We are a leading innovative interventional cardiovascular device company in China with a current focus on two therapies: (i) bioresorbable scaffold (BRS) therapy addressing the unmet medical needs of Chinese patients for the treatment of coronary or peripheral artery diseases, and (ii) renal denervation (RDN) therapy addressing the unmet medical needs of patients for the treatment of uncontrolled hypertension and resistant hypertension. BRS therapy is a procedure using polymer-based temporary scaffolds to keep the coronary artery open in a period of time and the scaffolds themselves will gradually degrade in the human body. RDN therapy is a minimally invasive procedure that uses ablation to destroy the nerves in the renal arteries without damaging the arteries. Founded in 2014, we have been dedicated to developing innovative medical devices to address the unmet medical needs of vascular disease and hypertension patients in China. Our mission is turning innovation into quality care. As of the Latest Practicable Date, we had one Core Product and eight other pipeline product candidates in various stages of development. Our Core Product, Bioheart, is a self-developed BRS system used in PCI procedures for the treatment of coronary artery disease, and is expected to be the world’s first second-generation BRS system receiving regulatory approval based on multi-center RCT results, according to Frost & Sullivan.
WE MAY NOT BE ABLE TO SUCCESSFULLY DEVELOP AND/OR MARKET OUR CORE PRODUCT, BIOHEART, OR ANY OTHER PRODUCT CANDIDATES.
OUR PRODUCTS AND PRODUCT CANDIDATES
We adopted a self-development business model, and self-developed the key technologies used in our products and product candidates. For our RDN product candidate, we currently plan to commercialize it in China, Japan, and Europe; for our other product candidates, we currently plan to commercialize them in China. We own all the rights pertaining to all our product candidates, except for certain exceptions as set forth in our strategic alliance agreements with Terumo. For details, please refer to the paragraphs headed “Business — Sales, Distribution and Marketing — Strategic Alliance with Terumo.” All of our products and product candidates are class III medical devices under the classification criteria of the NMPA.
Driven by factors including the aging population, people’s unhealthy diet and lifestyle, and environmental pollution, chronic diseases are becoming increasingly prevalent in China in recent years. Heart disease and hypertension are among the most prevalent, and deadly, chronic diseases suffered by Chinese patients. According to Frost & Sullivan, the number of coronary artery disease patients in China increased from 22.0 million in 2015 to 24.6 million in 2019 at a CAGR of 2.8%, and is expected to further increase to 28.0 million in 2024 at a CAGR of 2.6% from 2019 to 2024. Similarly, the number of hypertension patients in China increased from 289.9 million in 2015 to 317.4 million in 2019 at a CAGR of 2.3%, and is expected to further increase to 351.4 million in 2024 at a CAGR of 2.1% from 2019 to 2024. In recent years, interventional therapies are developing rapidly for treating these diseases, and are progressively replacing traditional therapies such as invasive surgeries and drugs, because they generally involve shorter procedure time and minimal invasiveness, cause fewer post-procedural complications, enable faster recovery, and relieve the patients from long term use and potential side effects of medications.
As a result of a combination of technological innovation, favorable government policies, rising per capita income and healthcare expenditure, as well as the significant advantages of interventional treatment solutions over traditional therapies such as drugs and invasive surgeries, the interventional medical device market in China has experienced rapid growth in recent years, and is expected to maintain its growth momentum in the near future, according to Frost & Sullivan. However, each of the BRS and RDN markets in China is still underpenetrated with significant growth potential. With respect to the BRS market, despite the large and quickly growing coronary artery disease patient pool in China and the benefits of interventional procedures over traditional therapies, the penetration rate of percutaneous coronary intervention (PCI) procedures has been low in China. According to Frost & Sullivan, on average, among every one million of the population, only approximately 729 PCI procedures were conducted in China in 2019, as compared to 2,951, 2,276 and 2,222 procedures for the United States, Japan and Europe, respectively, in the same year. In addition, the therapeutic devices used in PCI operations in China had primarily been earlier generation products such as bare metal stents (BMS) or drug eluting stents (DES), indicating a huge market for more advanced products such as BRS. Similarly, with respect to the RDN market, despite the large and fast growing hypertension patient pool, the limited number of therapies with proven clinical efficacy to treat uncontrolled or resistant hypertension, and the advantages of RDN therapy over traditional therapies, there has been no RDN product commercialized in China as of the Latest Practicable Date.
BIOHEART — OUR CORE PRODUCT
Our bioresorbable scaffold (BRS) product, Bioheart, is a self-developed temporary scaffold that will be fully resorbed by the human body over time. It is a BRS system used in PCI procedures for the treatment of coronary artery disease. Bioheart is a class III medical device under the classification criteria of the NMPA. As of the Latest Practicable Date, we held eleven registered patents (including three invention patents and eight utility model patents) in relation to Bioheart, of which ten were registered in China and one registered in Europe.
