Good News on Listing | Frost & Sullivan Assists MicroPort Medical Technology Co., Ltd. in Successful Listing on Hong Kong Stock Exchange (2160.HK)

Minimally Invasive Cardiac Therapy Technology Co., Ltd. (hereinafter referred to as 'Cardiac Therapy') successfully listed on February 4, 2021, with an issue of 206 million shares at a tender price of HK$11.1 - HK$12.2, raising approximately HK$2.33 billion. Frost & Sullivan (Frost & Sullivan, hereinafter referred to as 'Frost & Sullivan') provided exclusive industry advisory services for the listing of Cardiac Therapy and hereby warmly congratulate it on its successful listing.

During the Hong Kong listing process, Frost & Sullivan mainly undertook the following tasks: helping the company accurately and objectively understand its positioning in the target market, using objective market data to discover, support, and highlight the company's competitive advantages, assisting the company, investment banks, and other intermediaries in completing the relevant parts of the prospectus (such as the overview, competitive advantages and strategy, industry overview, business, and other important sections), facilitating communication with the Hong Kong Stock Exchange and investors, helping investors quickly understand the market ecosystem and competitive landscape, and assisting the company in completing feedback on various industry-related issues from the Hong Kong Stock Exchange.

Heart disease, often used interchangeably with the term 'cardiovascular disease', is a general term describing abnormalities of the heart, including structural heart disease, coronary heart disease, arrhythmia, and heart failure. Heart valve disease is a type of structural heart disease involving four heart valves (the aortic valve, tricuspid valve, mitral valve, and pulmonary valve). Due to various reasons, the structure and function of the valves become abnormal, leading to incomplete opening (stenosis) or closing (regurgitation). In 2019, there were approximately 213.2 million patients with heart valve disease globally, resulting in 2.6 million deaths. The number of patients with heart valve disease in China reached 36.3 million and is expected to increase to 40.2 million by 2025. With increasing health awareness, improved patient affordability, expanded government medical reimbursement coverage, and improved living standards, the prevalence and diagnosis rate of heart valve disease are expected to increase significantly in the near future.

Aortic valve diseases include aortic stenosis (AS) and aortic regurgitation (AR).

Aortic valve stenosis refers to the narrowing of the aortic valve, which blocks the flow of blood from the left ventricle into the ascending aorta during systole. The main causes of AS include rheumatic fever, congenital bicuspid aortic valve, and idiopathic degenerative sclerosis with calcification. Patients should undergo aortic valve replacement surgery as soon as possible; otherwise, the mortality rate within two years after diagnosis for patients progressing to symptomatic AS is higher than 50%. Compared with American AS patients, Chinese AS patients typically have more severe valve calcification and a higher proportion of bicuspid aortic valves. The special design of TAVI products is suitable for these characteristics, such as a special frame design with strong radial force that can push aside severely calcified leaflets at the bottom. The following figure shows a comparison between China and the United States in terms of calcification degree and incidence of bicuspid valve morphology based on a sample of 52 Chinese patients and 232 American patients.

Aortic regurgitation refers to the incompetence of the aortic valve in the heart, causing blood to flow back from the aorta into the left ventricle during ventricular diastole. The causes of AR include valvular degeneration, rheumatic disease, endocarditis, and dilation of the aortic root. Many patients with AS usually also have AR symptoms, while those with pure AR are rare. Current treatment methods for AR mainly include traditional surgical procedures (SAVR) and valve repair, followed by the use of TAVI products.

AS can be treated surgically. In recent years, TAVI has become one of the methods for treating patients with severe aortic stenosis, especially those who are unable to undergo SAVR. According to the 2014 guidelines for heart valve disease published by the American College of Cardiology and the American Heart Association (ACC/AHA guidelines), for patients with moderate to low surgical risk (patients with an STS score below 8), SAVR is recommended; for patients with high surgical risk (patients with an STS score above 8), TAVI is a reasonable alternative to SAVR. In the updated ACC/AHA guidelines in 2017, the scope of application for TAVI was expanded to include patients with moderate surgical risk (patients with an STS score of 4 to 8). In August 2019, the FDA approved the implementation of TAVI surgery on patients with moderate to low surgical risk. It is expected that Chinese regulatory authorities will follow similar trends and may approve the implementation of TAVI surgery on Chinese patients with moderate to low surgical risk in the future. In addition, many AS patients cannot be treated with SAVR. The following figure shows a comparison between TAVI surgery and SAVR surgery in China.

