On August 23, 2024, Peijia Medical Co., Ltd. (9996.HK) (the "Company") released its interim results for the period ending June 30, 2024 (the "Reporting Period"). During the Reporting Period, the Company achieved revenue of 0.3 billion yuan (RMB), an increase of 33.9% year-on-year.

The revenue growth was mainly driven by: (i) the continued accelerated commercialization process of transcatheter aortic valve replacement ("TAVR") products, with steady increases in hospital coverage, terminal implantation volume, and market share; (ii) the implementation of relevant work in provinces where centralized procurement was successfully conducted, greatly promoting the sales of our spring clip products and achieving significant sales growth; (iii) the rapid increase in market penetration rate of several differentiated design products such as Syphonet thrombectomy brackets and Fastunnel delivery-type balloon dilatation catheters, with their excellent performance; and (iv) the widely recognized market acceptance of the DCwire microguidewire for vascular access, which was approved by the National Medical Products Administration in 2023, contributing to new revenue growth for the Company.

With the increasing maturity of the Company's operating system and the comprehensive improvement of efficiency, various expense ratios have significantly improved. The sales expense ratio, management expense ratio, and research and development expense ratio decreased by 26.2, 7.0, and 42.8 percentage points respectively compared to the same period last year.

The transcatheter valve treatment business: simultaneous advancement in commercialization and research and development, significantly enhancing commercial profitability.

During the Reporting Period, the sales revenue of the transcatheter valve treatment ("Valve") business reached 0.13 billion yuan, a year-on-year increase of 21.0%. The gross profit of the segment increased by 13.7% to 0.11 billion yuan year-on-year.

During the Reporting Period, the Company's first and second-generation TAVR products successfully entered approximately 100 new hospitals, with a cumulative coverage of over 580 hospitals. In the first half of the year, the terminal implantation volume of TAVR products was nearly 1,750 units, a nearly 40% increase year-on-year, and the market share of TAVR through coronary artery improved by approximately 5 percentage points to nearly 25%.

Thanks to the continuous growth in sales scale and the significant improvement in sales team efficiency, the sales expense ratio of the valve business during the Reporting Period decreased by 34.0 percentage points year-on-year, and the commercial loss significantly decreased by 92.4% to 2.505 million yuan, approaching commercial profitability. In addition, with the successive conclusion of major registered clinical projects and the continuous optimization of management and operation, the research and development expense ratio and management expense ratio decreased by 80.4 and 7.1 percentage points respectively compared to the same period last year, driving a 45.5% year-on-year narrowing of the segment loss to 0.12 billion yuan.

In terms of pipeline research and development, we have accelerated the clinical progress of self-developed and external BD projects, continuously promoting product innovation and technological iteration, and building a product portfolio and product ladder with long-term competitiveness. During the Reporting Period, the TaurusTrio (JenaValve Trilogy THV) system, a transcatheter aortic valve regurgitation indication TAVR product introduced by the Company under the authorization of JenaValve from the United States, the self-developed third-generation "non-aldehyde crosslinking" dry valve TAVR product TaurusNXT, and the self-developed mitral valve edge-to-edge repair product GeminiOne completed the enrollment of multicenter registered clinical patients and entered the one-year follow-up stage.

It is worth mentioning that the global valve leader Edwards Lifesciences ("Edwards") announced the acquisition of JenaValve in July 2024 to complement the aortic valve regurgitation pipeline layout. This acquisition will enhance the global physician's understanding of aortic valve regurgitation disease and accelerate the development of the JenaValve Trilogy THV system. After the acquisition, Edwards will continue to have the exclusive license for the JenaValve Trilogy THV system in Greater China, and will continue to advance the clinical follow-up, registration, and commercialization of the TaurusTrio, in order to bring safe and effective treatment solutions to aortic valve regurgitation patients in Greater China as soon as possible.

