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United States securities and exchange commission logo
September 1, 2023
Songlin Song
Chief Executive Officer
Zhengye Biotechnology Holding Limited
No.1 Lianmeng Road, Jilin Economic & Technical Development Zone
Jilin City, Jilin Province, China
Re: Zhengye
Biotechnology Holding Limited
Draft Registration
Statement on Form F-1
Submitted August 4,
2023
CIK No. 0001975641
Dear Songlin Song:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form F-1, submitted August 4, 2023
Prospectus Summary
Our Corporate Structure, page 1
1. We note your disclosure
that you are not a Chinese operating company but a Cayman
Islands holding company
with operations conducted by your subsidiaries. Please provide
a cross-reference to
your detailed discussion of risks facing the company and the offering
as a result of your
organizational structure.
2. We note your disclosure
that you are not currently involved in any investigations on
cybersecurity review
initiated by any PRC regulatory authority and that, as confirmed by
your PRC counsel, you
believe you are not subject to the Cybersecurity Review
Songlin Song
Zhengye Biotechnology Holding Limited
September 1, 2023
Page 2
Measures. Please include a discussion of how such data security
measures may impact the
company's ability to conduct its business, accept foreign investments,
or list on a U.S. or
other foreign exchange if you were found to be subject to such
regulatory actions. Please
also include a similar discussion for anti-monopoly concerns.
3. You state that as of the date of the prospectus, no cash transfer or
transfers of other assets
has occurred among the Company and any of its subsidiaries. Please
also state if there
have been any transfers, dividends, or distributions between the
subsidiaries and, if so,
please quantify the amounts.
Risks Relating to Our Business and Industry, page 31
4. We note your disclosure on page 56 that approximately 90.5% and 85.6%
of the operating
entity's revenues for the years 2022 and 2021 respectively were
derived from Swine
vaccines. To the extent that any such risks exist, please revise the
disclosure in this
section to describe the risks associated with deriving such a
significant percentage of
revenue from vaccines for one type of animal.
Use of Proceeds, page 49
5. Please revise the use of proceeds section to provide with specificity
the types of R&D
projects the operating entity plans to conduct, which products they
relate to, and, to the
extent the operating entity intends to utilize the proceeds from this
offering to conduct
pre-clinical or clinical work, please specify how far in the
development of its products the
operating entity expects to reach with the proceeds of the offering.
6. Please revise your use of proceeds section to provide the approximate
dollar amount
intended to be used for each purpose.
7. Please revise your use of proceeds section to provide more specificity
about the
new workshops the operating entity intends to build using the proceeds
from this offering,
such as any planned locations or the anticipated size of these
workshops.
Dividend Policy, page 50
8. Please revise your disclosure in this section to note that the
operating entity intends to
distribute a dividend in the amount of RMB 55,104,000 before May 2024,
as you disclose
on on the cover page and elsewhere throughout the registration
statement.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Overview, page 55
FirstName LastNameSonglin Song
9. We note you provide the RMB to USD conversion for fiscal year end 2022.
Please also
Comapany NameZhengye
provide Biotechnology
the same conversion Holding
for fiscal Limited
year end 2021, here and
throughout the filing, so
that 1,
September investors can 2make proper comparisons.
2023 Page
FirstName LastName
Songlin Song
FirstName LastNameSonglin Song
Zhengye Biotechnology Holding Limited
Comapany 1,
September NameZhengye
2023 Biotechnology Holding Limited
September
Page 3 1, 2023 Page 3
FirstName LastName
Key Components of Results of Operations
Research and development expenses, page 57
10. On pages 82-84, you refer to multiple collaboration arrangements with
universities and
research institutions as well as active participation in research
projects sponsored by the
government of Jilin Province PRC during 2021-2023. Please explain the
nature of
your active participation with these third parties, particularly the
research and
development performed by the 49 employees in your R&D department and
how
associated costs are funded. Also, describe key terms governing these
collaboration
arrangements, including options allowing you to license intellectual
property developed
under these arrangements and related financial obligations for
achievement of
development, regulatory or sales milestones as well as royalty
payments based on product
sales. In addition, explain how you plan to invest RMB90 million to
develop multiple
veterinary vaccines from net proceeds of the planned offering as
discussed on page 77,
specifying the extent to which this planned development will involve
third parties such as
Harbin Veterinary Research Institute, Shanghai Veterinary Research
Institute, China
Agricultural University, Jilin University and Nanjing Agricultural
University. Provide a
breakdown of this investment by recipient and nature of planned
product development.
