On December 6, the Shenzhen Stock Exchange issued the “Letter of Concern for Yunnan Watson Biotechnology Co., Ltd.”, expressing its high attention to the “Announcement on the Signing of the Share Transfer and Capital Increase Agreement of Shanghai Zerun Biotechnology Co., Ltd.” and requested Watson Biological (300142.SZ) board of directors supplemented or disclosed 17 related issues.
According to the letter of concern, the Shenzhen Stock Exchange requested Watson Bio to explain the rationality of the transfer of Shanghai Zerun’s control rights in this transaction and the basis for determining the proportion of transferred equity. This transaction Whether there are behaviors that harm the interests of listed companies and small and medium investors, such as the transfer of interests.
The letter of concern requires Watson Bio to make a written explanation on the above matters, and submit the relevant explanation materials to the company management department before December 8 and disclose it to the public. Copy to the Listed Company Supervision Division of Yunnan Securities Regulatory Bureau.
On the evening of December 4, Watson Bio announced the transfer of 32.60% of Shanghai Zerun’s equity for 1.14 billion yuan. After the transaction is completed, Shanghai Zerun will no longer be its holding subsidiary. It is worth noting that Shanghai Zerun has developed bivalent HPV vaccines and nine-valent HPV vaccines for many years. Among them, the drug registration application for bivalent HPV vaccine was accepted in June, and the nine-valent HPV vaccine will also undergo phase III clinical trials. Watson Bio This equity transfer attracted wide attention and doubts from investors.
About the letter of concern to Yunnan Watson Biotechnology Co., Ltd.
GEM letter of concern [2020] No. 526
Yunnan Watson Biotechnology Co., Ltd. Board of Directors:
On the evening of December 4, 2020, your company directly disclosed the “About Announcement on the Signing of the Share Transfer and Capital Increase Agreement of Shanghai Zerun Biological Technology Co., Ltd.”, it is proposed to provide Zibo Yunze Venture Capital Partnership (Limited Partnership) (hereinafter referred to as “Zibo Yunze”), Yongxiuguan from Zhaode Equity Investment Fund Center ( Limited partnership) (hereinafter referred to as “Yongxiu Guanyou”) transferred its subsidiary Shanghai Zerun Biotechnology Co., Ltd. (hereinafter referred to as “Shanghai Zerun”) with a total registered capital of RMB 296,887,137, which corresponds to 32.60% of Shanghai Zerun’s equity , The total equity transfer price is RMB 1,140,893,764. At the same time, Zibo Yunze intends to increase capital to Shanghai Zerun for RMB 110,128,012 to subscribe to Shanghai Zerun’s new registered capital.RMB 28,567,874 yuan. After the completion of this transaction, your company’s share of Shanghai Zerun’s shares will be reduced from 65.14% to 28.50%. Our department is highly concerned about this. Please add your company to explain or disclose the following issues:
1. Zibo Yunze was established on November 19, 2020, and the main partner is Ningbo Xiangcheng Venture Capital Partnership (Limited Partnership), Xi’an Taiming Equity Investment Partnership (Limited Partnership). Since Yongxiuguan was established on June 25, 2019, the main partners are 22 partners including Shanghai Guanyou Investment Development Co., Ltd., Hangzhou Tiger Equity Investment Partnership (Limited Partnership), Miu Di and Huang Liling.
(1) Please supplement to disclose the changes in the shareholding structure of Zibo Yunze and Yongxiuguan since their establishment, the proportion of each partner’s capital contribution, major financial indicators, and payment for this transaction The specific source of funds for the equity transfer and capital increase (please do not use vague expressions such as “own funds” and “self-raised funds”), whether Zibo Yunze and Yongxiu Guanyou have an associated relationship with the shareholders of the listed company, directors, supervisors and senior personnel Or other benefit arrangements.
(2) Combining Zibo Yunze’s main financial indicators and invested companies, explain whether Zibo Yunze was established for the acquisition of Shanghai Zerun and the specific reasons and background.
(3) Disclosure of Ningbo Xiangcheng Venture Capital Partnership (Limited Partnership), Xi’an Taiming Equity Investment Partnership (Limited Partnership), Shanghai Guanyou Investment Development Co., Ltd., The establishment time, registered capital, main business development status and main financial indicators of Hangzhou Tiger Equity Investment Partnership (Limited Partnership); transparently disclosed to the final investors of the above four companies, and explained that Zibo Yunze and Yongxiu Guanyou Chuan Check whether there is an associated relationship or other interest arrangements between the final investor and the shareholders of the listed company and the directors, supervisors and senior officers.
2. The announcement shows that this equity transfer will stimulate Shanghai Zerun’s market-oriented and professional development momentum, promote the relatively independent development of Shanghai Zerun, and benefit Shanghai Zerun has established a market-oriented incentive mechanism to attract and retain more high-end talents, increase development potential, open up development space, better adapt to the ever-changing market environment, and resolve the lack of resources required for development and the loss of talents Business risks caused by other factors.