We started the research and development of Bioheart in July 2014. Bioheart was recognized as an “innovative medical device” by the NMPA in February 2017 and is therefore eligible for an expedited approval process. As of the Latest Practicable Date, we had completed a single-center feasibility clinical trial for Bioheart and are in the process of completing a multi-center confirmatory clinical trial, which consists of a randomized controlled clinical trial (RCT) and a single-arm trial (SAT). We completed the trial subject enrollment for the RCT in August 2019 and initiated the SAT in April 2021. We expect to complete the subject enrollment for the SAT by the end of 2021, and to complete the required follow-ups for the confirmatory clinical trial and submit our confirmatory clinical trial results to the NMPA for its approval by the end of 2022. After the confirmatory clinical trial report is submitted to the NMPA, we expect to receive the NMPA approval within nine months after the submission, considering various factors such as the complexity of the relevant clinical trial data, the statutory maximum turnaround time for the review procedure, and the expedited approval process Bioheart is eligible for. We currently expect to receive the NMPA approval for Bioheart in the third quarter of 2023, and plan to launch it shortly after receiving the NMPA approval. According to Frost & Sullivan, as of the Latest Practicable Date, only two BRS products were commercialized in China, each of which was a first-generation BRS product with a strut thickness of over 150 μm. We are one of only four domestic players in China with second-generation BRS products at clinical trial stage and one of only two domestic players that had initiated a randomized controlled clinical trial (RCT) in China. Since we completed the patient enrollment of the RCT earlier than the other competitor in China and no BRS product candidates in the global market had been reported to initiate an RCT as of the Latest Practicable Date, Bioheart is expected to be the world’s first second-generation BRS system approved for commercialization based on multi-center RCT results, according to Frost & Sullivan. We currently plan to set the retail price of Bioheart, upon commercialization, within the range of RMB30,000 to RMB40,000 per unit. BRS products were not covered in the medical insurance reimbursement list of China as of the Latest Practicable Date, and are not expected to be covered in the list in the near future, according to Frost & Sullivan.
For details of Bioheart, please refer to the paragraphs headed “Business — Our Products and Product Candidates — Bioheart — Our Core Product” in this document.
Market Opportunity and Competition
Bioheart is indicated for use in PCI procedures for the treatment of coronary artery disease. According to Frost & Sullivan, the number of coronary artery disease patients in China increased from 22.0 million in 2015 to 24.6 million in 2019 at a CAGR of 2.8%, and is expected to further increase to 31.7 million in 2030 at a CAGR of 2.3% from 2019 to 2030. The volume of PCI procedures conducted in China grew rapidly from 0.6 million in 2015 to 1.0 million in 2019 at a CAGR of 15.8%, and is expected to further grow significantly to 1.9 million in 2024 at a CAGR of 12.7% from 2019 to 2024, according to the same source. Among the three types of stents (i.e., BMS, DES and BRS) currently available for use in PCI procedures in China, BMS represents an old generation stent and has been gradually replaced by DES and BRS. DES is currently the prevailing stent used in PCI procedures in China with a penetration rate of approximately 99.2% in 2019. BRS, as a novel therapy, has a much lower penetration rate (approximately 0.8% in 2019) in PCI procedures in China. With the increasing demand for PCI procedures in China, both the volume of DES and the volume of BRS used in PCI procedures are expected to increase. Further, as a result of the benefits of leaving no artificial foreign body in the vessel, the volume of BRS used in PCI procedures is expected to grow at a much higher rate than DES for the next decades, according to Frost & Sullivan. In 2030, the penetration rate of DES and BRS in PCI procedures in China is expected to be 69.0% and 31.0%, respectively, according to the same source.
Impact of the Implementation of Centralized Procurement Policies
In November 2020, the Chinese government implemented a centralized procurement policy over DES products, which resulted in a significant decline in price of DES products (i.e., reducing from approximately RMB13,000 per unit to approximately RMB700 per unit), primarily because the policy allowed the nationwide medical institution alliance to directly purchase from selected manufacturers without the involvement of any distributors. According to Frost & Sullivan, the centralized procurement policy made DES products affordable to a wider population of patients and is expected to drive a significant increase in the volume of DES products used in PCI procedures in China. However, it is expected that the increased volume of DES products used in PCI procedures is insufficient to make up for the negative impact on the market size of DES products brought by the significant decline in price. Therefore, the market size of DES in China is expected to drop by 73.0% from 2020 to 2021 and is not expected to see any material growth for the next decade.
According to Frost & Sullivan, since the centralized procurement policy is currently only applicable to DES products and is not expected to be applicable to BRS products in the foreseeable future, the average retail price for BRS products maintained at approximately RMB33,700 per unit in 2020 and is expected to gradually drop to RMB10,900 per unit in 2030. For these highly price-sensitive patients, the competitive advantage of BRS over DES may be negatively affected by the centralized procurement policy. However, for patients with sufficient purchase power, it is expected that the price itself would not be a key factor in determining which device to use when they undergo life-saving procedures such as PCI, and responsible physicians will still have incentives to recommend more advanced products such as BRS to their patients. Therefore, it is currently expected that the lower price of DES products would not significantly affect patients’ willingness to use BRS products, according to Frost & Sullivan. Further, BRS has various potential advantages over DES and BMS, such as better recovery of vasomotion function, higher possibility of positive remodeling of coronary arteries and no interference with X-ray, CT, MRI examinations. After considering all of the aforesaid factors, we believe that the competitiveness of the BRS products in the PCI treatment market will not be negatively affected by the significant price reduction of DES products. In addition, as a result of the significant decline in price, it is expected that many DES manufacturers will be prone to reduce their investments in developing, manufacturing and promoting their DES products as they bring limited margins. In contrast, the manufacturers, distributors and other relevant industry players are expected to have much more incentive to promote BRS products. Therefore, BRS is expected to be better positioned than DES to capture the growth potential of the PCI device market in China. The market size of BRS products in China is expected to increase significantly from RMB0.2 billion in 2019 to RMB6.6 billion in 2030 at a CAGR of 38.5%, according to the same source.
However, there is no guarantee that the above expectation related to the impact of the centralized procurement policy will remain accurate. If patients’ willingness to use BRS products is materially and adversely affected, we might be forced to change our pricing strategy, and our business and financial performance would be materially and adversely affected. For further details, please refer to the paragraphs headed “Risk Factors — Risks Relating to the Commercialization of Our Product Candidates — Even if we are able to commercialize any product candidates, the pricing of such products may be subject to downward changes which may have a material adverse effect on our business and results of operations” in this document.
Source: Bioheart Biologica-B (02185) Prospectus (IPO Date : 2021/12/13) |