement of payment ability, the growth rate of biological drug market in the future will be much higher than that of chemical drug market in the same period. According to frost Sullivan’s prediction, the global biological drug market is expected to reach US $530.1 billion by 2025, and the annual compound growth rate from 2020 to 2025 is expected to be 12.2%.
2. Policies to encourage and promote the development of domestic innovative drugs
At present, the overall market of innovative drugs accounts for about 7.3% in China’s public drug terminal market. Compared with developed regions such as Europe, America and Japan, there is still much room for improvement. With the deepening of China’s medical and health system reform, policies such as national centralized drug purchase and drug price negotiation, consistency evaluation, drug listing permit holder system, strict fee control of medical insurance, accelerated inclusion of anti-cancer new drugs in medical insurance and accelerated new drug review have been launched one after another. The R & D environment of innovative drugs in China has ushered in major changes, and the pharmaceutical industry is facing a reshuffle, Innovative pharmaceutical enterprises with real innovation ability and core competitiveness, especially pharmaceutical enterprises with leading technical ability and cost advantage, have ushered in development opportunities. Since 2017, the State Food and drug administration has accelerated the review and approval of new drugs, driving the development of Chinese innovative drug enterprises. In addition, the state has enabled more innovative drugs to be included in the scope of medical insurance payment faster through medical insurance negotiation, providing a better development environment for innovative drug research and development.
3. The issuance of shares to specific objects meets the needs of the company’s development strategy
As an innovation driven biopharmaceutical company, the company aims to develop first in class or best in class drugs through excellent innovative drug discovery capability, strong biotechnology R & D capability and mass production technology, The raised investment projects involved in this issuance to specific objects will help accelerate the company’s clinical research work and promote the listing process of relevant products outside China, enhance the synergy between the company’s preclinical research and clinical research, alleviate the shortage of the company’s R & D and operating funds to a certain extent, and be conducive to the realization of the company’s core development strategy and the sustainable and healthy development of production and operation. (II) purpose of this issuance to specific objects
1. Enhance the company’s R & D and independent innovation capabilities and enhance the company’s core competitiveness
At present, the company has successfully developed a combination of drugs under development with great market potential, and a number of products are landmark: one of the core products, treprizumab, is the first domestic anti-PD-1 monoclonal antibody approved by the State Food and Drug Administration in China; Ngoreximab and ubp1213 are anti PCSK9 monoclonal antibodies and anti BLyS monoclonal antibodies approved by nmpa clinical trials for the first time by Chinese local companies; Js004 is an anti BTLA monoclonal antibody independently developed by the company and pioneered in the world. It has been approved by FDA and nmpa for clinical trials. At present, clinical trials are being carried out in China and the United States. However, the development and commercialization of innovative drugs are highly competitive, and are affected by rapid and major technological changes. The company is facing competition from major global pharmaceutical companies and biotechnology companies. It is necessary for the company to continuously reserve and expand R & D pipeline products, enhance the depth and breadth of R & D, and provide guarantee for sustainable growth and enhancing core competitiveness.
2. Enhance the synergy between preclinical research and clinical research, and improve the R & D efficiency of innovative drugs
At present, the company has many preclinical research laboratories and clinical research offices in Pudong, Shanghai. Considering the increasing pipeline of products under research and the urgent need to further accelerate the R & D Progress of the company, the company plans to build a new R & D headquarters building in Shanghai to integrate the preclinical research departments and clinical research departments of the company, enhance the R & D synergy, improve the R & D efficiency of products under research, and save the rental cost of the company.