Patients recommended for TAVI surgery include those who cannot undergo SAVR, high-risk patients for SAVR, and intermediate- to low-risk patients for SAVR. Among them, intermediate- to low-risk patients were included in the TAVI indication by the FDA in August 2019. The global TAVI market has experienced rapid growth, increasing from $2 billion in 2015 to $4.8 billion (or RMB 32.3 billion) in 2019, and is expected to continue growing. By 2025, it is projected to reach $10 billion (or RMB 67.3 billion), doubling the market size compared to 2019. The following chart lists the historical and forecasted growth of the global TAVI market.

Currently, TAVI in China has only been approved for patients with aortic stenosis who are not suitable for surgery and those at high surgical risk. In 2019, the market size of the TAVI market in China was RMB 392 million. It is expected that the TAVI market will grow rapidly at a compound annual growth rate of 53.1%, reaching RMB 5 billion by 2025. The following chart lists the history and forecast growth of the TAVI market in China.

Frost & Sullivan, integrating nearly 60 years of global consulting experience, has been serving the booming Chinese market with dedication for 23 years. With a global perspective, it helps clients accelerate their business growth and achieve benchmark positions in industry growth, innovation, and leadership. The healthcare industry is one of the core areas of focus for Frost & Sullivan. Over the past sixteen years, the Frost & Sullivan healthcare team has provided financing financial advisory, IPO industry advisory, strategic consulting, management consulting, and other services to hundreds of outstanding domestic and international biopharmaceuticals, medical devices, healthcare services, and internet healthcare companies. Successful listings include: RuiLi Medical Beauty (2135.HK), Jiake Pharmaceutical (1167.HK), Hepalink Biopharmaceuticals (2142.HK), JD Health (6618.HK), Deqi Pharmaceuticals (6996.HK), Rongchang Biotech (9995.HK), WuXi AppTec (2126.HK), Sino Biologics (2096.HK), Yunding New Hope (1952.HK), Zai Ding Medicine (9688.HK), Ocular Therapeutics (1477.HK), Yongtai Biotech (6978.HK), Hapre Biopharmaceuticals (9989.HK), Kechuang Pharmaceutical (9939.HK), Peking Union Medical College Hospital (9996.HK), Kangfang Biotech (9926.HK), Novogene (9969.HK), Tianjing Biotech (IMAB.NASDAQ), Kanglong Chemical (3759.HK), China Antibody (3681.HK), Dongyao Pharmaceutical (1875.HK), Yasheng Pharmaceutical (6855.HK), Fosun Pharma (2696.HK), Hansoh Pharmaceutical (3692.HK), Mabtech (2181.HK), Founder Holdings (1521.HK), ViaBio (1873.HK), CStone Pharmaceuticals (2616.HK), Junshi Biosciences (1877.HK), WuXi AppTec (2359.HK), Innovent Biologics (1801.HK), Valneera Biologics (2552.HK), BeiGene (6160.HK), Gilead Sciences (1672.HK), WuXi Biologics (2269.HK), China Resources Healthcare (3320.HK), Yakult Biologics (2633.HK), HCMNasdaq (HCM.NASDAQ), (1548.HK), BBI Life Sciences (1035.HK), etc. In terms of the number of filings, the Frost & Sullivan healthcare team maintains an absolute leading position in Hong Kong healthcare IPOs, continuously occupying more than 90% of the market share from 2018 to 2020.

Since the listing of the first batch of companies on the Sci-tech Innovation Board in July 2019, Frost & Sullivan reports have been widely cited in the prospectuses of leading Sci-tech Innovation Board-listed companies in the industry, including: Huaxi Biotech (688363.SH), Junshi Biosciences (688180.SH), Zhejiang Genomics & Biotechnology Co., Ltd. (688266.SH), Bio-Thera (688177.SH), and Shenzhou Cells (688520.SH). It is considered one of the most powerful, professional, and influential industry research institutions in the sector. We hope to work with enterprises to understand industry trends, seize development opportunities, jointly promote innovation and upgrading of China's healthcare industry, and build a healthy future.