Recently, Shanghai Xinwei Medical Technology Co., Ltd. (hereinafter referred to as Xinwei Medical), an innovative neurological interventional medical device company, passed the Hong Kong Stock Exchange hearing. Goldman Sachs and CICC are joint sponsors.According to financial data released by Xinwei Medical in the first quarter of 2021, the company's revenue was 136.19 million yuan, an increase of 3590% over the previous year, close to last year's full year's revenue of 145.62 million yuan. The main reason for the increase in revenue was the commencement of commercial sales of the company's ExtraFlex remote access conduit in March 2020.What are the qualifications of this manufacturer, which has the most approved varieties of neurological interventional devices in China, in the neuro-intervention circuit, where there are many big bullish stocks?
Neurointervention circuit: blue ocean market, domestic production accelerates replacement
Stroke is the most common intracranial vascular disease, also known as “stroke”, an acute cerebrovascular disease. It is divided into two categories: hemorrhagic stroke and ischemic stroke. It is a group of diseases that cause damage to brain tissue due to sudden rupture of blood vessels in the brain or blood not flowing into the brain due to blockage of blood vessels. It is also the main cause of death and disability worldwide. The most prominent risk factor for stroke is high blood pressure. Other factors include diabetes, high blood lipids, and poor lifestyle.
Currently in China, the incidence of stroke is high, and the death rate is extremely high. According to data from Insight Consulting, the number of stroke patients in China reached 14.8 million in 2019, ranking first in the world, including 11.9 million ischemic stroke patients and 2.9 million hemorrhagic stroke patients.
Figure 1: Schematic diagram of the causes of ischemic stroke
Data source: MSD diagnosis and treatment manual, compiled by Gelonhui
Judging from published data, the current number of stroke patients is not small, and the demand for treatment is getting higher and higher. Traditional treatment methods are mainly intravenous thrombolysis (IVT) and craniotomy. Among them, IVT treatment has strict time window requirements and generally needs to be used within 4.5 hours after symptoms appear. Patients with more severe symptoms can only be treated through craniotomy surgery.
Innovative neuro-interventional surgery has completely changed the traditional treatment of stroke in recent years. Neurointerventional surgery is a minimally invasive procedure that uses endovascular catheterization technology to treat stroke. Its safety has been proven, its efficacy is significantly enhanced compared to traditional treatments, and it is suitable for most types of cerebrovascular diseases.
Stroke is a highly age-related disease. As the aging trend of the Chinese population becomes more and more obvious, the prevalence of stroke in China will continue to rise. Based on the advantages of neurointerventional technology over traditional treatment methods, the number and popularity rate of neurointerventional procedures in China will increase, and domestic demand for neurointerventional medical devices will also increase accordingly.
According to specific data, the market size of China's neurointerventional medical device market increased from 2.9 billion yuan in 2015 to 6 billion yuan in 2019, a compound annual growth rate of 20%, and is expected to further increase to 48.9 billion yuan in 2030. The compound annual growth rate from 2019 to 2030 was 21%, further showing the potential of China's neurointerventional medical device market in the future.
Figure 2: Market size of China's neurointerventional medical device market from 2015 to 2030 (estimated)
Data source: prospectus, compiled by Gelonhui
Due to the late start of the field of neurointerventional medical devices in China, imported device manufacturers have a large share of the market. According to the prospectus, the five major participants in the Chinese neurointervention market in 2019 were all international companies, accounting for a total market share of 81.2%. Due to the high price of imported devices and low patient accessibility, the penetration rate of thrombolization surgery in China was only 1.7% in 2019, far lower than the 11.8% in the US.
In recent years, with the improvement of domestic technical standards, domestic equipment manufacturers already have the ability to independently produce and innovate. Coupled with government policy support, domestic neurointerventional medical device manufacturers are continuously gaining the market share originally held by imported device manufacturers with product advantages that are comparable in efficacy and safety and have better accessibility. In the foreseeable future, with the increase in domestic per capita disposable income, rising health awareness, and technological innovation in medical devices, domestic manufacturers will gradually dominate the distribution of neurointerventional medical device market shares. It is expected that by 2030, the total market share of domestic neurointerventional medical device companies will reach 57%.
Xinwei Medical: The only medical device company in China that covers ischemic stroke prevention and treatment products
As the first market participant in China to have a complete product package for ischemic stroke thrombolization devices in the commercialization and registration stages, Xinwei Medical is currently the manufacturer with the largest number of approved neurological interventional devices in China.
All of Xinwei Medical's products cover all major stroke subtypes and surgical routes in the field of neurological intervention, and the company's ischemic stroke prevention products help to grasp the needs of the heart disease market.It may become the only medical device company in China whose products cover the prevention and treatment of ischemic stroke. Its products include 7 approved products and 16 products under development. Among the products under development, 6 are registered, 2 products are in the clinical stage, and 8 products are in the development stage.