3. Make full use of the advantages of capital market, enhance capital strength and enhance anti risk ability
Through this offering to specific objects, the company will enhance its capital strength with the help of the capital market platform, bring strong support to the company’s operation, and consolidate the foundation of sustainable development in business layout, R & D ability, financial ability, long-term strategy and other aspects. This will help to enhance the company’s core competitiveness and enhance its anti risk ability, Promote the sustainable and stable development of the company. 2、 The necessity of this issuance of securities and its variety selection (I) the variety of securities issued this time
The type of shares issued to specific objects this time is RMB ordinary shares (A shares) listed in China, with a par value of RMB 1.00 per share. (II) the necessity of the selection of securities issued this time 1. Speed up the research and development process of innovative drugs and enhance the core competitiveness of the company
R & D is the cornerstone and core competitiveness of innovative drug enterprises. The pharmaceutical industry is a technology intensive industry with limited product life cycle and rapid technological iteration and upgrading. In order to maintain its competitive advantage, innovative drug enterprises continue to reserve and expand R & D pipeline products, enhance the depth and breadth of R & D, and provide guarantee for sustainable growth and enhancing core competitiveness. Leading enterprises in the global pharmaceutical industry continue to invest a lot in R & D to develop innovative products, so as to maintain the industry leadership and the competitiveness of the product system and create new growth points China Meheco Group Co.Ltd(600056) in recent years, the R & D investment of the industry has been increasing. Traditional pharmaceutical enterprises and innovative drug enterprises have carried out a series of innovative drug R & D in line with the international technical level, driving the overall rapid development of the technical level of the industry.
In this trend, the company must continue to increase technology investment in order to ensure that the company can adapt to the technical development characteristics of the pharmaceutical industry at home and abroad, consolidate the market position of products and enhance the core competitiveness of the company. The implementation of this fund-raising and investment project will accelerate the R & D process of the company’s innovative drugs, expand the breadth and depth of clinical trials of the company’s drugs under research, and lay the foundation for the company to realize more commercialized products. 2. Enhance the synergy between preclinical research and clinical research, and improve the R & D efficiency of innovative drugs
At present, the company has many preclinical research laboratories and clinical research offices in Pudong, Shanghai. As of September 30, 2021, the company has 45 drug pipelines under development. Considering the increasing pipeline of products under research and the urgent need to further accelerate the R & D progress, the company plans to build a new Shanghai R & D headquarters building to integrate the company’s preclinical research departments and clinical research departments, enhance the R & D synergy, improve the R & D efficiency of products under research, save the company’s rental cost and attract excellent R & D talents. 3. There are limitations in debt financing methods such as bank loans
At this stage, the company will incur large financial expenses through bank loans and reduce the profitability of the company. At the same time, as a high-tech enterprise with high R & D investment, the company has huge R & D expenditure every year and needs sufficient capital reserves to ensure the advance layout of the company’s technology. If it is financed by means of bank loans and other debt instruments, it will improve the company’s asset liability ratio, increase the company’s operational and financial risks, and is not conducive to the sustainable development of the company. 4. Equity financing is a financing method suitable for companies to seize opportunities and develop rapidly
Equity financing can enable the company to maintain a good capital structure, enable the company to have sufficient long-term funds, reduce operational and financial risks, and help the company expand the breadth and depth of innovative drug product line. In the future, with the implementation of fund-raising investment projects, the growth of the company’s operating performance will be able to digest the dilution impact of equity expansion on immediate income and bring good returns to all shareholders of the company.
In conclusion, it is necessary for the company to issue shares to specific objects this time. 3、 Appropriateness of the selection scope, quantity and standard of the issuing object
The issuing objects of this offering are no more than 35 (including 35) specific objects that meet the conditions stipulated by the China Securities Regulatory Commission (hereinafter referred to as the “CSRC”). The scope of issuing objects is: no more than 35 specific objects such as securities investment fund management companies, securities companies, trust and investment companies, financial companies, insurance institutional investors, qualified overseas institutional investors, other domestic legal person investors and natural persons in accordance with the provisions of the CSRC; Securities investment fund management companies, securities companies, qualified foreign institutional investors and RMB qualified foreign institutional investors who subscribe for more than two products under their management shall be regarded as one issuance object; If a trust and investment company is the issuing object, it can only subscribe with its own funds.
The final issuing object will be determined by the board of directors of the company and its authorized persons through consultation with the sponsor (lead underwriter) in accordance with the authorization of the general meeting of shareholders and in combination with the inquiry results after the issuance is reviewed and approved by Shanghai Stock Exchange and approved to be registered by the CSRC. If laws, regulations or normative documents have other provisions on the issuing object at the time of issuance, such provisions shall prevail.
