Event: the company agreed to acquire all shares of the target company MitralTech and its non-wholly owned subsidiary Cardiovalve for approximately US $266 million. The consideration under the equity purchase agreement includes (1) the total delivery price and (2) the profit-based remuneration consideration. At the time of delivery, the company will hold the entire share capital of the target company. Among them, the company and its wholly-owned subsidiary, Qiming Hong Kong, signed a convertible loan agreement with the target company and Cardiovalve, a non-wholly-owned subsidiary of the target company. Qiming Hong Kong agreed to provide US $23 million to Cardiovalve in the form of convertible loans. Total delivery cost: equal to US $150 million and will be subject to a number of usual adjustments in accordance with the share purchase agreement. Profit and reward price:

In the event of a number of milestones achieved during the profit-based remuneration period, the following payments not exceeding $116 million will be paid to participating holders: (1) $50 million will be paid when Cardiovalve MV is approved by CE, FDA or NMPA; (2) $50 million will be paid when Cardiovalve TV is approved by CE, FDA or NMPA (3) $16 million will be paid when at least 10 patients (I) were subsequently discharged from the hospital after Cardiovalve MV and / or Cardiovalve TV; (ii) were implanted in mainland China at or before the end of the profit-based remuneration period, and (iii) were followed up for 90 days from the date of implantation and there was no problem with the implanted Cardiovalve MV or Cardiovalve TV.

Comments: Cardiovalve system is a transcatheter interventional replacement product for patients with mitral or tricuspid regurgitation. Compared with similar products, its transfemoral approach greatly improves the safety of treatment, and its 55mm valve ring is suitable for about 95% of patients. Its unique short frame design reduces the risk of LVOT obstruction. At present, the Cardiovalve system is recruiting patients in the United States and Europe, the mitral valve system has entered clinical trials in Europe, and the early feasibility study has been carried out in the United States; the tricuspid valve system has been approved by FDA breakthrough equipment in January 2020, and has entered the early feasibility study.

Our view: this acquisition further enriches Qiming Medical's pipeline in the field of mitral and tricuspid valve replacement, marks another milestone on the company's road to internationalization, and contributes to the construction of a "structural heart disease platform" company, so we suggest paying active attention to it.

Risk hint: pipeline research and development progress is not as expected, market commercialization is not as expected, policy collection risk.