Figure 3: The development status of Xinwei Medical's main products and products under development
Data source: prospectus, compiled by Gelonhui
1. The first complete set of throttle removal equipment in China: the “Master Catcher” series, now on the market
Among commercialized products, the company obtained the first complete throttle collection device approved by the NMPA in China (“Master Catcher” series), including Captor (Captor), Fullblock Blocking Balloon Catheter, ExtraFlex Remote Access Conduit, and SupSelek Microconduit.
Figure 4: Schematic diagram of the structure of a complete set of throttle removal equipment
Data source: prospectus, compiled by Gelonhui
The company's core product, Captor, is used for minimally invasive thrombolization and is designed for patients with acute ischemic stroke caused by blockage of large blood vessels.It is the first multi-point imaging throttle removal stent approved for marketing in China. The Fullblock blocking balloon catheter can temporarily block or control blood flow during surgery. It is the first domestic product in this category to be approved in China.
Judging from the market prospects, China's current bolting stent equipment market is still in the early stages of development, and the future bolting stent market is huge. The market size of the ischemic stroke neurological interventional device market in China increased from 380 million yuan in 2015 at a compound annual growth rate of 49.7% to 1.9 billion yuan in 2019. Insight Consulting expects a further increase to 25.4 billion yuan in 2030.
Judging from the competition situation, there are currently 13 types of bolt holders in the Chinese market, which are produced by four imported equipment manufacturers and four local manufacturers. The average price of domestic products is 15,000 to 20,000 yuan cheaper than imported manufacturers' products. Under the premise that efficacy and safety are comparable, preferential prices for domestic products can be converted into market share. Among the thrombolization stents already on the market in China, Captor, as the first multi-point imaging thrombus removal device approved for marketing in China, is more convenient to operate than domestic cerebral thrombus removal devices such as Ricoh and Jiaolong, and can more effectively observe the combination of blood clots and stents.
Figure 5: Bolting Stands Already Available in the Chinese Market
Data source: prospectus, compiled by Gelonhui
Currently, Captor's NMPA registration certificate includes four specifications. In order to meet the different medical needs of patients with acute ischemic stroke, Xinwei Medical is preparing to add Captor specifications and apply for FDA registration and CE marking for Captor. Currently, the indication approved by the NMPA is thrombus removal performed within eight hours of the patient's illness. The Xinwei Medical Plan expands the indications to remove the blood clots within eight to 16 hours of the patient's onset of illness.
2. The world's first rapamycin intracranial drug-eluting balloon catheter: better drug reach, expected to be approved in 2022
Among the products the company is developing, products such as embolic protection systems, microguide wires, and support catheters are expected to be the first to be commercialized, including the world's first rapamycin intracranial drug-eluting balloon (DEB) catheter used to treat intracranial artery stenosis.
Figure 6: DEB Schematic
Data source: prospectus, compiled by Gelonhui
Compared with traditional antagonists, the tissue absorption rate of rapamycin and the slow-release rate of drugs in tissues are lower. The efficacy and safety of DEB catheters in coronary angioplasty has been proven, and they are widely used to treat coronary artery disease. Due to the excellent efficacy and safety of rapamycin intracranial drug eluting balloon catheters, and showing better treatment effects on the stubborn trend of the disease, it has the potential to replace existing treatment devices for intracranial artery stenosis and become a next-generation solution for treatment of intracranial artery stenosis.
In terms of market size, the market size of the interventional device market for intracranial artery stenosis in China increased from 350 million yuan in 2015 at a compound annual growth rate of 9.4% to 510 million yuan in 2019, and is expected to further increase to 8.2 billion yuan in 2030.
Up to now, no intracranial DEB catheters have been approved for sale in China or around the world. According to registration data, Guichuang Tongqiao Medical registered a clinical trial of the rapamycin intracranial DEB catheter with the FDA in July 2021, which is expected to be completed by March 2023. However, our rapamycin intracranial DEB catheter has already entered clinical trials, led by the First Affiliated Hospital of the University of Science and Technology of China. It is expected to complete the trial and submit an NMPA registration application for approval in 2022. It is expected that it will be the first company in the world to provide rapamycin intracranial DEB catheters.
3. Other products under development: layout of endovascular devices to prevent ischemic stroke, various categories to meet treatment needs
left atrial ear blocker: An ischemic stroke prevention device The left atrial occlusion device is one of Xinwei Medical's core products. Its function is to prevent blood clots in the left heart and ear from separating and causing embolism, and has the effect of preventing ischemic stroke. Clinical trials have now been completed, and it is expected that NMPA approval will be obtained in the fourth quarter of 2021 and sales will begin in the second quarter of 2022. According to Insight Consulting data, as of 2019, the market size of the left ventricular ear blocker increased from 04.3 million yuan in 2015 to 420 million yuan, and is expected to increase to 2 billion yuan by 2030. Currently, there are only five participants in the domestic market for similar products, and Xinwei Medical is expected to participate in allocating a rapidly growing market in the future.
