Regencell Bioscience(US:RGC)2022-10-30 16:00Company Overview - The company qualifies as an "emerging growth company" with less than $1.07 billion in revenue, allowing for reduced reporting requirements [159]. - The initial public offering (IPO) generated gross proceeds of approximately $21.85 million from the sale of 2,300,000 Ordinary Shares at $9.50 per share [165]. - The company raised approximately $24.93 million in gross proceeds from its IPO, with a net amount of approximately $22.67 million after deducting expenses [492][493]. - The company incurred $2.26 million in expenses related to the IPO, including $1.83 million for underwriting discounts and commissions [493]. - As of June 30, 2022, $16.4 million of the net proceeds from the IPO remained unused, placed in savings and short-term investments [495]. - The company intends to continue using the net proceeds from the IPO as disclosed in its registration statements [495]. Product Development - The company has three standardized TCM formulae candidates under development targeting mild, moderate, and severe ADHD and ASD patients [178]. - The first research study showed that patients treated with personalized TCM formulae experienced improvements in speech, communication, and behavioral abilities [178]. - The second efficacy trial using the standardized TCM formulae candidates commenced in the third quarter of 2021 [178]. - In a second efficacy trial, seven patients aged 6 to 12 diagnosed with ADHD or ASD showed improvements in speech, communication, sociability, cognition, and behavioral abilities after three months of treatment with standardized TCM formulae [182][183]. - The company has developed three standardized TCM formulae candidates targeting mild, moderate, and severe ADHD and ASD patients, with a total research and development cost of $2.51 million for the year ended June 30, 2022, compared to an industry average of nearly $4 billion for new medicines [214]. - The first research study on ADHD and ASD involved seven patients aged 5 to 12, treated with personalized TCM formulae for up to three months, starting in November 2018 [235]. - In the first research study, six out of seven patients completed the treatment, showing improvements in speech, communication, sociability, cognition, and overall health [238]. - The second efficacy trial commenced in August 2021, involving the same group of seven patients, and also showed similar improvements in symptoms within three months [249]. - The assessment methodology for both studies included globally accepted tools such as ATEC and VADRS, with qualitative and quantitative data collected from parents [240][250]. - The company plans to expand its research with a larger sample size of at least 100 candidates for the next efficacy trial, lasting between 3 to 12 months [241]. Market Strategy - The company aims to commercialize TCM formulae first in Hong Kong and then globally to address unmet medical needs [167]. - The company intends to register its pCm formulae products with the Hong Kong Chinese Medicines Board after completing the second efficacy trial [234]. - The company aims to expand its market presence globally, starting with commercialization in Hong Kong before considering entry into the U.S. market [228]. - The ADHD therapeutics market is led by major pharmaceutical companies, but Regencell focuses on TCM treatments, which do not directly compete with these companies [198]. - There are no large TCM companies providing similar ADHD and ASD products in the Hong Kong market, indicating a fragmented market with no major competitors [191]. Intellectual Property and Compliance - The company intends to protect its intellectual property through patents, trade secrets, and trademarks, having received trademark certificates for several product names [181]. - The company has exclusive rights to the TCM formulae and intellectual property developed by the TCM Practitioner under the Strategic Partnership Agreement [172]. - The company intends to file patent applications for its TCM formulae in Hong Kong and abroad to protect its intellectual property [223]. - The company has received trademark certificates for its brand names, including "腦還原®" and "RGC Regencell," to distinguish its products from competitors [215]. - The company is subject to the regulations under the Food Safety Ordinance, which requires food importers and distributors to register with the Food and Environmental Hygiene Department [263]. - The maximum fine for selling, importing, or possessing unregistered proprietary Chinese medicine (pCm) is HK$100,000 and imprisonment for two years [258]. - The company must ensure that all pCm is properly labeled and includes a package insert with specific information, including the name of the medicine and active ingredients [261]. - The Food Safety Ordinance mandates record-keeping for food supply, requiring details such as the date of supply and total quantity [266]. - Any person importing or exporting specific Chinese herbal medicines without a license may face a fine of HK$500,000 and imprisonment for two years [269]. - The Public Health Ordinance requires manufacturers and sellers to ensure food products are fit for human consumption and comply with safety standards [271]. - The company must comply with labeling requirements under the Food and Drugs Regulations, including stating the product's name, ingredients, and expiration date [277]. - The Trade Marks Ordinance provides for the registration of trademarks, which must be registered in Hong Kong to enjoy legal protection [279]. - The company is liable for offenses under the Public Health Ordinance, with fines up to HK$50,000 for selling food unfit for human consumption [272]. - The Chinese Medicines Regulation is enforced by the Chinese Medicine Council of Hong Kong, which oversees the registration and licensing of pCm [260]. Joint Ventures and Partnerships - Regencell Bioscience Limited entered into a joint venture agreement with Honor Epic, contributing 60% of the capital for operations including trading and distribution of TCM products [184]. - The joint venture will have exclusive rights to market and distribute Regencell's COVID-19 TCM treatment products in designated markets including ASEAN countries, India, Japan, Australia, and New Zealand for an initial term of two years [185]. Research and Development Commitment - The company is committed to conducting further research and development on the TCM base formula for potential applications in other neurological disorders [229]. - The TCM Practitioner has over 30 years of experience treating ADHD and ASD patients, focusing on a unique TCM brain theory [170]. - The TCM formulae are based on the Sik-Kee Au TCM Brain Theory, which has been used for over 30 years to treat ADHD and ASD, although it lacks recognition in general TCM literature [230]. - The company has reported that all parents of children in the efficacy trial observed pronounced changes in their child's symptoms, preferring the TCM treatment over mainstream medications [209]. - The company plans to set up a centralized production facility to lower manufacturing costs and support the anticipated increase in demand for its standardized TCM formulae candidates [225].