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Venus Medtech (Hangzhou) Inc.- H share, 02500.HK - Company Profile
Chairman	Min Frank Zeng
Share Issued (share)	432,000,000
Par Currency	Renminbi
Par Value	1.0
Industry	Medical Equipment & Services
Corporate Profile	Business Summary: During the year, the Group was principally engaged in research and development, and the manufacturing and sale of bioprosthetic heart valves. Performance for the year: The Group’s revenue for the year ended December 31, 2019 was RMB233.3 million (unaudited), representing an increase of 102.3% compared to RMB115.3 million (audited) for the year ended December 31, 2018. The gross profit of the Group increased by 96.7% from RMB99.0 million (audited) for the year ended December 31, 2018 to RMB194.7 million (unaudited) for the year ended December 31, 2019. Business Review VenusA-Valve – Our Core Product As a leader in TAVR technologies in China, The Group focus on the development, manufacturing and sale of transcatheter aortic heart valves and their respective delivery systems. The Group currently have one product on the market, VenusA-Valve, our first-generation TAVR device, which is used to treat severe aortic stenosis using a catheter-based approach. VenusA-Valve received marketing approval from the NMPA in April 2017, and was subsequently commercialized in August 2017, which marked the first NMPA-approved TAVR product and the first TAVR product commer-cialized in China. Moreover, we registered VenusA-Valve in Colombia in April 2018 and The Group commercialized VenusA-Valve in Philippines in the third quarter of 2019. The Group also submitted the GMP application of the manufacturing system of VenusA-Valve in Brazil in August 2018. The Group are currently applying for product registration for VenusA-Valve in Brazil. We are also applying for the registration of VenusA-Valve in Taiwan. For the year ended December 31, 2019, our revenue generated from the sales of VenusA-Valve amounted to RMB232.1 million (unaudited), representing an increase of 104.1% compared to RMB113.7 million (audited) for the year ended December 31, 2018. VenusA-Valve has been used to treat patients with severe aortic stenosis. According to Frost & Sullivan, there is an increasing population of aortic stenosis patients worldwide and in China, and the TAVR procedure in China has been applied to patients ineligible for surgeries and patients with intermediate to high surgical risk. As the FDA approved the application of certain transcatheter aortic heart valve products in TAVR procedures that treat low surgical risk patients, TAVR procedure is expected to be approved by the NMPA to be applied to patients with low to intermediate surgical risk in China in the future. Similarly in Philippines and other markets where we have launched or are preparing to launch our TAVR products, the application of TAVR procedure is expected to be approved for severe aortic stenosis patients with low to intermediate surgical risk. As of December 31, 2019, more than ten TAVR products in the global market had received FDA approval or CE Marking, and the major competitors are Edwards Lifesciences and Medtronic. There are also eight known TAVR pipeline products globally. As of December 31, 2019, in China, there were three TAVR products approved for marketing by the NMPA in China, including VenusA-Valve of our Company, J-Valve of Jiecheng and VitaFlow-Valve of MicroPort. There were several TAVR pipeline products in China at clinical trial stage. The Group MAY NOT BE ABLE TO ULTIMATELY MARKET VENUSA-VALVE IN BRAZIL AND TAIWAN SUCCESSFULLY. VenusA-Plus – Our Core Product VenusA-Plus is an upgraded product based on VenusA-Valve. Compared to VenusA-Valve, VenusA-Plus contains a DCS with retrieving function. In May 2018, The Group submitted to the NMPA an application for VenusA-Plus as an amendment to the VenusA-Valve registration we have obtained, and supplemented the application with further information in November 2019. Given (i) the application was expected to expire three months after our provision of further information, (ii) the outbreak of COVID-19 in the PRC since December 2019 and the travel restrictions and quarantine measures implemented in response were expected to affect the review process of the application by the NMPA, we voluntarily withdrew the application in early February 2020. We currently expect to re-submit the application to the NMPA at an appropriate timing, depending on the COVID-19 situation and other business, market and regulatory considerations. Once VenusA-Plus is launched in the market, The Group believe it could be the first retrievable TAVR product in China. Driven by the increasing number of patients with severe aortic stenosis and regurgitation, the number of TAVR procedures and the size of TAV market is expected to continue to grow. As of December 