(1) Please explain whether there are problems between the company and the Shanghai Zerun management team that affect the development of Shanghai Zerun due to insufficient incentives. Shanghai Zerun is the company Holding sonThe specific reasons why the company cannot provide market-based incentives to attract and retain high-end talents; after the introduction of new investors, the listed company has become an important shareholder of Shanghai Zerun, whether it has been combined with the newly introduced shareholders and the management of Shanghai Zerun Reached an incentive arrangement for Shanghai Zerun’s management or high-end talents. If not, please indicate whether the company’s disclosure of giving up control on the grounds of encouraging Shanghai Zerun is true and accurate.
(2) Zibo Yunze and Yongxiu Guanyou acquired 32.6% of the company’s shares in Shanghai Zerun for approximately 1.14 billion yuan, but only to Shanghai Zerun through capital increase Run capital injection of 110 million yuan. Please explain whether the above-mentioned method of mainly transferring stocks will help Shanghai Zerun to obtain the funds needed for development, and whether this transfer is related to the capital pressure of your company’s continuous investment.
(3) According to the announcement, Zibo Yunze and Yongxiu Guanyou have been established in a relatively short time. In addition, according to your company’s answer in the conference call, the continuous research and commercialization of bivalent and nine-valent HPV vaccines still need at least 1 to 1.5 billion yuan. Please combine Zibo Yunze and Yongxiuguanyou’s main business, main financial data, investor background, investor’s continuous investment plan, etc., and specify whether the introduction of Zibo Yunze and Yongxiuguanyou as shareholders of Shanghai Zerun can achieve the aforementioned assistance to Shanghai The purpose of Zerun’s development is whether Zibo Yunze and Yongxiuguan have the ability to support Shanghai Runze’s R&D and production operations, and Zibo Yunze and Yongxiuguan will invest in Shanghai Zerun’s next development strategy or arrange specific measures.
3. The recombinant human papillomavirus bivalent (16/18 type) vaccine (yeast) (ie “bivalent HPV vaccine”) developed by Shanghai Zerun will be launched in 2020 Received the “Notice of Acceptance” for the new drug production application issued by the National Medical Products Administration in June 2006, and the recombinant human papillomavirus 9-valent virus-like particle vaccine (6, 11, 16, 18, 31, 33, 45, 52, 58 Type L1 protein) (Pichia pastoris) (ie, “Nine-valent HPV vaccine”) officially launched a phase I clinical trial in December 2018, recombinant enterovirus 71 virus-like particle vaccine (Pichia pastoris)” (hereinafter referred to as “ Hand, Foot and Mouth Disease Vaccine”) received a clinical trial notice in June 2019. According to the “assessment report on the value of all shareholders of Shanghai Zerun Biotechnology Co., Ltd. involved in the proposed equity transfer” (hereinafter referred to as the “assessment report”), Taking the income method evaluation result as the evaluation result, the value of all shareholders’ equity of Shanghai Zerun on the evaluation base date is RMB 3,496,600,000.
(1) EvaluationAccording to the report, according to Shanghai Zerun’s estimates, the capitalized R&D expenditures for the bivalent HPV vaccine and the nine-valent HPV vaccine from the evaluation base date to the production approvals totaled 72 million yuan and 238,297,600 yuan, respectively. R&D and production related fixed assets still need to be invested. The capital is 34 million yuan and 220 million yuan. The assessor has no professional ability to judge the rationality and completeness of the capitalized R&D expenditures and new investment in fixed assets. Please refer to the research and development expenditures of companies in the same industry, and specify the basis and rationality of the estimated capitalized research and development expenditures and investment funds for bivalent HPV vaccine and nine-valent HPV vaccine.
(2) The evaluation report shows that in 2019, a total of 10.181 million domestic HPV vaccines were issued and 11.08 million domestic HPV vaccines were issued from January to September 2020. Shanghai Zerun’s HPV vaccine has double advantages over imported HPV vaccines in terms of product price and vaccine promotion. It faces a huge stock to be vaccinated and an annual increase in the applicable population market. It is expected that the HPV vaccine will bring greater benefits to the company in the future . Please explain the calculation process of income method evaluation and its rationality based on the research and development progress of Shanghai Zerun HPV and hand-foot-mouth disease vaccine, market demand and sales profit of similar products, and combine the market value and market value of companies in the same industry and similar transactions. Evaluation method, analysis of the determination process and rationality of the evaluation method.
(3) Please combine the research and development progress and market prospects of Shanghai Zerun HPV and hand-foot-mouth disease vaccine to explain the rationality of the transfer of Shanghai Zerun’s control rights in this transaction. As well as the basis for determining the proportion of transferred equity, whether there is any transfer of interests in this transaction that harms the interests of listed companies and small and medium investors.
The assessor shall check and express clear opinions on matters (1)(2).
