National Cheng Kung University finally clears customs

On the evening of September 14, 2021, Typhoon "Sandu" had just left Shanghai Beach, but it brought good news for the Northeast Lao Tiecheng University (831550) to land on the Sci-tech Innovation Board
.
In the announcement, the China Securities Regulatory Commission announced that it agreed to the registration of the initial public offering of shares on the National Cheng Kung University Biotech Innovation Board in accordance with legal procedures, and stated that relevant companies and their underwriters will negotiate with the Shanghai Stock Exchange to determine the issuance schedule and publish prospectus documents one after another

Generally, the IPO on the Science and Technology Innovation Board needs to "pass the five barriers".
Starting from the acceptance, it generally needs to go through inquiries, listing committee meetings, submission of registration, and registration to take effect
.
And we noticed that Chengda Biotechnology had already submitted the registration application in November last year, but why is the SFC's delay in approving it?

Delayed to approve, just because the barbarian knocked on the door?

Chengda Biosciences had the dream of going public as early as 2010.
On May 27 of that year, its controlling shareholder Liaoning Chengdafae issued an announcement saying that it would start the process of spin-off into a large biological listing
.
At that time, even insiders believed that Chengda Biotech could complete the listing by the end of 2010

According to the inquiry letter from the China Securities Regulatory Commission, Chengda Biotech is mainly due to the low sales expense rate and whether the actual controller has changed in the past two years
.
The first question is actually a relatively easy solution.

Chengda Biotech's equity structure chart

As a spin-off company from Liaoning Chengda, Liaoning Chengda’s 60.
74% stake in Chengda Biotech is a natural result
.
However, Liaoning State-owned Assets Control Liaoning Chengda only accounted for 11.

The sci-tech innovation board listing regulations require that the actual controller of the company has not changed in the past two years, and this wave of operations by Shaoguan Gaoteng can not help but make the China Securities Regulatory Commission question whether it complies with the regulations
.
Finally, in order to prevent this listing plan from being ruined, Liaoning Chengda’s largest shareholder Shaoguan Gaoteng and the third largest shareholder Guangxi Xinyi had to issue a "Notice Letter" stating that only 10% of the voting rights would be retained within 24 months after listing.

In fact, the problems are not limited to these two.
Observing the company’s shareholding structure, it can be found that the current shareholder Zhuang Jiurong of the company’s second natural person once paid a bribe of 1.
07 million yuan to Yin Hongzhang, the former deputy director of the Drug Evaluation Center of the State Food and Drug Administration, in order to become a rabies vaccine of Dabio.
The "2-1-1" injection method can quickly pass the approval in the case of incomplete experimental data
.
In addition, Qiao Debiao, the former director of Guangxi Liucheng County CDC, Jiang XX, former section chief of Sichuan Anxian CDC, Zhang XX, former section chief of the immunological prevention section of the Yantai Economic and Technological Development Zone Center for Disease Control and Prevention, and the former Mianyang City Fucheng Center for Disease Control and Prevention Director Wang Chengke, former Deputy Secretary of the Party Branch of Yanting County CDC, Wang Mou, and other CDCs also have the shadow of Chengda biological salesperson behind the bribery case

The actual controller risk still exists, the product structure is single, and the product under research has insufficient stamina

Although Shaoguan Gaoteng and Guangxi Xinyi, the third largest shareholder, have issued the "Notice Letter", since the Liaoning State-owned Assets Supervision and Administration Commission only holds 11.
11% of the shares, the risk of a third party seeking actual control of Liaoning Chengda is not ruled out 24 months after listing
.

As the "King of Rabies Vaccines", the core products of Chengda Biotech, established in 2002, are still the human rabies vaccine marketed in 2005 and the Japanese encephalitis inactivated vaccine marketed in 2008
.
Among them, the human rabies vaccine is currently the only rabies vaccine available in China that can be injected with Zagreb2-1-1, and the inactivated Japanese encephalitis vaccine is currently the only domestically-made inactivated Japanese encephalitis vaccine on sale in China

National Cheng Kung University's R&D investment

Chengda Biosciences has invested 75 million, 153 million and 222 million in R&D in the past three years, and its proportion of operating income has increased from 5.
39% to 11.
14%, which is still not high
.
At present, the company has 24 research projects, two-thirds of which, 16 of which are in the pre-clinical research stage, 2 research projects have obtained clinical approvals, 4 research projects are in clinical phase I, and 1 is in the preclinical research phase.

It is also mentioned in the prospectus that the gross profit margin of rabies vaccines listed in 2005 were all above 85%, which is still at a relatively high level compared with the same industry.
Moreover, after the withdrawal of Changchun Changsheng in 18 years, the market has become the only major biologics company.
The situation is over
.
Although there is no news about centralized procurement in the vaccine industry, with the recent introduction of insulin, consumables and proprietary Chinese medicines into centralized procurement, rabies vaccine is a rigid vaccine and has a high profit margin.
It is difficult to predict that centralized procurement will not start it
.

Concluding remarks

The "Vaccine Management Law" that came into effect on December 1, 2019 clearly stipulates that the state encourages vaccine manufacturers to produce and export vaccines in accordance with international procurement requirements
.
Moreover, China recently submitted an application for joining the CPTPP, together with the original signed RCEP, the pharmaceutical export business has a promising future
.
At present, the rabies vaccine market focused by Chengda Biologics is becoming more and more fierce.
It is hoped that, as a pioneer in this segment in China, Chengda Biologics can actively explore overseas markets and create new growth points
.

This article has been compiled from publicly available information on the Internet, and is only for information display, and does not constitute investment advice; the stock market is risky, and you need to be cautious when entering the market
.