If 2019 is the year of the explosion of biotechnology listing on the Hong Kong Stock Exchange, then 2021 is a new era of medical devices. According to wind data, three intrusive medical device companies have listed in Hong Kong since July, which also makes the Hong Kong stock market immersed in the performance period feel a small wave of intrusive medical devices. In addition, Hanyu Medical also hung up the prospectus after the hearing on September 13 to increase the popularity of intrusive medical devices.

Zhitong Financial APP learned that Hanyu Medical is a medical technology company that mainly focuses on the field of structural heart disease. Its products mainly cover four areas: valve repair, other heart repair, valve replacement and electrophysiology. The company has 10 product lines, covering a total of 8 indications. Its core product ValveClamp has a leading position in China's transcatheter mitral valve (TMV) market.

Huge market potential to create innovative trial treatments for Chinese MR patients

In the past few decades, the diagnosis and treatment of structural heart disease has developed rapidly and become an important subfield in the field of cardiovascular disease. Valvular heart disease is a kind of structural heart disease. Mitral regurgitation (MR) and active valvular stenosis (AS) are the most common types. The incidence of MR is about 4 times higher than that of AS.

MR is the most common structural heart disease, which generally needs timely treatment, otherwise it may lead to serious complications and even life-threatening. According to Frost Sullivan data, the number of patients with moderate and severe mitral regurgitation worldwide increased from 90 million in 2015 to 96.7 million in 2019, with a compound annual growth rate of 1.8%. It is expected that there will be 122 million patients worldwide by 2030.

China's population is aging faster than the global level, so the growth rate of moderate and severe mitral regurgitation is also higher than that of the world, increasing from 9.6 million in 2015 to 10.6 million in 2019, with a compound annual growth rate of 2.5%. The number is expected to reach 13.4 million by 2030.

The treatment of MR mainly includes medicine, surgical treatment and interventional therapy. However, the effect of drug treatment is limited, although surgical treatment is an important means of MR treatment, but the operation is extremely difficult, treatment risk is extremely high, not suitable for patients with underlying diseases, poor physical condition.

In addition, the number of medical institutions and doctors capable of valvular surgery in China is also very limited, which greatly restricts the promotion of surgical treatment. According to Frost Sullivan, only about 42000 MR surgeries were performed in China in 2019, and less than 1 per cent of moderate and severe MR patients received surgical treatment.

Compared with traditional surgery, TMV (transcatheter mitral valve) therapy, as an interventional technique, can repair or replace the mitral valve through an interventional catheter that does not involve thoracotomy, without cardiac arrest or cardiopulmonary bypass, the surgical risk is significantly reduced, and the surgical wound is reduced to 2 to 4 cm. Thanks to its advantages over traditional surgery, TMVr has gradually become an important method for the treatment of MR.

According to Frost Sullivan's data, edge-to-edge TMVr is the most effective and widely used method in interventional therapy of MR. Margin-to-edge TMVr has become the first choice for the treatment of TMV in the world, and has accumulated more than 100000 operations worldwide.

ValveClamp, the core product of Hanyu Medical, uses the repair method of edge-to-edge TMV to treat MR. As a catheter-based interventional technique, TMV can repair (TMVr) or replace (TMVR) the mitral valve without cardiac arrest or cardiopulmonary bypass without thoracotomy, and the surgical wound is reduced to 2-4 cm, which significantly reduces the risk.

In addition, ValveClamp is also excellent in clinical manifestations. The data showed that the success rate of ValveClamp in the FIM trial of 12 patients with advanced age, high risk of traditional surgery and severe MR was 100%, with only one clamp implanted in each patient. And the average operation time of ValveClamp is very short, only 26.8 minutes, and the postoperative effective rate of patients 12 months (Mr ≤ 2 +) is 91.7%. The rate of adverse events in 30 days is 0%.

Hanyu Medical has created advanced treatment methods to bring changes to Chinese MR patients.

China's first domestic TMV equipment, seizing the market opportunity

For innovative medical devices, market primacy is particularly important. As far as we can see, the domestic interventional mitral valve therapy has just started. It is gratifying that the imported transcatheter mitral valve repair products have been approved in China, and some domestic products in the field of transcatheter mitral valve repair and replacement have also entered the clinic. Transcatheter tricuspid and pulmonary valve interventional therapy is also gradually mature.

Globally, seven kinds of TMV devices have been approved by FDA/CE, of which only Abbott Laboratories's MitraClip has been approved by Yuanyuan TMVr in China. Other devices approved for TMV include Catrillon for Cardiac Dimensions, NeoChord DS1000 for NeoChord, Cardioband for Edwards, and MPAS Implant for PASCAL and Mitrallign.

In China, six kinds of TMV devices are currently under clinical trial, of which 4 are for repair and 2 are for replacement. The fastest progress in repair is Hanyu Medical's ValveClamp. As of the last practical date, the ValveClamp confirmatory clinical trial has completed the patient enrollment (102subjects). More than 50% of the subjects have completed follow-up and are expected to receive approval from the State Drug Administration in the first quarter of 2023. It is expected to become the first domestic TMV device and the soon-to-be-marketed TMVr device worldwide.

According to Frost Sullivan, the global TMV market is expected to grow to $5.4 billion by 2030, with a compound annual growth rate of 20.5 per cent from 2019 to 2030, while China's TMVr facilities market is expected to grow to 5 billion yuan in 2030 and 65.9 per cent from 2021 to 2030.

Based on its deep understanding of structural heart disease, Hanyu Medical has also expanded its product line to the field of pet heart intervention medical devices and entered the promising global pet medical market.

The only treatment for pet dogs in the world is MR, which is involved in the pet golden track.