31, 2019, VenusA-Plus was one of the two TAVR product candidates with retrievable function at clinical trial stage in China. For details, see “– VenusA-Valve – Our Core Product” above. The Group MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET VENUSA-PLUS SUCCESSFULLY. VenusA-Pilot VenusA-Pilot is our next product for TAVR treatment, which makes further improvements to the DCS function of VenusA-Plus. The DCS of VenusA-Pilot is designed to have retrieving and steering functions, which can improve the accuracy of positioning the valve. The Group MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET VENUSA-PILOT SUCCESSFULLY. VenusP-Valve – Our Core Product VenusP-Valve is a transcatheter pulmonary valve system, which is designed for percutaneous implantation via cardia catheterization into the RVOT to treat RVOTD including pulmonary valve backflow as a result of treatment for patients with congenital heart disease. We have completed the clinical trial in China for VenusP-Valve. In April 2019, VenusP-Valve was approved by the NMPA to be eligible for the Special Approval Procedures of Innovative Medical Devices promulgated by the NMPA. We submitted the application for the CE Marking in April 2019. Once launched, VenusP-Valve is expected to become the first TPVR product in China, the first TPVR product for patients with RVOTD after receiving TAP treatment globally, and the first self-expanding TPVR product globally. VenusP-Valve is designed to treat patients with pulmonary regurgitation, which is mainly caused by degeneration of RVOT from a previous repair to treat ToF patients and other congenital heart diseases. With the increasing number of ToF and other RVOTD patients, demand for TPVR products such as VenusP-Valve is expected to increase. Considering the high prevalence of newborns with congenital heart defects every year in China and global market, TPVR treatment may become reimbursable under governmental medical insurance in the future, which will increase its accessibility and affordability. Meanwhile, the improved safety and efficacy of TPVR procedure over SPVR procedure will increase the acceptance among patients and physicians. Therefore, we expect the market adoption of our VenusP-Valve will increase. As of the date of this announcement, there were three FDA or CE approved TPVR products including Sapien and Sapien XT from Edwards Lifesciences and Melody from Medtronic, and there were five product candidates at the clinical trial stage. More than 85% of ToF patients in China that went through RVOT enlargement procedures are treated with the transvalvular patch method, and the diameter of their pulmonary valve ring is larger than 22mm, making VenusP-Valve the only viable option among the three competing products, according to Frost & Sullivan. The Group MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET VENUSP-VALVE SUCCESSFULLY. Venus Mitral Valve The Group are in the process of designing our product, Venus Mitral Valve, for TMVR treatment of mitral regurgitation patients. Our design-stage animal studies for Venus Mitral Valve are currently on-going, and we are in the process of refining our design based on the animal studies. For the sales of Venus Mitral Valve in China, similar to the registration of VenusA-Valve, we will submit our clinical trial results to the NMPA for its approval. The Group MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET VENUS MITRAL VALVE SUCCESSFULLY. Venus Tricuspid Valve The Group are in the process of designing our product, Venus Tricuspid Valve, for TTVR treatment of tricuspid regurgitation patients. Our design-stage animal studies for Venus Tricuspid Valve are currently ongoing, and we are in the process of refining our design based on the animal studies. For the sales of Venus Tricuspid Valve in China, similar to the registration of VenusA-Valve, we will submit our clinical trial results to the NMPA for its approval. The Group MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET VENUS TRICUSPID VALVE SUCCESSFULLY. V8 and TAV8 A balloon aortic valvuloplasty catheter system is designed to be used in stand-alone balloon aortic valvuloplasty procedures and the dilatation of aortic valve leaflets prior to and after TAVR procedure. InterValve has developed two generations of bicuspid aortic valve catheter system, V8 and TAV8, both of which have received FDA 510(k) clearance and CE Marking. In November 2016, InterValve assigned V8 and TAV8 related patents and transferred related regulatory approvals to us. The Group applied for an import product license with the NMPA for TAV8 in February 2018. For the year ended December 31, 2019, our revenue generated from the sales of V8 and TAV8 amounted to RMB1.2 million (unaudited), representing a decrease of 25.0% compared to RMB1.6 million (audited) for the year ended December 31, 2018. The Group MAY