All issuers subscribe for the shares issued by the company in RMB cash at the same price. The selection scope, quantity and standard of the company’s issuing objects this time comply with the provisions of the measures for the administration of securities issuance and registration of companies listed on the science and Innovation Board (for Trial Implementation). 4、 Rationality of the pricing principle, basis, method and procedure of this offering (I) the pricing principle and basis of this offering
The pricing benchmark date of this issuance is the first day of the issuance period of this issuance. The issuing price of this offering shall not be lower than 80% of the average trading price of the company’s A-Shares 20 trading days before the pricing base date (excluding the pricing base date). The final issue price of this offering shall be determined by the board of directors of the company and its authorized persons through consultation with the sponsor (lead underwriter) according to the authorization of the general meeting of shareholders, in accordance with the provisions of relevant laws and regulations and the requirements of the regulatory authorities and the inquiry results, after applying for the registration document of the CSRC from the specific object, but not lower than the above issue reserve price.
The average trading price of A-Shares 20 trading days before the pricing benchmark date = the total trading volume of A-Shares 20 trading days before the pricing benchmark date / the total trading volume of A-Shares 20 trading days before the pricing benchmark date. If the share price of the company’s shares is adjusted due to ex rights and ex interest matters such as dividend distribution, share distribution, share allotment, conversion of capital reserve into share capital within 20 trading days, the trading price on the trading day before the adjustment shall be calculated according to the price after corresponding ex rights and ex interest adjustment.
During the period from the pricing base date to the issuance date, if the company has ex dividend and ex right matters such as dividend distribution, bonus shares or conversion of provident fund into share capital, the base price of shares issued to specific objects will be adjusted accordingly. The adjustment method is as follows:
Cash dividend: P1 = p0-d
Bonus shares or converted into share capital: P1 = P0 / (1 + n)
Cash distribution and bonus shares or share capital conversion: P1 = (p0-d) / (1 + n)
After adjusting the dividend per share, P1 is the cash dividend per share, or D is the dividend per share, after adjusting the dividend per share.
(II) pricing method and procedure of this offering
The pricing methods and procedures for the issuance of shares to specific objects are in accordance with the relevant provisions of laws and regulations such as the measures for the administration of securities issuance and registration of companies listed on the science and Innovation Board (for Trial Implementation). The company convened the board of directors and disclosed the relevant announcements on the website of the exchange and the designated information disclosure media, which must be deliberated and approved by the company’s extraordinary general meeting of shareholders.
The pricing methods and procedures of this offering comply with the relevant provisions of laws and regulations such as the measures for the administration of securities issuance registration of listed companies on the science and Innovation Board (for Trial Implementation), and the pricing methods and procedures of this offering are reasonable.
To sum up, the principles, basis, methods and procedures of this offering pricing comply with the requirements of relevant laws, regulations and normative documents such as the measures for the administration of securities issuance registration of listed companies on the science and Innovation Board (for Trial Implementation), and the compliance is reasonable. 5、 Feasibility of this issuance method (I) the company does not have the situation that it is not allowed to issue securities to specific objects in Article 11 of the measures for the administration of securities issuance registration of companies listed on the science and Innovation Board (for Trial Implementation):
1. Arbitrarily changing the purpose of the previously raised funds without correction, or without the approval of the general meeting of shareholders;
2. The preparation and disclosure of the financial statements for the most recent year do not comply with the accounting standards for business enterprises or relevant information disclosure rules in major aspects; An audit report with a negative opinion or unable to express an opinion on the financial and accounting report of the most recent year; The last year’s financial and accounting report has been issued with qualified audit report, and the material adverse impact of the matters involved in the qualified opinion on the listed company has not been eliminated. Except that this issuance involves major asset restructuring;
3. The current directors, supervisors and senior managers have been subject to administrative punishment by the CSRC in the last three years, or have been publicly condemned by the stock exchange in the last year;
4. Listed companies and their current directors, supervisors and senior managers are being investigated by judicial organs for suspected crimes or by CSRC for suspected violations of laws and regulations;
5. The controlling shareholders and actual controllers have committed major illegal acts that have seriously damaged the interests of listed companies or the legitimate rights and interests of investors in the past three years
