Whether The Three Enterprises On The Board Of Science And Technology Innovation Board Are Under The Background: True Scientific And Technological Innovation Attribute Determines The Success Or Failure

Within a month, the science and technology innovation board ushered in three IPO cases.

On September 22, the Shanghai Stock Exchange issued the announcement on the results of the 71st review meeting in 2021, which showed that Shanghai Jikai gene Medical Technology Co., Ltd. (hereinafter referred to as "Jikai gene") failed to pass the first round.

On the same day, the Shanghai Stock Exchange also disclosed the announcement of terminating the examination of the initial application of Shanghai Haihe pharmaceutical research and Development Co., Ltd. (hereinafter referred to as "Haihe pharmaceutical"). Prior to this, the Shanghai Stock Exchange has suspended the review of Haihe drug IPO application, but it has not escaped the conclusion that it is not.

For example, Zhejiang Tiandi Environmental Protection Technology Co., Ltd. (hereinafter referred to as "Tiandi environmental protection") which failed in early September, three enterprises were vetoed by the municipal Party committee in September, which led to the failure of these companies to rush to the science and technology innovation board.

The reason why the market felt a chill was that wind data showed that, including the above three enterprises, only 12 enterprises, including the above three enterprises, had been rejected in the meeting since the opening of the science and technology innovation board in 2019. This means that in September alone, 25% of the cases of Shanghai Science and Technology Innovation Board since its opening two years ago were contributed.

According to the 21st century economic report, the reporters learned from many sources that the three enterprises that were rejected were just the "tip of the iceberg" among the enterprises that failed to go public due to the lack of scientific and technological innovation attributes this year. More enterprises have been dissuaded from going through on-the-spot inspection or on-site supervision, and the above three enterprises have only persisted in the deliberation stage of the municipal Party committee.

Under various signals, does it mean that it will be more difficult to pass the scientific and technological innovation board?

Is it a frontier biotechnology service provider or a doctor's outsourcing provider

Judging from the three cases mentioned above, the advancement of its technology and its real status in the industrial chain are quite controversial.

According to the prospectus, GK gene was established in 2002, and its main business is target discovery and derivative business, including target screening and validation services, new drug research and development and intellectual property trading, preclinical research / clinical research services, as well as medical testing services, sales of scientific research instruments and consumables.

As a biopharmaceutical company, gekkai gene is still unprofitable. In 2020 and the first half of 2021, the company realized operating revenue of 243 million yuan and 116 million yuan, with net profit of - 72.457 million yuan and - 86.7247 million yuan respectively in the same period. There is a risk that the loss will continue to expand in the future.

In this regard, Jikai gene has said that the continuous loss during the reporting period is mainly due to the company's continuous R & D investment and increasing R & D investment, and there are certain share-based payment related expenses. After excluding the impact of share based payment, the company's loss expansion is relatively limited. But even after deducting the share payment expenses, the net profit of the company in the first half of 2021 is still -46.8804 million yuan.

But the loss is not the reason that hinders the listing of gene. "The science and technology innovation board itself allows loss making enterprises to be listed. It is normal for biomedical enterprises, especially those engaged in innovative drug research and development, to suffer losses. New drug R & D cycle is long, and investment is large, and continuous financing is needed to ensure normal development. The scientific and technological innovation board also wants to provide opportunities for biomedical enterprises to develop innovative drugs," said a person in charge of private equity institutions in Beijing.

As the private equity personage said, Jiangsu Yahong Pharmaceutical Technology Co., Ltd. (hereinafter referred to as "Yahong pharmaceutical") which passed the deliberation of the municipal Party Committee on the science and technology innovation board on September 23, had a loss of 247 million yuan in 2020. The net profit attributable to the parent company after deducting non recurring profit and loss in the current period is still a loss of - 125 million yuan, which is obviously higher than that of Jikai gene. Since its establishment, Yahong pharmaceutical has been engaged in the research and development of innovative drugs, and has not yet realized the commercial production and sales of its products in the latest report period.

As for the real reason why gekai gene was rejected, the municipal Party Committee on the science and Technology Innovation Board said that the company did not fully disclose whether its core technology was advanced, the growth of related businesses, potential market space and the impact on the ability of sustainable operation.

One of the controversial points of gekai gene before is that compared with other biomedical companies, the main customers of gekai gene are not pharmaceutical companies and biotechnology companies, but individual customers such as research doctors. This has also aroused the concern and query of the municipal Party committee, requiring the company to state that the main customers of target screening and verification business are research doctors, which will affect the future market space and growth of relevant businesses.