4. According to the announcement, Shanghai Zerun established a board of directors after the equity transfer. The board of directors consists of 7 directors, of which 2 are appointed by Zibo Yunze, Watson Bio, Gaoling Chuying, Yongxiu Guanyou, Jiuda, and Wuxi Xinwo each appoint one. After this transaction, your company holds 28.50% of Shanghai Zerun’s shares, which is equivalent to Zibo Yunze’s share (29.90%), and is much higher than the shareholding ratio of Gaoling Chuying, Yongxiu Guanyou, Jiuda, and Wuxi Xinwo .
(1) Please combine the shareholding ratio of each shareholder of Shanghai Zerun, the relevant provisions of Shanghai Zerun’s Articles of Association and the voting rules of the board of directors, and indicate that your company only sends 1 director ofrationality.
(2) The agreement stipulates that regardless of whether the procedures of the industrial and commercial institutions involved in this transaction have been completed, the two appointed by Zibo Yunze will be reviewed by Shanghai Zerun in accordance with internal review procedures Directors and Yongxiuguan are elected as Shanghai Zerun directors by one of the appointed directors. The appointed directors of Zibo Yunze and Yongxiuguan have the right to perform Shanghai Zerun directors in accordance with Shanghai Zerun’s articles of association and exercise the rights of Shanghai Zerun directors. obligation. Please explain whether the directors appointed by Zibo Yunze and Yongxiuguan have the right to exercise the rights of Shanghai Zerun directors regardless of whether the formalities of the industrial and commercial authorities are completed, whether they are in compliance with the provisions of Shanghai Zerun’s Articles of Association, and whether they harm the interests of listed companies and small and medium shareholders.
(3) The agreement stipulates that, regardless of whether the procedures of the industrial and commercial authorities involved in this transaction have been completed, from the date when Zibo Yunze and Yongxiuguan have paid the first installment, Zibo Yunze and Yongxiuguan shall enjoy the rights of shareholders corresponding to the equity of their respective subscribed and transferred capital contributions after the completion of this transaction, and shall assume shareholder obligations. Please explain whether Zibo Yunze and Yongxiuguan have all the shareholder rights corresponding to the total subscription and transfer of capital contributions before the completion of the procedures for the industrial and commercial authorities, whether they comply with the provisions of Shanghai Zerun’s Articles of Association, and whether they harm the interests of listed companies and small and medium shareholders .
5. In March 2016, your company issued shares to purchase assets and raised RMB 598.5 million in supporting funds, of which RMB 180,353,900 was used to pay for Shanghai Zerun’s R&D project. Please explain the method and progress of the use of the aforementioned funds raised to Shanghai Zerun. If you invest in Shanghai Zerun by borrowing, please explain the loan amount, interest rate, term and specific arrangements for recovering the invested funds.
6. This transaction is expected to generate a net profit of approximately RMB 11.8 to RMB 1.28 billion. On July 4, 2018, your company disclosed the “2018 Stock Option Incentive Plan (Draft)”. The company-level performance evaluation index is that the company’s cumulative net profit for the two years of 2019 and 2020 is not less than 1.2 billion yuan. On November 3, 2020, your company disclosed the “2020 Stock Option Incentive Plan (Draft)”. The company-level performance evaluation indicator is that the company’s cumulative net profit for 2020 and 2021 is not less than 2.2 billion yuan. The cumulative net profit for the two years in 2022 will not be less than 2.7 billion yuan.
(1) Please provide additional explanation on the calculation process of the above-mentioned estimated equity disposal income and the basis for income recognition, and whether it complies with relevant accounting standards. In addition, the associationAccording to the agreement, if the delivery does not occur before December 31, 2020, the observant party that did not cause such delay has the right to request cancellation. Please explain whether there is a situation of adjusting profits through the surprise sale of assets at the end of the year in this transaction.
(2) Please explain the rationality of the performance appraisal index setting in combination with the operating status of the listed company, and explain whether the transaction will affect the net profit of the listed company There are situations in which the shares of Shanghai Zerun are sold to meet the performance evaluation indicators of the stock option incentive plans in 2018 and 2020.
(3) Please describe in detail each specific link and progress in the transaction planning, including the proponent and proposal time, plan demonstration, negotiation and judgment, formation of relevant intentions, The time, place, participating institutions and personnel for making relevant resolutions and signing relevant agreements.
7. Please indicate whether the members of the board of directors of the listed company performed their duties in this transaction and whether they are in accordance with the “Guidelines for the Standard Operation of Listed Companies on the Growth Enterprise Market (revised in 2020)? )” Article 3.3.3, on the basis of investigating and obtaining documents and materials required for decision-making, fully considering the legality and compliance of the matters under consideration, the impact on listed companies (including potential impacts), and existing Risks, perform their duties diligently with normal and reasonable caution, and whether the independent directors have fully understood the transaction before expressing their opinions.
Please make a written explanation from your company on the above matters, and submit the relevant explanatory materials to our department before December 8, 2020, and disclose to the public, and send a copy to Yunnan Securities Regulatory Commission. Bureau of Supervision of Listed Companies.