Stock abbreviation: Heyuan biotechnology Stock Code: 688238 Heyuan Biotechnology (Shanghai) Co., Ltd
Obio Technology (shanghai) Corp., Ltd.
(building 19, Lane 908, Ziping Road, Xi’An International Medical Investment Company Limited(000516) Park, Pudong New Area, Shanghai)
Initial public offering
Listing announcement of science and Technology Innovation Board
Sponsor (lead underwriter)
(No. 689, Guangdong Road, Shanghai)
Co lead underwriter
(No. 618, Shangcheng Road, China (Shanghai) pilot Free Trade Zone)
March 21, 2022
hot tip
The shares of Heyuan Biotechnology (Shanghai) Co., Ltd. (hereinafter referred to as “Heyuan biotechnology”, “issuer”, “company” and “the company”) will be listed on the science and Innovation Board of Shanghai Stock Exchange on March 22, 2022. The company reminds investors to fully understand the risks of the stock market and the risk factors disclosed by the company, avoid blindly following the trend of “speculation” in the initial stage of IPO, and make prudent decision and rational investment.
Section I important statements and tips
1、 Important statement
The company and all directors, supervisors and senior managers guarantee that the information disclosed in the listing announcement is true, accurate and complete, promise that there are no false records, misleading statements or major omissions in the listing announcement, and bear legal liabilities according to law.
The opinions of Shanghai Stock Exchange and relevant government authorities on the listing of the company’s shares and related matters do not indicate any guarantee to the company.
The company reminds investors to carefully read and publish on the website of Shanghai Stock Exchange（ http://www.sse.com.cn. ）The contents of the “risk factors” chapter of the company’s prospectus should pay attention to risks, make prudent decisions and make rational investment.
The company reminds the majority of investors to pay attention to the relevant contents not involved in this listing announcement. Please refer to the full text of the company’s prospectus.
Unless otherwise specified, the abbreviations or terms in this listing announcement have the same meanings as those in the prospectus of the company’s initial public offering of shares. 2、 Risk tips
The company reminds investors to pay attention to the investment risks at the initial stage of IPO (hereinafter referred to as “new shares”), and reminds investors to fully understand the trading risks and rationally participate in the trading of new shares, as follows: (I) the stock trading risks caused by the relaxation of price limit
On the first day of listing of new shares on the main board of Shanghai Stock Exchange and Shenzhen Stock Exchange, the increase limit ratio is 44%, the decrease limit ratio is 36%, and the increase and decrease limit ratio from the next trading day is 10%.
According to the special provisions of Shanghai Stock Exchange on the stock trading of the science and innovation board, the proportion of rise and fall of the competitive trading of the shares of the science and innovation board is 20%, and there is no limit on the price rise and fall in the first five trading days after the listing of the shares listed in the initial public offering. There is a more severe risk of stock price fluctuation on the Kechuang board than that on the main board of Shanghai Stock Exchange and Shenzhen Stock Exchange.
(II) risk of a small number of circulating shares
At the initial stage of listing, the share lock period of the original shareholders is 12 to 36 months, the lock period of the sponsor’s follow-up investment shares is 24 months, the restricted period of the shares allocated to other strategic placement investors other than the relevant subsidiaries of the sponsor is 12 months, and the online lower limit lock period is 6 months. The total share capital of the company after the issuance is 493189000 shares, of which 69007994 shares are non tradable shares in the initial stage of the IPO, accounting for 13.99% of the total share capital after the issuance. At the initial stage of listing, the number of circulating shares is small, and there is a risk of insufficient liquidity. (III) the P / E ratio is higher than the average level of the same industry
The industry of the company is research and experimental development (M73). As of March 8, 2022 (T-3), the average static P / E ratio of research and experimental development (M73) released by China Securities Index Co., Ltd. in the latest month was 71.72 times. The price earnings ratio corresponding to this issue price is:
1. 55.08 times (earnings per share is calculated by dividing the net profit attributable to shareholders of the parent company before deducting non recurring profits and losses audited by an accounting firm in accordance with Chinese accounting standards in 2020 by the total share capital before this issuance); 2. 195.06 times (earnings per share is calculated by dividing the net profit attributable to shareholders of the parent company after deducting non recurring profits and losses audited by an accounting firm in accordance with Chinese accounting standards in 2020 by the total share capital before the issuance);
3. 69.09 times (earnings per share is calculated by dividing the net profit attributable to shareholders of the parent company before deducting non recurring profits and losses audited by an accounting firm in accordance with Chinese accounting standards in 2020 by the total share capital after this issuance); 4. 244.67 times (earnings per share is calculated by dividing the net profit attributable to shareholders of the parent company after deducting non recurring profits and losses audited by an accounting firm in accordance with Chinese accounting standards in 2020 by the total share capital after this issuance).