A private-equity personnel focusing on biomedical investment said that the so-called research doctors are clinicians who focus on scientific research. "Jikai gene is mainly aimed at individual doctors, not bound to hospitals. Its stability and reliability are all problems. It's hard to say that it is the outsourcer of doctor's project. Moreover, the doctor's project has a lot of water, and part of it involves kickbacks. The exchange may not be able to make a clear judgment. From the perspective of protecting the interests of investors, the company is not a very good listing target."

Jikai gene has previously said that the main customers of the company's target screening and verification business are research doctors, and the customer concentration is low. Therefore, it is necessary to have a certain number of sales personnel to cover the sales business of research-oriented doctors in different regions. Therefore, the company has a large number of sales personnel, and the total salary of sales personnel is relatively large, which leads to the high total sales expenses of the company. According to the data of the prospectus, the sales expense rate of Jikai gene in the first half of 2021 has reached 35.28%.

Strictly check the content of science behind the "license in" mode

Compared with gekai gene, whether Haihe pharmaceutical has been paid more attention in the biomedical industry, that is, whether pharmaceutical enterprises under the "license in" mode can still enter the science and technology innovation board in the future.

According to the public information, the R & D path adopted by Haihe pharmaceutical is a typical "license in" mode, that is, by paying a certain down payment, milestone fee and sales commission to the authorized party, in exchange for the right to develop, produce and sell the product in a specific area. At present, Haihe pharmaceutical has developed a total of 19 R & D pipelines, 18 of which are authorized to introduce or cooperate in R & D.

Considering that the core products of Haihe pharmaceutical which have carried out more than phase II clinical trials originate from authorized introduction or cooperative R & D, and continuously entrust partners to participate in outsourcing R & D services of core products during the reporting period, the Listing Committee of scientific and Technological Innovation Board considered that Haihe pharmaceutical failed to accurately disclose whether it had made substantive improvement independently on the core products authorized to be introduced or jointly developed, Whether there is technical dependence on the partner.

In fact, this is not the first time that a biomedical enterprise adopting the "license in" mode has "broken the scientific and Technological Innovation Board". For example, Yiteng Jingang, which voluntarily withdrew its listing application in December 2020, has obvious traces of "license in". The company's core product patents come from overseas authorized introduction.

In January 2021, tianshli also withdrew the application materials for listing on the science and technology innovation board, and the Shanghai Stock Exchange also clearly pointed out in the inquiry that the introduction of technology in a number of products under development of the company needs to be explained "Whether the product pipeline and technology mainly come from outsourcing, whether there is dependence on the mode of technology introduction and non independent R & D to enrich product pipeline, and whether it has a complete technology R & D system and independent R & D capability.".

Related enterprises failed to clear the customs one after another, and the market was worried about whether the "license in" biomedical enterprises could land on the science and technology innovation board.

In fact, there are many successful cases of enterprises with "license in" mode landing on the scientific and technological innovation board. Zejing pharmaceutical, the first listed company in the science and technology innovation board with the fifth set of standards, did not have any R & D pipeline to complete the listing at the beginning of landing on the stock exchange. The company has also used the "license in" mode to introduce three antibody molecules of the subsidiary gensun to license in Greater China.

"It is a very common model for enterprises to introduce relatively mature clinical stage products through 'license in' and develop generic drugs in China, but this does not mean that enterprises are not innovative under the 'license in' mode." according to private investors in the above biomedical field, some domestic pharmaceutical enterprises with strong R & D strength are adopting "license in" After the model is authorized, "me too" or "me bet" drugs can be developed to meet the domestic clinical needs. Even some enterprises can develop "best in class" (the best in class), "this can also be regarded as the category of innovative drugs. I believe that such enterprises have the scientific and technological innovation attributes required for listing on the science and technology innovation board."

The fifth set of listing standards on the science and technology innovation board is generally considered as a channel specially designed for innovative biomedical enterprises. It requires that the expected market value of the enterprises to be listed should not be less than 4 billion yuan. The main business or products need to be approved by the relevant departments of the state. The market space is large. At present, phased achievements have been made. Pharmaceutical enterprises should have at least one core product approved to carry out phase II clinical trial, and other enterprises meeting the positioning of the science and technology innovation board should have obvious technical advantages and meet the corresponding conditions.

"Some enterprises have begun to directly purchase products of clinical trial stage in order to" accurately "fit the rules and drill holes in the rules, but their innovation ability is questionable. From the case of this year, it is more and more uncertain for enterprises that only rely on the" license in "purchase technology to achieve the scientific and technological innovation attribute in the future." a senior investment bank in Beijing said.

