On March 31, 2022, Peijia Medical Limited (“Peijia Medical” or the “Company”, together with its subsidiaries, the “Group”, stock code: 9996), a leading player in the high-growth transcatheter valve therapeutic and neurointerventional procedural medical device markets in China, announced its audited consolidated annual results for the year ended 31 December 2021 (the“Year”).
In 2021, Peijia Medical’s product sales, financial position and results of procedures continued to grow rapidly with dual engines – the commercialization and business expansion of the Company’s two main business segments, i.e. Transcather Valve Therapeutic Business and Neurointerventional Business. During the year, the Group recorded a total revenue of RMB136.5 million, a significant increase of 253.2% from RMB38.7 million compared with the same period of last year.
The increase was primarily due to the commercial launch of new products with relatively higher margin, as well as the Company’s achievements in continuously optimizing the supply chain and reducing production costs. The gross profit increased by 279.2% from RMB25.2 million of the same period last year to RMB95.7 million, with gross profit margin rising to 70.1% from 65.3% of the same period last year.
In particular, the gross profit margin of the Transcatheter Valve Therapeutic Business was as high as 82.8%, showing a significant cost advantage over our peers.
During the Year, the Group recorded a net loss of RMB211.5 million after deducting one-time expensing business development (“BD”) payments and foreign exchange losses. The Transcatheter Valve Therapeutic Business only recorded sales for half a year but related expenses in preparation for sales for the entire year, but the net loss remained stable; Neurointerventional Business continued to narrow. Financial performance of the Group was further strengthened.
Core business continued to expand, pipeline enrichment and consolidation was accelerating
Peijia Medical is a market leader in the high-growth transcatheter valve therapeutic and neurointerventional interventional procedural medical device market in China with a comprehensive product pipeline. During the year, the Group obtained registration approvals from NMPA for seven products, including TaurusOne® and TaurusElite®, the first and second generation Transcatheter Aortic Valve Replacement (“TAVR”) devices. As of March 31, 2022, the Group have had 16 registered products and 16 product candidates at various development stages.
2021 signaled the first year of commercial launch for the Group’s Transcatheter Valve Therapeutic Business. The products and product portfolios of the two businesses were in the fast lane of commercialization. During the year, the revenue generated from the sales of transcatheter valve therapeutic products amounted to RMB41.9 million. In addition, the first-and second-generation Taurus systems not only obtained NMPA approval earlier than expected, but also quickly gained market access. The provincial tendering and hospital entrance of such systems were progressing well, with a total of 95 hospitals (equivalent to 102 centers) entered by the end of 2021. Clinical feedbacks on the products were great, and the sales and implantation were progressing gratifyingly.
In the first quarter of 2022, sales and implantation volume maintained an accelerating upward trend. The number of hospitals entered and the volume of implantations reached a new high, with access to 39 new hospitals in the first quarter, with a total number of hospital coverage reaching 134, an increase of 37.9% over the end of 2021.
The monthly volume of implantation in March reached 97 units with an estimated market share approaching 15%.
We have built a strong pipeline with a wide range of innovative product candidates through external acquisitions as well as internal development. Our strategy is to employ both approaches to build a comprehensive portfolio in the next-generation technologies.
From late 2020 to the date of the announcement, the Company harvested 4 BD projects, which were deployed in the fields of aortic regurgitation (“AR”), mitral valve replacement, tricuspid valve replacement, and mitral valve coaptation augmentation with huge unmet market demand.
The internal developed projects also progressed smoothly. Our exploration directions include improving the durability of valve materials, non-implant treatment solutions for valve disease and developing innovative mitral valve repair products.
The Group has preliminarily completed its pipeline build-up on major heart valve diseases, which differentiated us from the peers in innovation and significantly strengthened our competitiveness in the next-generation technologies.
The Neurointerventional Business continued to expand as well by simultaneously deploying in the sizable hemorrhagic market and the fast-growing ischemic market. In addition to continuously consolidating the leading position in the hemorrhagic market with existing advantages, the commercialization of newly launched products of the ischemic and vascular access also rapidly advanced with remarkable R&D and sales results. During the year, the revenue generated from the sales of neurointerventional products amounted to RMB94.6 million, representing an increase of 144.7% from approximately RMB38.7 million of the same period of last year.