NOT BE ABLE TO ULTIMATELY MARKET V8 AND TAV8 SUCCESSFULLY IN THE EU AND CHINA. CEP Device – TriGUARD3 TriGUARD3 is a CEP device designed to provide coverage of all three major aortic vessels (brachiocephalic artery, left carotid artery, and left subclavian artery) to minimize the risk of cerebral damage during TAVR and other structural heart procedures. It is the only CEP device designed to cover all three major aortic vessels globally according to Frost & Sullivan. TriGUARD3 received CE Marking for use in cardiac procedures on March 4, 2020 and The Group plan to submit for the FDA registration in the third quarter of 2020. The Group MAY NOT BE ABLE TO ULTIMATELY MARKET TRIGUARD3 SUCCESSFULLY. Our Platform As The Group build our pipeline, The Group have established a transcatheter heart valve platform with robust R&D, manufacturing and commercialization capabilities. R&D Our R&D team, based in China, Israel and the U.S., is led by our COO, Mr. Lim, former CTO of Transcatheter Technologies GmbH and a veteran with more than 15 years’ experience in the industry. The R&D team of Keystone is led by Mr. Amit Ashkenazi, who has extensive experience in the R&D of medical devices. The Group remain at the forefront of heart valve technology by maintaining close contact with leading cardiologists globally, and develop products that specifically address the clinical needs of transcatheter heart valve replacement procedures. Our powerful R&D capabilities are reflected by our strong intellectual property portfolio. The time required from developing to commercializing a new product varies by product candidate and can be affected by various factors which may be beyond our control, such as clinical trial results and government policies and approvals. Manufacturing The Group have an approximately 3,500 sq.m. facility in Hangzhou, China and an approximately 816 sq.m. facilities in Israel for manufacturing our heart valve products and product candidates. Our manufacturing facilities comply with the GMP requirements in the U.S., the EU and China and follow rigorous manufacturing and quality control standards to ensure high product quality and safety. The Group conduct all the key valve manufacturing procedures in-house. Over the years, The Group have accumulated extensive expertise and know-how in manufacturing heart valve products, which sets a solid foundation for our long-term growth. Commercialization The Group have a dedicated in-house sales team with a focus on academic marketing driven by our extensive expertise and clinical resources. As the pioneer in launching the first TAVR product in China, our products have contributed to the underlying clinical experience of leading experts in China in setting up the guidelines for physicians conducting TAVR and TPVR procedures. The Group have also established a systematic TAVR training program in China to promote our TAVR products as well as TAVR awareness and drive the penetration rate of TAV market in China. Prospects: The Group will continue our mission to become a global leader in the development and commercializa-tion of transcatheter solutions for structural heart diseases. The Group plan to execute the following strategies to achieve our mission. Continue to grow sales of VenusA-Valve Sales of TAVR products in China possess substantial growth potential. The Group intend to solidify our leadership position in China’s TAV market by increasing VenusA-Valve’s sales volume. Towards that goal, The Group plan to substantially increase sales to hospitals with which we have existing relationships as well as expand our sales network to cover more hospitals and further promote TAVR awareness among hospitals, physicians and patients in China. The Group believe there are still substantial unmet demands for TAVR products from the hospitals to which we currently sell VenusA-Valve. We also believe there is significant potential to develop new hospitals to perform TAVR procedures. We plan to increase sales efforts to deepen the penetration in hospitals to which we currently sell VenusA-Valve and expand into new hospitals in China by leveraging our direct access to KOLs in cardiac interventional therapy, providing systematic training to physicians, and increasing TAVR awareness among hospitals, physicians and patients. We plan to continue to implement and improve our systematic TAVR training program to expedite the physician education process and to promote our TAVR products. The Group also plan to further promote TAVR awareness among patients with structural heart diseases in China, in particular to low surgical risk patients, in order to broaden the patient base of our TAVR products. The Group cooperate with foundations, such as Bethune Charitable Foundation, to subsidize patients’ medical expenses and conduct regular follow-up visits post procedures. The Group will continue to