Xintong Medical treatment is the leading platform for interventional treatment of cardiac valvular disease in China.The company, originally a minimally invasive medical subsidiary, was split and listed in Hong Kong in February 2021. Relying on the resource advantage of the absolute leader in the field of domestic surgical intervention (minimally invasive group), Xintong Medical is expected to accelerate the volume of its products in the hospital terminal.

This article mainly answers the following questions:

1) what is the market scale of Xintong Medical TAVI products?

2) where is the core bottleneck of TAVI surgery?

3) who are the main competitors of Xintong Medical TAVI products?

4) the future development and valuation of Xintong Medical Service?

1) HealthcareWhat is the market scale of VitaFlow series products?

A: more than 3.9 million patients need valvular surgery every year in China, and it is estimated that the number will reach 4.4 million by 2025. However, only about 2400 TAVI operations were performed in China in 2019, accounting for only 0.3 per cent of eligible patients.

VitaFlow series products have broad market prospects in the future, and our country is still in the early stage.At present, the company's core products are VitaFlowTM and VitaFlow II products, both of which belong to the field of TAVI. VitaFlowTM was approved for listing in July 2019, and the second-generation product VitaFlow II is expected to be approved for listing in China by the end of 2021.

From the moment of birth, the human heart beats 60-100 times per minute. As you get older, the more the heart beats accumulatively, the more times the heart valve opens and closes, and it is prone to problems, which explains why older people are more likely to suffer from heart disease.

Valvular heart disease mainly includes stenosis and insufficiency, which affect the normal flow of blood flow, resulting in cardiac dysfunction, and eventually lead to heart failure.

TAVI interventional surgery is a minimally invasive operation, which has the advantages of small wound, short recovery time and low risk of operation. It is especially suitable for the elderly over 75 years old.The operation time of TAVI is 1-2 hours, while that of thoracotomy is often 3-6 hours.

For your convenience in learning about TAVI surgery, here is an one-minute video:

2) where is the core bottleneck of TAVI surgery?

A: the bottleneck is mainly the production capacity of doctors.

An TAVI operation requires 2-3 interventional physicians, 1-2 cardiac surgeons, 1 anesthesiologist, 1 echocardiologist, 2-3 nurses and so on. Doctors need to perform 20-30 TAVI operations as a learning curve. Although 604 hospitals in China comply with TAVI surgery in 2019, only 156 hospitals perform TAVI surgery, and the top 20 hospitals play an important role in the market.

3) who are the main competitors of Xintong Medical's TAVI products?

Answer: although our country is "3 domestic + 1 import" situation, but Xintong's opponent is only Qiming Medical, and Xintong TAVI products may be more explosive.

The domestic TAVR market has formed a pattern of 3 domestic (Qiming Medical, Jiecheng Medical, minimally invasive Xintong) + 1 import (Edward). Imported Edward products have a high mortality rate and may not conform to the structure of the human body. At present, Jiecheng Medical is in crisis and is plagued with lawsuits. Therefore, at present, the main competitor of minimally invasive Xintong is Qiming Medical.

VitaFlowTM (left) is equipped with an electric delivery system (right), which aims to overcome doctors' productivity problems and greatly shorten the doctor's learning curve.VitaFlow, the first generation TAVI product independently developed by Micro Chuangxintong, was approved by the State Drug Administration in July 2019. It is worth mentioning that only Xintong products are equipped with electric delivery system, other company products surgical intervention depends on the experience of doctors.

In the first generation of products, the minimally invasive Xintong VitaFlow has obvious advantages in security and price.According to the available data, the all-cause mortality rates of 30 days and 1 year after operation are 0.9% and 2.7% respectively, and the safety data are excellent.

TAVR surgery is far from being satisfied in China, and it is expected that the sales volume of Xintong Medical VitaFlowTM will surpass that of Qiming Medical in 2021.Although Xintong medical products will not be on the market until 2019, relying on the advantages of the domestic leading channel in the field of minimally invasive surgery (minimally invasive medical care), VitaFlowTM sales have quickly entered domestic hospitals.

The second generation TAVI products of VitaFlow II of Xintong Healthcare are expected to directly open the bottleneck of doctors' production capacity.Minimally invasive Xintong's VitaFlow II is a second-generation TAVI product with recyclable functions and is expected to be approved for listing in China by the end of 2021.

Of all the TAVI products, VitaFlowTMII is the only one with an electric conveying system, and it is also the only TAVI product developed in China that is clinically tested or commercialized in Europe.

4) the future development and valuation of Xintong Medical Service?

A: the company will enter the TMVR market in the future, which is expected to have a broader commercial prospect than TAVI. In the near future, CICC has set a target price of HK $18.42 for Xintong Medical.

In 2020, the number of people with bicuspid / tricuspid valve disease is more than 3 times that of people with aortic valve disease and about 7.5 times that of people with aortic valve stenosis. TMV products may have a broader market. At present, transcatheter mitral valve therapy ((TMV)) is still in the early stage in China. Abbott MitraClip is the only product in China, which has great market potential in the future.

Considering that potential listed products are expected to provide stable cash flow in the future, CICC's target price for Xintong Medical is HK $18.42.

Summary

1. China's TAVI market is large in scale and belongs to the blue ocean market. At present, Xintong Medical's TAVI product competitor is Qiming Medical.

2. Relying on the resource advantages of the minimally invasive Group and Xintong Medical, with the advantages of product safety and price, its products are expected to accelerate the volume in the hospital terminal.