Among them, revenue generated from hemorrhagic products, ischemic products and vascular access and other products was RMB51.3 million, RMB19.5 million and RMB23.8 million, respectively, increasing by 52.3%, 596.2% and 995.9% as compared with the same period of last year.
It is worth mentioning that the total revenue generated from ischemic and vascular access and other products rose rapidly from 12.9% of the same period of last year to 45.8%. As a result, the revenue composition of the Neurointerventional Business was further diversified.
With the successive launch of the core products targeting ischemic stroke treatment, including Syphonet® Stent Retriever, Tethys AS® Aspiration Catheter, and Fluxcap® Balloon Guiding Catheter together with the Tethys® Intermediate Guiding Catheter, the Company has developed a fully-integrated solution for treating acute ischemic stroke.
The commercialization of the approved ischemic products progressed smoothly. For example, the SacSpeed® Balloon Dilatation Catheter which was fully commercialized in 2021, has quickly become the market leader since its launch. The successive launch of ischemic products will further enhance the attractiveness of our product portfolio.
Strong financial performance with sufficient liquidity
During the year, the Group recorded a net loss of RMB574.2 million which was mainly due to the increase of R&D expenses. During the Year, the total R&D expense was RMB445.9 million. This included RMB314.6 million of one-time expensing R&D payments, resulting from the upfront and milestone payments in relation to four BD projects. The Group recorded a net loss of RMB211.5 million excluding the exchange losses and one-time expensing BD payments. The continual investment in R&D of innovative medical devices companies is expected to bring significant benefits for their shareholders in the future.
Looking into two business segments, excluding the one-time expensing BD payments, the operating loss of the Transcatheter Valve Therapeutic Business remained stable while the operating loss of the Transcatheter Valve Therapeutic Business was RMB183.3 million, close to the same level of the last year (RMB145.2 million). During the year, the operating loss of the Neurointerventional Business was RMB60.0 million, decreasing from RMB72.1 million of the same period last year which continued to narrow. The overall financial performance of Neurointerventional Business were further strengthened.
The rapid advancement of commercialization has laid a solid cash foundation for the long-term development of the Company. As of the end of 2021, the cash balance was as high as RMB2.30 billion. With the further growth of sales, we believe that the abundant cash position will be sufficient to meet the long-term operating needs of the Company.
Innovative R&D platform, backed by proven commercialization capability
Peijia Medical’s R&D team is led by industry veterans with an impressive academic and professional background, previously working in managerial positions at various leading players in the medical device sector. The Group has developed deep relationships with global leaders in both the transcatheter valve therapeutic and neurointerventional domains, including world-class scientists, physicians and industry practitioners, and established close working relationship with world-class consultants, which laid a good foundation for the Group’s strong R&D capabilities and innovative product pipelines. As of December 31, 2021, the Group had an in-house team of 110 employees dedicated to the R&D of the transcatheter valve therapeutic products and neurointerventional products. As of December 31, 2021, the Group had a robust intellectual property portfolio, consisting of a total of 81 registered patents and 39 patents under application.
During the year, the Group had an expanded sales and marketing team of 157 employees, with 55 of whom dedicated to the sales and marketing of the neurointerventional products and 102 focusing on the transcatheter valve therapeutic devices. For the Transcatheter Valve Therapeutic Business, the Group has built an in-house sales and marketing team with professional background and experience in the innovative medical device industry and has established an effective sales and marketing team structure that matches the innovative nature of TAVR products. For the Neurointerventional Business, the Group has an experienced and professional sales team which has built a long term cooperation relationship with seasoned distributors. For the year ended December 31, 2021, we had 143 distributors for the Neurointerventional Business, covering over approximately 1,700 hospitals nationwide. The Group will continually build on the sales team and distributor coverage in response to the expanding ischemic product portfolio.
Dr. Yi Zhang, Executive Director, Chairman of the Board, and Chief Executive Officer of Peijia Medical Limited, said “Peijia Medical has always upheld the corporate vision and continued the commitment to the development and commercialization of interventional solutions for structural heart and neurovascular diseases in China and globally. In the future, the Group will continue to enhance the pipeline, including Mitral Valve and Tricuspid Valve treatment device, and other transcatheter valve therapeutic and neurointerventional product candidates; keep strengthening the in-house R&D capabilities while seeking deeper cooperation and strategic partnership around the globe. The Group will continue to strengthen the international patent layout through collaboration and licensing and further advance the international strategy.”
