The first time a company goes public is called an IPO (Initial Public Offering).
The materials required for a domestic IPO include a prospectus, the company's annual reports (and quarterly reports), which contain data from the company's three major financial statements, historical "research reports" from securities research institutes and investment banks, and all announcements issued by the company.
Since Kechuang Bio has been established for a short time, its annual and quarterly reports are relatively easy to prepare, and the materials are also very clear.
The most important of these materials is the prospectus, which mainly contains:
How many shares do you want to issue, and what percentage of the company's total share capital will they represent?
The rules for listing on the domestic Science and Technology Innovation Board (STAR Market) stipulate that publicly issued shares must account for more than 25% of the company's total shares; if the company's total share capital exceeds RMB 400 million, the proportion of publicly issued shares must be more than 10%.
The total equity of Kechuang Biotechnology far exceeds RMB 400 million, so the proportion of publicly issued shares is at least 10%.
Secondly, consider the company's risk profile, including risks related to funding, talent, R&D investment, business expansion, team stability, and so on.
The original prospectus of Kechuang Bio stated that the company's R&D investment accounted for a very high proportion of its total investment, and that the expected return on R&D investment could not be guaranteed. The securities firm listed this as the biggest risk.
Now things need to change. The biggest risk after brain-computer interface technology comes out is the risk of facing antitrust investigations. It might be a little better in China, but America will almost certainly conduct an antitrust investigation against you.
The prospectus also includes financial data for the most recent fiscal year, as well as the company's projected future operating performance.
Kechuang Bio's product line is limited to endorphins, which was originally a relatively predictable area.
Due to the pandemic and the widespread use of endorphins for their anti-addictive effects, the current situation is that endorphin production capacity can be sold as much as available, so the future operating income is relatively easy to predict.
However, Kechuang Bio has launched brain-computer interface technology, and it still charges based on the production volume of mobile phone companies, which makes it difficult to calculate the volume.
Each manufacturer only incorporates brain-computer interface technology in its most high-end products, and estimating the specific patent licensing fees is quite complicated.
Because Li Shuyao and Li Miaomiao are sisters, CICC assigned this part of the work to her.
China's Science and Technology Innovation Board (STAR Market) was officially launched in 2019, and its goal was to create a board specifically for high-tech companies to go public.
Therefore, a very important part of the prospectus is the issuer's technological advancement, business model innovation, R&D technology industrialization, and future development strategy.
CICC originally thought they could just follow the template for biopharmaceutical companies, that would be easy.
As a result, a brain-computer interface was developed, but there are very few companies in China that do this, and even fewer listed companies doing it.
The technology is indeed very advanced, but the problem is that CICC will have to rephrase it again.
Regarding this part, the brokerage firm originally wrote:
"The company's main core technology is the industrial production process of α-endorphins, which is a technology for the large-scale production of long-chain organic compounds."
This technology won the first prize of the National Science and Technology Progress Award. Its successful development marks that the company has overcome a problem that no one had ever solved before, filling a gap in the domestic and international analgesic field and leading the high-end substitution of analgesics.
From its inception, Kechuang Biotech aimed to become a world-class biopharmaceutical company. A world-class biopharmaceutical company must possess top-tier R&D capabilities and a rich drug pipeline. Not content with its achievements in α-endorphin, the company continuously recruited talent, bringing in 479 PhDs and 928 Master's degree holders within just two years, making its entire R&D team comprised of PhDs and Master's degree holders.
In addition to optimizing the industrial production process of α-endorphin, the company has also developed a series of innovative biopharmaceutical products for malignant tumors from the perspective of drug therapy, including inhibitory and cytotoxic targeted antibody drugs (such as EGFR monoclonal antibody SCT200 and its second-generation product SCT210 for the treatment of various solid tumors) and tumor angiogenesis inhibitor targeted antibody drugs (such as VEGF monoclonal antibody SCT510 and its second-generation product SCT520F for the treatment of various solid tumors).
The company adheres to the following product development strategy:
Not simply pursuing R&D speed as the primary goal: In the early stages of R&D, the company did not simply pursue R&D speed as the primary goal, but rather focused on developing biopharmaceuticals that can solve the accessibility of biopharmaceuticals, meet clinical drug needs, and have potential differentiated market competitiveness, and steadily promoted the R&D progress of the product pipeline.
Balancing the breadth, depth, and speed of the product pipeline: The company's product pipeline is independently developed based on the aforementioned overall R&D strategy, its own technological capabilities, and advantages. The company's product pipeline includes biologics aimed at expanding drug accessibility and meeting urgent clinical needs, as well as innovative products for future multi-drug combination therapy development...
The analysts at the securities firms wrote a lot of articles, but with the advent of brain-computer interfaces, it all became obsolete and they had to rewrite everything.
Kechuang Bio is a research-driven company, and Cheng Gang has no say in research and development.
The most ridiculous part is their R&D technology industrialization and future development strategy. They are unaware of Kechuang Bio's development direction for the future industrialization of brain-computer interface technology.
Even more unclear about the future development strategy of Kechuang Bio, CICC and CITIC Securities were extremely frustrated. They approached Cheng Gang, who said they should ask Chairman Zheng.
CITIC and CICC, two companies facing similar difficulties, suggested that they could directly talk to Chairman Zheng about many things they didn't understand. Cheng Gang replied that he himself couldn't even see Chairman Zheng, and that these were minor matters for him, so he wouldn't meet with them.
Each message had to go through several intermediaries. Later, Zheng Li finally agreed to communicate with them via email. Each of Zheng Li's email replies was so hard-hitting that even a PhD in biology from CICC's investment banking department had to spend a long time reading them to understand them.
Securities firms typically have a number of PhDs in various disciplines in their core departments.
The main business model, products, or services of Kechuang Biotechnology must also be completely overhauled and started from scratch.
Li Shuyao: "The workload lately has been astonishing. My workload is no longer that of an intern; it's more like that of a full-time employee."
"The problem is I'm being paid as an intern!"
Li Miaomiao comforted her, "When you come to Suzhou, I'll treat you to a big meal, there's no limit."
Li Shuyao said enviously, "You're so lucky. Zheng Li won't treat you badly after Kechuang Bio goes public. You'll be financially free right away."
"Approximately what market value of shares will you receive?"
Li Miaomiao: "I don't know. Your prospectus hasn't even been completed yet. How would I know how much share capital you have or how many shares you're issuing?"
"We can only proceed with the next steps once you have completed the prospectus."
Continue read on readnovelmtl.com
