Chinese heart valve specialist Microport Cardioflow Medtech Corp. (HKEX:2160) launched an IPO in Hong Kong on Feb. 4, raising HK$2.5 billion (US$324 million) by issuing 205.62 million shares at HK$12.20 apiece. With J.P. Morgan, Citi and CICC backing the IPO, the stock opened at HK$21.50, up 76% from the offer price.

The pre-revenue med-tech firm, spun off from Microport Scientific Corp. in 2020, develops transcatheter aortic valve implantation (TAVI) products for valvular heart diseases, and is especially known for its Vitaflow series. The IPO will support it to further upgrade its Vitaflow product.

“Our first-generation product Vitaflow has already been launched and commercialized in China. We’re aiming at bringing it to the global markets,” said Luo Qiyi, chairman of Microport Cardioflow, in a press conference on Thursday morning.

“We are also waiting for the marketing approval for our second-generation TAVI product, Vitaflow II, and developing our third-generation product. Besides aortic valve diseases, we’re also making strategic plans for tackling mitral regurgitation and developing products for this. To sustain our long-term development to keep bringing solutions to the patients, we went for a public listing,” he added.

Following the IPO, Microport Cardioflow plans to spend 30% of the proceeds on Vitaflow II and 27% on other pipeline products.

Microport Cardioflow is known for its self-developed first-generation TAVI product Vitaflow that was approved in China in July 2019. It is the first TAVI product using bovine pericardium as valve tissue, which sets it apart from most of the marketed TAVI products in China.

Using bovine pericardium is said to provide better durability and hemodynamic performance compared to porcine pericardium, which competitors Venus Medtech (Hangzhou) Inc.’s VenusA-Valve and Suzhou Jiecheng Medical Technology Co. Ltd.’s J-Valve are using.

Microport Cardioflow said it is also the only med-tech company in China that offers a comprehensive package with self-developed complementary TAVI procedural accessories, with its Alwide balloon catheter and Alpass catheter sheath as part of the Vitaflow offering.

In clinical trials, Vitaflow demonstrated a low all-cause mortality rate and low incidences of postoperative complications, including moderate or severe paravalvular leakage, major stroke and vascular complication.

The all-cause mortality rate was 0.9% at discharge, 0.9% at 30 days, 2.7% at six months, 2.7% at 12 months, 4.5% at 24 months and 10.9% at 36 months after implantation. During the 36 months following the TAVI procedure, only 2.7% of the patients experienced major vascular complications.

Betting on the success of Vitaflow, Microport Cardioflow is now improving this product. Its second-generation Vitaflow II is under registration review in China and clinical trials in Europe. The company expects to score the marketing approval by the end of this year. Its third-generation Vitaflow III is now at design stage.

What makes Vitaflow II superior to the predecessor is the upgrade in the delivery system, where the capsule of Vitaflow II includes a distal flare, a flared tip located at the distal part of the delivery system.

This design enables the physician to retrieve the prosthetic aortic valve (PAV) if it is not placed accurately at the designated position, given that the deployment does not exceed 75% of the maximal deployment range. The retrievable function will help position the PAV more accurately, which means the TAVI procedure is more likely to be successful.

Besides the TAVI products, Microport Cardioflow has five transcatheter mitral valve (TMV) products under development that target mainstream viable transcatheter valve therapy options for mitral regurgitation. The company is collaborating with mitral and tricuspid valve med-tech developers 4C Medical Technologies Inc. and Valcare Medical Ltd. to tap into the TMV space.

Microport Cardioflow’s pipeline also includes tricuspid valve products, surgical valve products and five procedural accessories ranging from balloon catheter to expandable sheath.

Vast market of opportunities

Luo believes that TAVI products will have great market potential in China, and the underserved market in the country will fuel the development and innovation of these products.

“The biggest driving force for Chinese med-tech companies is the large population in China. [The development of] medical devices, especially for interventional treatments, is still on the rise in China. Compared to mature markets such as Europe and the U.S., the penetration rate of interventional medical devices in China is still very low, which is the driving force for development,” Luo told the media. “A lot of people in China still cannot receive such treatment, which I think is the biggest driving force [for us].”

For now, China only approves TAVI to be used in severe aortic stenosis patients who are not suitable for surgeries, which means around 290,000 patients are eligible for TAVI procedures.

Looking ahead, China is expected to follow the FDA to expand the indications to include severe aortic stenosis patients with low to intermediate surgical risks, which will pump the number of eligible patients to 942,800 in 2025.

And zooming out to look at the whole med-tech sector, Chinese investors remain bullish.

“The med-tech sector is a very hot investment area in China. I even think the valuation is too high,” said Nisa Leung, managing partner of Qiming Venture Partners, at the China Biomed Forum 2021 last month. “The med-tech sector will remain active this year, but it remains to be seen if the valuation will drop.”

The Hong Kong Stock Exchange continues to be a hot bourse for Chinese health care companies. Two more pre-revenue med-tech firms, colon cancer screening specialist New Horizon Health Limited and genetic test developer Suzhou Basecare Medical Corp. Ltd., will launch their IPOs in the coming days.