At the same time, we are committed to making the Taurus series TAVR products more comprehensive and precise in covering diverse market needs through substantial performance iterations. During the reporting period, we added the AV21 size valve to the existing first and second generation products to better adapt to the smaller aortic root structure of Chinese patients. In August 2024, our new generation (2.5th generation) TAVR product TaurusMax obtained approval for listing from the National Medical Products Administration. This product has upgraded the valve imaging point and the adjustable bending specifications of the TaurusElite second-generation product, helping operators better determine the depth of implantation and overcome challenges from complex anatomical structures in the operation.

As of now, the company's valve business has 7 approved products and 9 products under development, covering a wide range of industry hotspots including aortic valve regurgitation, long-term valves, high-molecular-weight valves, interventional non-implant shock wave therapy, as well as mitral and tricuspid valve replacement and repair.

Neurointervention business: Policy opportunities drive the development of the entire product line, achieving a divisional profit of 28.716 million yuan.

During the reporting period, the neurointervention ("NeurInt") business recorded an income of 0.17 billion yuan, a year-on-year increase of 45.9%. Among them, the revenue contribution of each business line is balanced, with bleeding, ischemia, and access contributing 32.3%, 34.4%, and 33.2% of the divisional revenue (2023H1: 27.3%, 39.1%, and 33.1%). The adjusted divisional gross margin increased by 38.8% year-on-year to 0.12 billion yuan. The divisional gross margin remained stable at 69.1%. The sales expense ratio, management expense ratio, and R&D expense ratio each decreased by 13.8, 4.0, and 4.8 percentage points year-on-year, achieving a divisional profit of 28.716 million yuan during the reporting period.

During the reporting period, the NeuroInt business's full range of products benefited from the industry opportunities brought by the construction of national stroke centers and the trend of domestic substitution, achieving a significant increase in sales volume. We have steadily improved our leading position in the industry by implementing effective commercial strategies, launching differentiated innovative products and procedure combinations, optimizing R&D and production capabilities. We actively participate in and respond to various centralized procurement work, securing advantageous positions in tendering for multiple provincial and alliance procurements. During the reporting period, our coil products achieved a significant increase in sales volume, significantly increased market share, and recorded an income of 55.138 million yuan, a year-on-year increase of 72.5%.

At the same time, our differentiated competitive strategy has been effectively validated in the market. The Syphonet retrieval stent and Fastunnel delivery balloon catheter, with their unique product design features, combined with innovative procedures developed in collaboration with operators, such as BASIS, REOPENS, COSIS, and "zero exchange," have not only rapidly expanded the application scenarios of the products but also significantly enhanced their reputation, further expanding market share and providing strong momentum for the continuous growth of the NeuroInt business income.

During the reporting period, our DCwire microguidewire, which was officially launched in mid-2023 by the National Medical Products Administration, has officially entered the commercialized volume phase. This product has won widespread favor from operators with its outstanding performance, successfully breaking through in the microguidewire market traditionally dominated by foreign brands, bringing significant income growth to the group.

Up to now, the company has a complete commercial product portfolio of 16 products for the market of hemorrhagic and ischemic stroke, and 13 innovative surgical combinations targeting complex cases and clinical hotspots such as radial artery access, emergency thrombectomy, slow recanalization, and stenosis of aneurysms.

Dr. Zhang Yibo, Chairman and CEO of Peijia Medical: "Since the first half of 2024, our dual-drive global strategy for heart and brain treatment has achieved remarkable results, with steady progress in the commercialization, R&D, and production management operations. Both of our cardiac and neurology business units have achieved or even exceeded our performance targets, and have made significant achievements in overall operational efficiency improvement. In the pipeline, we have successfully completed the clinical enrollment of three major heavyweight products - regurgitation, long-acting valves, and mitral valve clips, and entered the follow-up and registration phases. We are very confident in maintaining a good development momentum in the second half of the year and further improving and enhancing the group's profit-making ability."

Source: WeChat Official Account. Peijia Medical