participate in heart valve conferences and academic events to further promote awareness of our products and TAVR generally. The Group believe that these marketing activities will strengthen our brand name and enable us to accumulate first-hand know-how for structural heart diseases and keep abreast of the market developments in transcatheter heart valve solutions. Leverage our experience with VenusA-Valve to commercialize VenusP-Valve and other product candidates in China The Group plan to leverage our experience in successfully commercializing VenusA-Valve in China to launch VenusP-Valve and our other product candidates in the Chinese market in the future. The Group have completed the clinical trial for VenusP-Valve in China in January 2018. The Group believe our experiences with respect to the regulatory approval will significantly facilitate the approval process of VenusP-Valve. In April 2019, VenusP-Valve was approved by the NMPA to be eligible for the Special Approval Procedures of Innovative Medical Devices. The Group will benefit from our established network with and direct access to KOLs, hospitals and physicians to introduce our new valve products. The Group believe that our existing brand and reputation for VenusA-Valve will facilitate our commercialization of VenusP-Valve upon approval. The Group also plan to replicate our existing training model for TAVR procedures to VenusP-Valve and our other product candidates to educate hospitals and physicians and promote our new products. Expand our presence in North America, the EU and emerging markets to become a global leader The Group plan to broaden our sales and expand our presence globally, especially in North America and the EU, as we believe we will benefit from higher medical expense levels in these developed regions. Medical expense levels in China remain low compared to the U.S. and the EU. The Group is in the process of various clinical trials and registration applications in the U.S., the EU and emerging markets. The Group plan to leverage on the existing brand names of TAV8 and TriGUARD3 to enter the U.S. and the EU markets and subsequently establish our own brand name. With our acquisition of Keystone in December 2018, The Group plan to have Keystone as our platform for the U.S. and the EU markets which could help us with the clinical trials, registration and promotion of our products in these markets. Keystone has completed the clinical trial procedures and follow-up with the enrolled patients for TriGUARD3 and expects to file for FDA registration in the third quarter of 2020. The Group believe The Group can leverage the global experience in product development and clinical trial of Keystone to advance the clinical trials of our other product candidates in the U.S. and the EU in order to obtain approvals and launch our products worldwide. With regard to our valvuloplasty balloon product, TAV8, The Group plan to relaunch it with a new marketing strategy and sell it as a package with VenusA-Valve and TriGUARD3. The Group also plan to promote VenusP-Valve in the EU and North America. The Group are conducting clinical trial of VenusP-Valve for registration in the EU and filed registration application in April 2019. With respect to emerging markets, The Group registered VenusA-Valve in Colombia in April 2018 and plan to commercialize VenusA-Valve in this market. In Brazil, The Group are currently applying for registration of VenusA-Valve. To execute our global expansion strategy, The Group will continue to participate in international heart valve conferences and academic events to further promote our products and brand. Continue to advance and strengthen our pipeline products within the structural heart disease space The Group plan to advance our existing pipeline products to further expand our coverage within the structural heart disease space, both horizontally covering all four heart valves and vertically from valves, CEP, valvuloplasty balloons to other ancillary devices. The Group will invest in technological innovation to strengthen our R&D capabilities to develop new products and enhance our competitiveness as we believe innovation is a key factor to achieve our mission to become a global leader of transcatheter solutions for structural heart diseases. The Group may selectively form partnerships with complementary product providers to enhance our clinical strengths and market advantages and make acquisitions that have the potential to broaden our product portfolio. The Group believe our established network with and direct access to KOLs, hospitals and physicians gives us the best knowledge of strategic opportunities which could complement or improve our existing product offerings. As of the date of this announcement, The Group had not identified any specific acquisition targets.

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