Product: Sina Finance listed Company Research Institute
Author: IPO Refinancing Group / Caro
After years of policy support and capital catalysis, 2021 is known as the first year of AI medical commercialization, a number of AI medical companies rushed to Hong Kong stock IPO. Following the medical AI device company Keya Medical, AI Retinal Imaging Company Eagle pupil Technology and AI Medical Technology Company to submit IPO applications, on September 21, 2021, AI Digital Doctor platform Company Jukun Technology submitted a prospectus to the Hong Kong Stock Exchange to embrace the capital market. JPMorgan Chase & Co, Bank of America Securities and Bank of China International served as co-sponsors.
Sikun Technology is a leading AI medical enterprise that provides artificial intelligence medical imaging solutions for disease screening, diagnosis and treatment selection and planning. In terms of AI medical treatment, the coverage of Jukun science and technology treatment occupies the first place in the world, and the coverage and installation of hospitals rank first in China.
Its digital doctor pipeline products cover the heart, brain, abdomen, chest and musculoskeletal systems, accounting for more than 80% of medical imaging scenarios, according to the prospectus. As of the date of signing of the prospectus, Jikun technology digital doctor products have been adopted and installed by more than 1200 hospitals in China, including about 80 per cent of the top 100 hospitals and more than 30 per cent of third-class hospitals.
This IPO receives a lot of capital attention, a number of capital into the Bureau Kun technology financing before the IPO. Since its establishment, Jukun Technology has received 10 rounds of financing, including Huagai Capital, Yuanyi Capital, Wuyuan Capital, Sequoia Hanchen, Qiming Rongxin, Zhongke Chuangda (300496, stock bar) and so on. After the final round of financing by D-round, the company was valued at 9.407 billion yuan, with founders Mao Xinsheng and Ma Chune holding 9.4544 million shares and 6.3762 million shares respectively, with a shareholding ratio of 17.53% and 11.82% respectively.
The gross profit margin is as high as 84.2%. The revenue of the largest customer accounts for 59.3%.
AI is the inevitable choice to solve the imbalance between supply and demand of medical resources. According to the Anxin Securities Research report, total health expenditure CAGR 6.9% in 2011-2019. As far as the consumption structure of residents is concerned, medical consumption accounts for about 6% of the total consumption expenditure of urban residents and 9% of the total consumption expenditure of rural residents, accounting for about 9% of the total consumption expenditure of rural residents. To a certain extent, it reflects the greater demand for medical resources in rural areas and the urgency of improving medical efficiency.
In 2020, the State Drug Administration of China focused on issuing three types of certificates for AI Medical, and the commercialization of AI Medical gradually accelerated. The issuance of the three types of certificates means that the approval path of the SDA for this kind of products is clearer, and the approval of compliant medical AI products begins to be accelerated.
On January 15, 2020, Keya Medical won the first AI Medical Class III Certificate with "Coronary flow Reserve fraction calculation Software". As of September 21, 2021, "CoronaryDoc", which focuses on coronary artery stenosis analysis, has also obtained a three-class certificate in the self-developed products of Jukun science and technology.
All of its products and production lines are independently developed, which is a major advantage for it to gain revenue, and it enjoys the global rights and interests of all its products and candidate products. With the accumulation of technology, Sikun Technology began to commercialize its products in the fourth quarter of 2019, and its income mainly comes from the sales of artificial intelligence products, including digital heart, digital brain, digital breast and other products and related technical service support.
Benefiting from policy support and market demand expansion, Jukun's technology revenue grew rapidly, with revenues of 764000 yuan from 2019 to 2020 and 52.624 million yuan in the first half of 2021, up 3142.28% (2020) and 680.89% from the same period last year. Income growth was accompanied by a steady gross profit margin, which was as high as 83.4%, 83.5% and 84.2% over the same period.
In terms of product portfolio, digital heart pipeline products cover cardiovascular disease screening, diagnosis, treatment selection and planning procedures. According to the prospectus, Jukun Technology is the only company in China to provide such one-stop artificial intelligence medical imaging products for cardiovascular diseases. The flagship core product is CoronaryDoc, an artificial intelligence software used to analyze coronary artery stenosis in patients with cardiovascular disease in CT mode.
The digital brain product pipeline mainly includes CerebralDoc, SK-LVO, SK-StrokeDoc, SK-ASPECTS, CTPDoc, AneurysmDoc and Aneurysm SurDoc. One of the core products, CerebralDoc, is an artificial intelligence software based on CT program to assist in the diagnosis of vascular stenosis in the head and neck. In 2021, StrokePro V1.0, an one-stop solution for stroke diagnosis covering NCCT, CT and CTP, also received a Class II medical device registration certificate from the State Drug Administration. With the comprehensive layout of digital brain pipeline products, Sikun Technology has become the first company in China to provide full-path and multi-mode artificial intelligence solutions for the screening, diagnosis and treatment selection and planning of cerebrovascular diseases.