The diluted P / E ratio of the company after this issuance is higher than the average static P / E ratio of the industry in the latest month released by China Securities Index Co., Ltd., which is at risk of loss to investors due to the decline of the company’s share price in the future. (IV) risk that can be regarded as the subject matter of margin trading on the first day of stock listing
There is a certain risk in the price fluctuation of the subject-matter stock and the margin on the stock market, which may lead to a certain risk. Price fluctuation risk refers to that margin trading will aggravate the price fluctuation of the underlying stock; Market risk refers to that when investors use stocks as collateral for financing, they need to bear not only the risks caused by the change of the original stock price, but also the risks caused by the change of the stock price of new investment, and pay the corresponding interest; Margin call risk means that investors need to monitor the level of guarantee ratio in the whole process of trading to ensure that it is not lower than the maintenance margin ratio required by margin trading; Liquidity risk refers to that when the price of the underlying stock fluctuates violently, the financed purchase of securities or the repayment of securities, the sale of securities or the repayment of securities may be blocked, resulting in greater liquidity risk. 3、 Special risk tips
The following “reporting period” refers to 2018, 2019, 2020 and January June 2021.
(I) gene therapy cdmo depends on the development of downstream gene therapy industry, and there is a risk that the development of gene therapy industry is less than expected
1. There are uncertain factors in the development of gene therapy industry
The issuer and its gene therapy cdmo industry are highly dependent on the development of downstream gene therapy industry.
Globally and in China, the gene therapy industry has experienced twists and turns in the development process of the past 30 years, and there has been a period of development stagnation caused by safety problems; In recent years, although the gene therapy industry has accelerated its development and well controlled the safety problems with the continuous increase of listed drugs and clinical trials, it is still faced with the weakening of the advantages of the pipeline under research due to the rapid iteration of industry technology, the high price of drugs may lead to insufficient effective demand in the market, the small scale of the indication treatment market or more competition from traditional drugs Stricter supervision leads to a series of uncertain factors such as the difficulty of obtaining approval of new drugs, so the development prospect may be less than expected.
The gene therapy cdmo industry is highly linked with the downstream gene therapy industry. If the development of the gene therapy industry is less than expected due to safety, technology, price, indications, regulatory policies and other factors, it will have an adverse impact on the cdmo industry, and the issuer’s customers’ demand for cdmo services will weaken.
2. Risk of regulatory policy changes in gene therapy
Gene therapy is an emerging treatment. At present, only more than ten car-t products and adeno-associated virus products have been approved to market in the United States and Europe, and the experience of drug review and continuous supervision is limited. Among them, the technology of car-t is relatively mature, and the clinical research on safety and efficacy is relatively sufficient; The technology of oncolytic virus and AAV is more difficult, and the clinical research on safety and efficacy still needs more accumulation. In particular, the safety of AAV has attracted the continuous attention of FDA.
The scientific and industrial circles continue to discuss the safety and effectiveness of gene therapy. Global regulatory authorities such as FDA, EMA and nmpa have also adjusted regulatory regulations and policies according to various opinions on many occasions. While the overall regulatory trend tends to encourage the development of gene therapy, it also continues to emphasize the quality and safety of products.
China’s production standards and norms on gene therapy are still immature, the regulatory system is not comprehensive, and relevant regulations and policies are continuously adjusted according to the development of the industry. If there are medical safety incidents of gene therapy products in the future, which will lead to negative public opinion on the safety, practicability or effectiveness and ethics of gene therapy, it is possible to urge the regulatory authorities to implement stricter technical and experimental control over the gene therapy industry as a whole, and improve the difficulty of obtaining approval for clinical trials and listing of gene therapy products.
