PE-backed MicroTech Medical targets $254m Hong Kong IPO

The company wants to sell 63.5 million H-shares for HK$27.70-31.15 apiece, according to a filing. Eleven cornerstone investors are willing to cover up to $153.5 million of the offering. They include LAV, Springhill Fund, Hudson Bay Capital, Boyu Capital, Lake Bleu Capital, and OrbiMed. Springhill is a healthcare-focused public investment vehicle under Qiming.

Founded in 2011, MicroTech specializes in diabetes management, providing both treatment and monitoring devices. Its Equil Patch Insulin Pump System received regulatory approval for use by adults in Europe and China in 2017 and commercialization began the following year. It is available in 20 markets across Asia, Europe, the Middle East, Africa, and Latin America, and US regulatory approval is expected in the first half of 2022.

There are two more commercialized products – blood glucose monitors that capture readings at a single point in time (BGMS) or on a continuous basis (CGMS) – and a further six at various stages of development. While BGMS is based on finger-prick blood samples, MicroTech’s AiDEX G7 CGMS device is for acute diabetes sufferers who require close monitoring. The device was certified in the EU last year and is waiting for clearance in China following the completion of a clinical trial.

A China Insights Consulting report cited in the prospectus notes that 486.9 million people globally had diabetes in 2019, with the total on course to reach 607.6 million in 2030. The market for diabetes management devices was worth $42.3 billion last year, up from $27.8 billion in 2015. It is projected to hit $118.5 billion in 2030.

In China alone, the number of sufferers will rise from 118.8 million in 2019 to 143.2 million in 2030. This translates into a market opportunity of $10.2 billion, up from $2.2 billion in 2020 and $800 million in 2015. Insulin syringes and insulin pens are the most used treatment devices. However, demand for insulin pumps is expected to grow with improved user experience. MicroTech makes patch-based pumps, which are more discrete than tube pumps.

Other private equity investments in the diabetes treatment space include DCP Capital Partners’ RMB1.94 billion ($283.7 million) commitment to Tonghua Dongbao Pharmaceutical last year. The company claims to be the first in China to develop and market insulin shots for the treatment of diabetes in humans. It also produces injection kits and insulin pens.

MicroTech raised RMB800 million across four funding rounds between 2016 and 2020, achieving a post-money valuation of RMB4 billion at the Series D stage. LAV and Qiming led the Series A and B rounds, respectively. Qiming holds a 15.83% stake in MicroTech, while LAV has 7.12%.

Other investors include Tencent, GF Capital, and funds managed by the likes of China International Capital Corporation (CICC), Taikang Life Insurance, and China Everbright.

MicroTech generated RMB75.3 million in revenue for the 12 months ended December 2020, up from RMB51.9 million a year earlier. BGMS and Equil together accounted for more than 90% of sales, with BGMS responsible for just over half. Its share dropped in the first four months of 2021 with the introduction of CGMS. The company’s net loss widened from RMB78.6 million to RMB121.3 million.

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• Topics
• Greater China
• IPO
• Healthcare
• Technology
• China
• Lilly Asia Ventures
• Qiming Venture Partners