The digital abdomen product pipeline is mainly LiverMRDoc, which is a pioneer artificial intelligence software used to assist the diagnosis of liver disease. Digital chest core products include LungDoc for auxiliary diagnosis of pulmonary nodules and PneumoniaDoc for pneumonia diagnosis. Digital musculoskeletal pipeline products include BoneDoc, BoneAgeDoc, SpineGo-C and SpineGo-L.
What is worth paying attention to is that Jukun Technology has not yet made a profit. The losses from 2019 to 2020 and the first half of 2021 were 91.298 million yuan, 129 million yuan and 87.424 million yuan respectively.
In addition, in the initial stage of commercialization, Jukun Technology has a certain dependence on major customers, and its top five customers, including distributors and medical equipment manufacturers, are all independent third parties. From 2019 to 2020 and the first half of 2021, the sales revenue from the top five customers was 800000 yuan, 9.9 million yuan and 37.6 million yuan respectively, accounting for 100%, 39.8% and 71.5% of the total revenue. In the same period, the largest customer sales income was 800000 yuan, 5.2 million yuan and 31.2 million yuan respectively, accounting for 100.0%, 20.8% and 59.3% of the total revenue.
Attach importance to R & D and strengthen competitive barriers
As a technology-driven enterprise, its competitiveness depends greatly on its continuous investment in research and development, as well as its ability to create new technologies, design new products and improve existing products. From 2019 to 2020 and the first half of 2021, its R & D expenditure was 42.689 million yuan, 62.933 million yuan and 81.188 million yuan respectively, accounting for 5587.57%, 254.06% and 154.28% of the total income.
Thanks to the emphasis on R & D investment and business strategy layout, Jukun Technology has formed a set of competitive barriers in products, technology, commercialization, talents and so on. The initial development work will focus on the most technically challenging and high clinical value of cardiovascular disease and other treatment areas, and then expand to other key treatment areas.
In terms of products, the product development of Jukun Technology covers all areas from screening, diagnosis to treatment selection and planning. As of the date of signing of the prospectus, its digital doctor product portfolio includes 12 products and 25 candidate products, covering five key treatment areas: heart, brain, abdomen, chest and musculoskeletal system. According to the Fuji Consulting Research report, according to the number of medical device registration certificates obtained by the State Drug Administration, Jukun Technology ranks first among the providers of artificial intelligence medical imaging solutions in China.
In terms of technology, all its products and production lines are independently developed, and as of the date of disclosure of the prospectus, it has 71 registered patents and 80 patent applications in China. The self-developed digital human artificial intelligence technology platform can "read" medical images to understand the human body (including heart, brain, chest, abdomen and musculoskeletal system), analyze lesions and generate auxiliary diagnostic reports for doctors. The platform technology promotes the diversified product portfolio of Sikun science and technology, and realizes the initiative of many industries.
In terms of commercialization, Sikun Technology, which relied on direct sales in the early stage, developed a distributor sales model in 2020 and adopted a multi-channel business approach to expand market access. As of the date of disclosure of the prospectus, Jikun Technology had 11 approved products and 246 sales and marketing personnel, as well as 35 distributors in 21 provinces, municipalities and autonomous regions in China. From 2019 to 2020, the proportion of sales revenue contributed by distributors was 0%, 71.8% and 40.2% respectively, showing an expanding trend.
In addition, Sikun Technology also has a first-mover advantage in terms of product coverage. As of the date of disclosure of the prospectus, thanks to the high recognition of the products, its digital doctor products have been adopted by about 80% of China's top 100 hospitals, and its coverage has expanded to more than 1200 hospitals at different levels. At the same time, it is also adopted by more than 30% of China's tertiary and first-tier hospitals, more than 20% of tertiary hospitals and about 5% of secondary hospitals.
In terms of talent, Sikun Technology founders Mao Xinsheng and Ma Chune have worked at IBM, with experience in R & D, managing large teams and promoting technological innovation. Zheng Chao, vice president of R & D, has more than 10 years of experience in cloud computing, software design and machine learning. In addition, Jukun Technology has formed a world-class multidisciplinary team of more than 100 experts including artificial intelligence scientists, software engineers and doctors, and its R & D team members have won championships in Kaggle, AI Challenger, NeurlPS and other world-class artificial intelligence competitions.
According to the prospectus, the funds raised by IPO will be used for the ongoing research and development, clinical trial and registration and commercialization of four core products (namely CoronaryDoc, CerebralDoc, LungDoc and PneumoniaDoc), as well as the research and development, clinical trial, registration and commercialization of other pipeline products.
(responsible Editor: Zhang Hongyang)