Intracranial balloon dilatation catheter and carotid artery balloon dilatation catheter: Among intracranial artery stenosis treatment devices, in addition to intracranial DEB, there are two other products under development: intracranial balloon dilatation catheters and carotid artery balloon dilatation catheters. The above product is designed for balloplasty. The former is used for intracranial blood vessels and the latter for the carotid artery, which can push plaques to both sides of the artery to improve the patient's blood flow. Xinwei Medical received approval from NMPA for intracranial balloon dilatation catheters and carotid balloon dilatation catheters in April and June 2021.
Embolic spring ring and blood flow reconstruction stent: In hemorrhagic stroke treatment devices used to treat intracranial aneurysms, embolic spring rings are used to isolate aneurysms from normal blood circulation to prevent further expansion and rupture of the aneurysm; blood flow reconstruction stents are used to connect the neck of the aneurysm to support the spring ring where the aneurysm is placed to prevent the spring ring in the aneurysm from falling into blood vessels. Both types of products are expected to submit NMPA registration applications and receive NMPA approval in 2022.
Multi-dimensional capabilities work together to build comprehensive advantages
The neurointerventional medical device industry is facing major industry opportunities in recent years as per capita healthcare expenditure has increased, demand for treatment has increased, and government policy support has increased. The distribution of future market share is based on the two main lines of replacing existing imported device manufacturers and distributing incremental markets going hand in hand, requiring that manufacturers' products be accessible and innovative.
However, for Xinwei Medical, under the external environment of rapid development of the domestic substitution plus industry, it has the following competitive advantages:
First, the company's pipeline layout is perfect and has product advantages.As the first market participant in China to have a complete product package for ischemic stroke thrombolectomy equipment in the commercialization and registration stages, Xinwei Medical has 7 listed products and 16 products under development. It is the only neurointervention pipeline company that simultaneously lays out prevention+treatment products. Xinwei Medical's products cover fields such as ischemic stroke thrombolization, intracranial stenosis treatment, ischemic stroke prevention, and hemorrhagic stroke treatment. They are sufficient to meet the vast majority of unmet medical needs in the rapidly growing and insufficiently penetrating neurointerventional medical device market, making full use of product advantages to increase product accessibility.
Second, the company has strong innovation strength and technical advantages.In terms of innovation capabilities, Xinwei Medical has established five major technology platforms for product development, manufacturing and quality control, including a stent production and processing platform, a catheter technology development and manufacturing platform, a balloon technology development and manufacturing platform, a knitting technology development and manufacturing platform, and an intervention product quality platform. Under the leadership of an experienced management team, Xinwei Medical leverages the advantages of various technology platforms to transform R&D results into real intellectual property rights. Up to the latest, Xinwei Medical has registered 97 domestic patents, of which 42 have been approved.
Finally, the company has extensive channel coverage and strong commercialization capabilities.In terms of commercialization capacity, Xinwei Medical has set up two production bases in Shanghai. Among them, the Zhangjiang production base has been put into operation, with an annual output of 12,000 products. The Lingang production base is currently under construction and is expected to be put into operation in 2021, with an annual output of over 100,000 pieces. At the same time, Xinwei Medical formed a strong commercialization team to help free up production capacity at the production base. Currently, Xinwei Medical has 41 distributors, and its sales network covers more than 25 provinces in China, and can directly reach 1,135 terminal hospitals. Sales cover leading markets, and have not given up on the sinking market. They have collaborated with leading clinical trial researchers at top-class intervention and stroke centers such as Tiantan, Xuanwu, Eastern War Zone General Hospital (Nanjing Army General Administration), and the First Affiliated Hospital of the Chinese University of Science and Technology, and are also supplying goods to nearly 200 non-top three hospitals.
Summarize
From a capital market perspective, among companies in the field of neurointerventional medical devices listed on the main board of the Hong Kong Stock Exchange, the market value of minimally invasive medicine has increased tenfold since listing, reaching HK$120 billion. Peijia Healthcare's stock price was 74.48% higher on the first day of listing, and the recently listed Guichuang Tongqiao closed 40% higher on the first day of listing. These cases all show that the market is paying close attention to the medical device industry circuit and is optimistic about high-quality companies.
As for Xinwei Medical, which went public in Hong Kong this time, the company is expected to take advantage of its market position as the first manufacturer of a complete product package for ischemic stroke thrombolization devices in the commercialization and registration stage in China, perfect product pipeline layout, innovative research and development, and the ability to achieve subsequent commercialization. It is worthy of long-term attention and anticipation in the recent Hong Kong stock market boom.