Revise your disclosures accordingly.
Overview of China's Veterinary Vaccine Market
Market Size of Veterinary Vaccine in China, page 66
11. You state that the market size of the Chinese veterinary market
increased from RMB 12.6
billion in 2018 to RMB 16.5 billion in 2022 and that it is expected to
further increase to
RBM 21.2 billion in 2026. Please provide the market sizes in USD here
and on pages 71,
72, and 73.
National policies of animal epidemic detection and prevention, page 67
12. You list various policies of epidemic detection and prevention that
you claim have
strengthened animal epidemic prevention and control measures. Please
explain with
specificity how the policies listed have strengthened animal epidemic
prevention and
control measures.
Analysis of Domestic Top Players' Product Portfolio, page 68
13. Please revise your disclosure to identify the names of the companies
listed in Frost
& Sullivan's analysis.
Ranking of Revenue of China's Veterinary Vaccine Companies, page 69
14. We note your disclosure that in 2022, "ZYBIO generated revenue of
RMB[] 300
million." Please reconcile this figure with your disclosure on page 3
stating that the
operating entity's revenue reached approximately RMB 260.3 million for
the fiscal year
Songlin Song
Zhengye Biotechnology Holding Limited
September 1, 2023
Page 4
ended December 31, 2022.
Historical and Forecasted Market Size of Porcine Vaccine in China, 2018-2026E,
page 70
15. Please identify the entity listed as "CVDA" with more specificity in
the first instance.
Additionally, we note your disclosure that the source for this
graphic, and other data in
your registration statement, is listed as "Expert Interview." To the
extent you are relying
on the analysis or report of an expert, please disclose the identity
of the expert and file the
written consent of that expert as an exhibit to this registration
statement or, alternatively,
please explain why you are not required to do so. Refer to Rule 436 of
the Securities Act
for guidance.
Analysis of Domestic Top Players' Pet Vaccine Portfolio, page 74
16. You state that Jilin Zhengye ("ZYBIO") has been granted two approvals
for clinical trials
of its veterinary vaccines. Please describe the status of these
clinical trials, including, but
not limited to, where the trials are being conducted, whether any
third parties are assisting
with the trials, the structure of the trials, and whether any results
have been observed.
Business
Competitive Strengths
Diversified products, page 75
17. Please disclose which animal or animals the Rabies Vaccine,
Inactivated (Strain Flury
LEP) vaccine is designed to treat.
Strong research and development capabilities, page 75
18. Please revise your disclosure to state the total aggregate amount to
date that has been
paid to each of the parties listed in this section pursuant to the
collaboration agreements.
Growth Strategies
Develop high-demand products and expand the operating entity's business...,
page 76
19. You state that your operating entity intends to develop high-demand
products and you list
various products that appear to be in development. Please include a
short description of
each vaccine's indication and whether each vaccine is in pre-clinical
or clinical
trials. Also, please provide justification for the statement that the
operating
entity's products are in "high-demand."
20. Please clarify whether the Ministry of Agriculture and Rural Affairs of
the PRC is the
FirstName LastNameSonglin Song
entity that has provided the approvals for the products listed in this
section. Additionally,
Comapany NameZhengye
please clarify if anyBiotechnology
of the productsHolding
listed inLimited
this section have been
approved for sale or
whether
September further
1, 2023 Pageclinical
4 development will be required.
FirstName LastName
Songlin Song
FirstName LastNameSonglin Song
Zhengye Biotechnology Holding Limited
Comapany 1,
September NameZhengye
2023 Biotechnology Holding Limited
September
Page 5 1, 2023 Page 5
FirstName LastName
Expand the operating entity's sales and distribution network, page 76
21. You state that the operating entity plans to expand its sales and
distribution network to
enter new geographic markets. Please identify such geographic markets.
Increase R&D investment, page 77
22. Please revise your disclosure to provide further detail regarding the
research and
development that has been conducted to date, if any, for each of the
products listed in this
section. To the extent that the operating entity has not begun any
pre-clinical or clinical
work for any of the vaccines listed in this section, please revise
your disclosure
accordingly.
Products, page 77
23. You state that the operating entity has a total of 43 veterinary
vaccines in its product
portfolio, 43 of which are sold domestically and five of which are
sold internationally.
