New stock offering | HPV vaccine company Ruikang Biology-B starts its IPO today, and is expected to be listed on March 31.

Futu News on March 21st, Monday$RECBIO-B (02179.HK)$announced that it will open for subscription from March 21st to 24th, planning to issue 30.8545 million shares, including 3.0855 million shares for public offering and 27.769 million shares for international offering, with an issue price of HKD 24.8 per share, 500 shares per board lot, expected to be listed on March 31st.

Ray Corp is a vaccine company founded in 2012, operating mainly on a business model of independently developing new vaccines, focusing mainly on the R&D of HPV candidate vaccines.

Currently, the company has established a vaccine combination consisting of 12 candidate vaccines, including the core product REC603, a recombinant HPV nine-valent vaccine used for preventing cervical cancer, currently in phase III clinical trials. The company has completed subject recruitment for REC603, plans to complete the three doses administration in the first half of 2022, and submit a BLA application to the National Medical Products Administration before 2025.

According to the prospectus, Ruikang Biotechnology has received investments from well-known institutions such as Green Pine Capital, Temasek, Junlian Capital, and Sequoia Capital.

In terms of financial data, up to now, the company has not had any approved products for commercial sales, nor has it generated any revenue from vaccine sales. For the first nine months of 2019, 2020, and 2021, the company recorded comprehensive losses of RMB 0.138 billion, 0.179 billion, and 0.52 billion respectively.

In the industry aspect, in China, the HPV vaccine market has enormous potential and is expected to grow rapidly in the next few years. The first HPV vaccine in China was approved in 2017. Subsequently, the market size of the HPV vaccine increased to RMB 13.5 billion in 2020 and is expected to reach RMB 69 billion by 2030, with a compound annual growth rate of 17.7% from 2020 to 2030. It is expected that the HPV nine-valent vaccine market will have the largest market share in the HPV vaccine market in 2030.

The HPV market in China still faces insufficient supply. According to Frost & Sullivan, as of the end of 2020, the overall vaccination rate of HPV vaccines in China is low, at less than 1% of the total population. Even considering the expected growth in the HPV vaccine vaccination rate, by 2025, an estimated 233.9 million women aged 9 to 45 in China are projected to not have received the HPV vaccine. Assuming three doses per person, an additional 701.7 million doses may be needed.

Regarding cornerstone investors, multiple cornerstone investors have agreed to subscribe for the available shares at the offer price, with a total amount of approximately $53 million. This includes Yangtze River Hong Kong, Harvest, SCHP, and Sequoia Capital China Growth.

In terms of the use of proceeds, the company's net proceeds amount to approximately HK$0.672 billion (assuming the exercise of the over-allotment option). According to the prospectus, the company intends to use the net proceeds from the share sale for the following purposes:

Approximately 47.3% will be allocated to continue optimizing, developing and commercializing the company's HPV vaccine pipeline, including the core product (recombinant HPV nine-valent vaccine REC603); approximately 17.7% will be used for preclinical and clinical research, and registration of the COVID-19 vaccine (ReCOV); approximately 21.1% will be used for preclinical and clinical research, and registration of other candidate vaccines; approximately 6.7% will be used to further strengthen research and development capabilities and enhance operational efficiency; approximately 7.2% will be used for the company's operational capital and general corporate purposes.

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