"Invisible threshold" of scientific and technological innovation

Whether it is gekai gene or Haihe pharmaceutical, the main reason is that it fails to accurately demonstrate the innovation of the company's core technology to the exchange.

"Whether the core technology is advanced or not, frankly speaking, is the query of the company's scientific and technological innovation attribute." some people from Shanghai securities companies and investment banks said.

Constantly improving the scientific and technological innovation attribute identification of listed enterprises on the science and technology innovation board has always been the top priority of supervision. On April 16 this year, China Securities Regulatory Commission revised and issued the guidelines on the evaluation of science and innovation attributes (Trial), further improving the evaluation system of science and innovation attributes.

Among them, "4 + 5" requirements are put forward for the application projects of science and technology innovation board. That is, the issuers of the science and technology innovation board must meet the following four basic conditions: first, R & D investment accounts for more than 5% of the operating revenue in the recent three years or the R & D investment amount in the last three years is more than 60 million yuan; Second, the proportion of R & D personnel in the total number of employees in that year should not be less than 10%; Third, more than five invention patents have been formed in the main business income; Fourth, the compound growth rate of business income in the last three years has reached 20%, or the amount of business income in the latest year has reached 300 million yuan.

If the above four basic requirements are not met, any one of the "five exceptional conditions" including "the core technology is recognized by the national competent department to be internationally leading, leading or of great significance to the national strategy" can be exempted from the assessment of the above four basic conditions.

After the revision of the guidelines for the evaluation of the attributes of scientific and technological innovation (Trial), many enterprises have begun to withdraw from the stock market. However, it is worth noting that most enterprises with doubts about the nature of science and technology innovation will be "dissuaded" and withdraw their application materials for listing on the science and technology innovation board when they are subject to on-site inspection or on-site supervision. However, the three enterprises that were rejected in September have all stuck to the stage of deliberation by the municipal Party committee.

"The reasons for enterprises' persuading but not retreating" may be complicated. One is that after the on-site supervision, the company's scientific and technological innovation attribute is in doubt. But the major shareholders behind the company still want to have a Expo. After all, some companies' scientific and technological innovation attributes have met the relevant quantitative standards. What if they will succeed? "Said the senior investment bank.

Another possibility is that, from the perspective of on-site supervision, the scientific and technological innovation attributes of enterprises meet the basic standards set by the CSRC and the exchange. However, after the comprehensive review of the municipal Party committee, it was considered that the details of the technical advancement still could not be explained, and finally the project was rejected. "It can also be regarded as a hidden threshold for enterprises to be listed on the science and technology innovation board from the consideration of being responsible to investors, which may represent the increasingly strict attitude of the stock exchange towards the examination and approval of the IPO companies of the science and technology innovation board."

In addition, according to the observation of some investment banks, the enterprises listed by the fifth set of standards of the science and technology innovation board in the early stage have a general market performance after listing, so it is not ruled out that there is a certain pressure on the audit work of the exchange. One of the details that can be corroborated with this view is that gekai gene, Haihe and drugs, which were rejected in September, all chose to go on the market through the fifth set of standards.

According to wind data, 10 biomedical companies have been listed on the science and technology innovation board through the fifth set of standards. In terms of the rise and fall of the stock prices of related companies 100 days after listing, only Zejing pharmaceutical, which was the earliest to realize the listing, rose by 11.1% in total. The rest such as Junshi biology and frontier biology all fell by more than 40% after 100 days of listing, and Shenzhou cell and allis fell by more than 20%. In fact, Zejing biological in about 60 days after listing, the decline was once close to 30%.

"Most of the companies listed by the fifth set of standards are loss making enterprises, and their business risks are relatively high. Combined with the market performance in the early stage, it is not ruled out that the stock exchange will be more cautious when examining and approving companies that are not so well-known or influential or have really outstanding R & D strength," said the senior investment bank.

However, some investment bankers pointed out that there are some complicated reasons for many enterprises that "stop" because they are difficult to meet the attribute of scientific innovation this year. "For example, affected by the epidemic situation, some enterprises have poor performance in 2020, unable to meet the requirement of 20% compound growth rate. Some enterprises hope to achieve a 20% compound growth rate in 2021. However, due to the stipulation of the science and technology innovation board that the total time of review by Shanghai Stock Exchange and registration of China Securities Regulatory Commission shall not exceed three months, some enterprises have to terminate the IPO process in the registration stage." The aforementioned person pointed out that in his opinion, such enterprises that have encountered problems in a specific period of time will probably start a secondary listing in the future, or switch to the gem or even the Beijing stock exchange.