Regencell Bioscience Holdings Ltd., a Hong Kong company, has filed for an initial public offering in New York worth approximately $17.7 million.
The early-stage bioscience company focuses on research, development, and commercialization of traditional Chinese medicine (TCM) for the treatment of neurocognitive disorders and degeneration, specifically ADHD and autism.
Currently, Regencell has three TCM formulae candidates in development, with second research studies planned for the second quarter. When/if the research proves the effectiveness of the treatment, the company will file patent applications at home and abroad and set up production facilities. The company has laid out a five-year timeline of operations.
The prospectus states that TCM industry “has grown into one of the main industries in the healthcare sector” with over 10,000 TCM practitioners in Hong Kong in June 2020 and no single large TCM competitor. Herbal medicine has been supported by the government since 1997 and it is committed to further promoting new drug development in the sector, operating state funds to facilitate TCM research.
Operating since 2014 in Hong Kong, Regencell said in its prospectus that it plans to eventually explore other markets. Since October 2020, the company has also been operating an office in California, but it is “not actively developing the U.S. market.”
The company notes that it does not compete with pharmaceutical drugs for ADHD and autism treatment, but is a holistic medicine developer regulated by the Hong Kong Chinese Medicine Ordinance (HKCMO) and is not required to obtain Good Manufacturing Practices (GMP) certification. Another distinguishing factor is that TCM products must register with the Hong Kong Chinese Medicines Board.
Regencell has not generated any revenue. For the fiscal year ended June 30, 2020, the company reported $810,000 in losses.
The IPO capital will fund the second research study, staff salaries, facilities rental and renovation, product and IP registration, and other expenses, according to the prospectus.
Regencell seeks to become traded on the Nasdaq Capital Market under the symbol “RGCB.” Maxim Group LLC is securing the deal.
The company’s IPO filing came a day before Chinese TCM maker Universe Pharmaceuticals Inc. (Nasdaq: UPC) debuted on the Nasdaq last week, raising $25 million. Since IPO, Universe Pharma has been trading mostly below issue price of $5 and has been seeing unusual trading activity outside U.S. market hours. Thus, Monday in pre-market, UPC shares surged 135% to $9.53 per share – compared to the closing price of $4.06 on Friday.
Last week was tough for all U.S.-listed Chinese companies after the Securities and Exchange Commission adopted the Holding Foreign Companies Accountable Act, aimed to force foreign firms to open their books to local auditing and disclose any ties to the Chinese government. The move wiped out billions of market value in U.S.-traded Chinese companies.