Facing the uncertainty of regulatory policy changes, if the company cannot adjust its business strategy in time to deal with changes in industry regulations and regulatory environment, its gene therapy cdmo business may be adversely affected.
3. There are some uncertainties in the path of gene therapy technology
(1) Gene therapy cdmo technology path
At present, the issuer mainly provides services for R & D pipelines in preclinical and clinical phase I & II stages, and has accumulated more experience in process development, process validation, drug quality control technology, amplification production technology and project operation management in these stages. However, since the drug pipeline served has not yet entered clinical phase III trial, it has no production experience in these stages.
In terms of technology, clinical phase III and commercial phase production are different from preclinical and clinical phase I & II production in many technical considerations such as process characterization, commercial process amplification and continuous quality verification. At present, the issuer has carried out process characterization and other work, and the production scale has reached the requirements of clinical phase III. at the same time, it has the process amplification experience from small trial to pilot trial, the development experience of multiple quality methods and perfect quality management system, and has done some technical reserves for clinical phase III and commercial production.
However, in view of the cutting-edge nature of gene therapy, some cdmo process changes may occur due to the application of new technologies and changes in regulatory requirements during the promotion of the service pipeline from clinical phase I to phase III and beyond. Therefore, the technology accumulation formed by the issuer’s existing business may face uncertainty in the technology path for cdmo projects serving phase III and commercialization scale.
(2) Downstream gene therapy technology path
In recent years, the exploration of gene therapy technology and mechanism and the development of clinical trials have continued to deepen, but there are still few gene drugs approved for marketing. In terms of mainstream drugs, imlygic, the oncolytic virus product of Amgen (Amgen), was approved by FDA and EMA in 2015. Other drugs approved by FDA and EMA are mainly AAV, car-t and other products; In China, nmpa approved one oncolytic virus product in 2005 and two car-t products in June and September 2021.
Gene therapy is a frontier and emerging field. Most drugs are in clinical trials, and there are some inherent uncertainties in its technical path. Among them, the technology of car-t is relatively mature, and the clinical research on safety and efficacy is relatively sufficient; The technology of oncolytic virus and AAV is more difficult, and the clinical research on safety and efficacy still needs more accumulation. In particular, the safety of AAV has attracted the continuous attention of FDA.
In view of the business characteristics of the issuer, such as focusing on the ind-cmc phase project, not providing phase III and commercial phase services, the main advantage field is oncolytic virus with higher process difficulty, and the clinical progress of relevant pipelines is fast, the pipelines served by the above cdmo project may face the risk of drug technology path failure, or the risk that the drug technology path needs to be adjusted when entering phase III. If such circumstances occur, the issuer’s cdmo project may not be able to be continuously promoted, or the developed process and quality control methods may not meet the requirements.
The uncertainty in the above technical path may cause the development of gene therapy industry to be less than expected, and bring certain risks to the company’s cdmo business operation. (II) characteristics of the issuer’s gene therapy cro and cdmo business
1. The whole chain services of gene therapy cro and cdmo have not been realized
At present, the issuer has the ability to provide cro services such as gene therapy vector development and gene function research for basic research of gene therapy, as well as cdmo services such as ind-cmc pharmaceutical research and GMP production of clinical samples for research and development of gene drugs.
However, based on the current business situation, the company’s gene therapy cro and cdmo customers are relatively independent and have great differences. Cdmo business mainly serves new drug R & D enterprises, and cro business mainly serves scientific research customers; The transformation of cro business and cdmo business is less, and there is no inevitable transformation relationship. Therefore, as far as the specific R & D pipeline is concerned, the company has not yet realized to provide it with complete and whole chain cro and cdmo services from early basic research, process development, efficacy test, clinical sample production to commercial production.
2. Cdmo business execution projects and customer accumulation are relatively small
The cdmo business of the company has not developed for a long time, and the number of customers and executed projects are relatively small; In terms of business structure, at present, ind-cmc stage projects are the main ones, and there are relatively few clinical stage projects, all of which are clinical stage I & II; In addition, as of August 20, 2021, the genetic drugs covered by the issuer’s contract in hand are mainly oncolytic viruses, followed by AAV and cdmo projects of cell therapy, as follows:
Unit: 10000 yuan
Product category number of projects in hand (PCs.) contract amount not executed in hand (10000 yuan)
Oncolytic virus 22