According to the prospectus, V-Clamp is a miniaturized ValveClamp designed for mitral regurgitation in small and medium-sized pet dogs. According to Frost Sullivan, V-clamp has become the only TMVr product in the world to treat pet dog MR and has been applied clinically. V-Clamp currently does not need regulatory approval. As of the last practical date, the company is carrying out the promotion and pilot sales of the product, and plans to continue to expand the channels of pilot sales.

According to the 2020 White Paper on Pet in China, the number of dogs and cats in cities and towns in China reached 100.84 million in 2020, an increase of 1.7 percent over 2019. Among them, the number of dogs is 52.22 million and the number of cats is 48.62 million.

Figures show that as of 2019, China's household pet ownership rate was only 17 per cent, far lower than 67 per cent in the US and 44 per cent in the UK. Compared with developed countries, the rate of domestic pet breeding in China is still relatively low.

According to the aging experience in Japan, with the development of the aging society, people's emotional demand for pets as family members is getting stronger and stronger, and more and more families choose to keep pets. In the process of aging in Japan, the scale of the pet industry is also gradually increasing. At present, China's population is also aging, and there is still a lot of room for improvement in China's household pet market. At present, with the rapid development of pet market, the field of pet medical treatment will also develop rapidly.

According to the prospectus, in addition to V-Clamp, Hanyu Medical also has V-Closer and pet multi-functional ECG monitoring system in the pet field.

The V-Closer is a transprecardial annular device for reducing mitral valve orifice, enhancing mitral valve adaptability and reducing regurgitation. Pet mitral valve is fragile, and functional regurgitation is common. This device uses transatrial pathway, does not damage the valve lobe, and is safer on the hand. The product does not need regulatory approval at present, and the company plans to launch a pilot sale of V-Closer in 2022. Pet multi-functional ECG monitoring system realizes the monitoring of ECG, body temperature and other functions through wearable physical sensors. The company expects to launch a pilot sale of the product by the end of 2021.

In the field of ten billion yuan of electrophysiology, there is a huge opportunity for domestic substitution.

Relying on its successful mitral valve development experience, Hanyu Medical has also expanded its products to the electrophysiological field, where the company already has two product layouts, including HyPulse and CardioMcare, and plans to continue to actively promote the independent development of other electrophysiological products, including atrial fibrillation pulsed electric field ablation (PFA) and implantable cardiac event recorder (ICM).

In the field of cardiac medicine, electrophysiological technology is mainly used for the diagnosis and treatment of arrhythmias.

Arrhythmias can be seen in a variety of organic heart diseases, including coronary atherosclerotic heart disease, cardiomyopathy, myocarditis and rheumatic heart disease, especially in the occurrence of heart failure or acute myocardial infarction. Atrial fibrillation is the most common tachyarrhythmia, which is more common in the elderly. In severe cases, angina pectoris, acute left heart failure or shock can occur, and blood stasis is easy to form thrombus in the atrium.

Driven by factors such as the aging population, the increase in the number of arrhythmia patients, the popularity of ablation surgery and the upgrading of ablation consumables products, according to the Frost Sullivan report, it is estimated that by 2024, the market scale of electrophysiological instruments in China will reach 18.78 billion yuan, with a compound annual growth rate of 32.1% from 2019 to 2024.

In terms of competition pattern, due to the listing of domestic brands later than foreign brands in China's electrophysiological market, and there is a certain gap between domestic manufacturers and import manufacturers in technology, high-end products are still dominated by foreign brands. The top three places in China's electrophysiology market in 2019 are Johnson & Johnson, Abbott Laboratories and Medtronic PLC, of which Johnson & Johnson accounts for 60.5% of the market share.

The domestic electrophysiology industry has been occupied by foreign capital for a long time, and there is a great room for domestic substitution. The electrophysiology field has high R & D difficulty and R & D threshold, but the company has rich technology accumulation and talent reserve in this field through continuous R & D investment. At present, Hanyu Medical has established a high-quality R & D team including 38 people, of which 42% of the R & D personnel have master's degree or above. Tang Yuli, the main R & D staff of its electrophysiological products, is the CTO of the company, with more than 15 years of industry experience, has served as a senior product manager in minimally invasive medicine, has served as a senior engineer, technical director, team leader and R & D manager in Boston Scientific, and has rich experience in the research and development of implantable neuromodulators, heart rhythm management equipment and wearable medical devices.

Due to the company's excellent R & D strength, has a large number of patented technology, the formation of deep technical barriers. So far, Hanyu Medical has 30 patents in China, including 8 invention patents and 22 utility models. At the same time, the company also has 26 patent applications to be approved in China, including 20 invention patents and 6 utility models. In addition, the company's core product ValveClamp has global patents, patents in Japan, South Korea, Australia, Russia and the European Union have been granted, patents in the United States have been announced, and patent applications in Israel, India and other places have also started the work of European CE certification.

With the complete combination of heart disease diagnosis and treatment programs represented by ValveClamp and the company's strong R & D, production and commercial strength, Hanyu Medical has also attracted many institutional celebrities who are good at investing in the medical field, such as Honghui Capital, CPE, Pacific Century Capital Yunfeng Fund and so on. D+ is valued at nearly 7.5 billion yuan after rotation.

Generally speaking, the pipeline layout of Hanyu Medical is in the golden period of high growth of the industry, the industry entry threshold is high, there is no certain technology accumulation, it is difficult to cut into, especially its core product ValveClamp, which has a leading position in China's TMV market. In addition, the company also cut into the two golden tracks of pets and electrophysiology. The company will speed up the registration of overseas products, promote international development, and enter a new stage of development.