Please identify which vaccines are sold internationally and where they
are being sold.
Additionally, please indicate in the table which specific products are
sold internationally.
24. We note your disclosure that the operating entity is "researching
about Feline Infectious
Peritonitis Subunit Vaccine, Feline Leukemia and Feline
Immunodeficiency Disease
Duplex mRNA Vaccine, and Feline GnRH Immunocontraceptive Vaccine."
Please
provide further details about the research the operating entity is
conducting with regard to
these vaccines.
25. You state that the operating entity has been granted approval to
conduct clinical trials for
Feline Herpes virus, Feline Calicivirus and Feline Panleukopenia
Triple Vaccine,
Inactivated on June 15, 2021. Please state whether the operating
entity has begun clinical
trials or state when they are expected to begin.
26. We note your disclosure that the operating entity is conducting
"animal experiments to
assess the immunity effectiveness of newly developed mRNA vaccines."
Please provide
further details about the animal experiments the operating entity is
conducting.
Regulatory Approvals for the Company's Products, page 80
27. We note the chart on page 80 listing the regulatory approvals received
by the operating
entity and the validity dates for each. Please explain what is meant
by the term "Long
term" in this chart.
28. Please revise your table here to explain which regulatory approvals
correspond with which
products. Additionally, please provide narrative disclosure here to
provide context
regarding what these regulatory approvals allow you to do with your
products.
29. Please disclose whether you have received any regulatory approvals to
sell your products
internationally.
Songlin Song
Zhengye Biotechnology Holding Limited
September 1, 2023
Page 6
Suppliers, page 81
30. We note your disclosure that the operating entity's suppliers provide
raw materials, such
as "experimental animal." Please revise your disclosure to explain
what is meant by
"experimental animal" in this instance.
R&D, page 82
31. You state that the operating entity currently has collaboration
agreements with Harbin
Veterinary Research Institute, Shanghai Veterinary Research Institute,
and China
Agricultural University and you broadly describe some key terms on
page 83. Please
disclose whether all of the collaborative research agreements with
universities and
research institutions referenced here are identical and have the same
terms. To the extent
that any agreements are unique, please disclose the material terms of
those agreements,
including a description of each party's rights and obligations, a
quantification of any
payment obligations, including any royalty fees or milestone payments,
and a summary of
the term and termination provisions. To the extent that any of the
collaboration
agreements differ from the Form of Collaborative Research and
Development Agreement
attached as Exhibit 10.8, please file the agreements as exhibits in
accordance with Item
601(b)(10) of Regulation S-K or, alternatively, explain why you are
not required to do so.
32. We note your disclosure that the operating entity has been "actively
participating in
research projects sponsored by the government of Jilin Province, PRC."
Please disclose
whether any of the research projects involved the execution of
collaboration agreements
with the government of Jilin Province, PRC or any other third parties.
If so, please
disclose the material terms of those agreements and attach them as
exhibits or,
alternatively, explain why you are not required to do so. Refer to
Item 601(b)(10) of
Regulation S-K for guidance.
Distribution Network, page 85
33. We note your disclosure that the operating entity "secures its
exporting distributors mainly
through Alibaba.com." Please provide further details about how the
operating
entity secures its distributors through Alibaba.com.
Regulations
Regulations Related to Veterinary Drugs Production and Operation, page 95
34. Please provide disclosure in this section about the process by which the
Ministry of
Agriculture and Rural Affairs of the PRC issues a Registration
Certificate of New
Veterinary Drugs, which you reference on page 9. Additionally, please
explain whether a
FirstName LastNameSonglin Song
Registration Certificate of New Veterinary Drugs allows the operating
entity to market
Comapany NameZhengye
and sell its productsBiotechnology
domestically orHolding
whetherLimited
any additional testing or
approvals are
required
September to market
1, 2023 Page 6and sell the products.
FirstName LastName
Songlin Song
FirstName LastNameSonglin Song
Zhengye Biotechnology Holding Limited
Comapany 1,
September NameZhengye
2023 Biotechnology Holding Limited
September
Page 7 1, 2023 Page 7
FirstName LastName
Management, page 104
35. We note your disclosure regarding the "notice of criticism towards Mr.
Han, which was
recorded in the Securities and Futures Market Integrity File on May
18, 2022." Please
revise your disclosure to explain the consequences, if any, of the
notice of criticism
described here. To the extent that this notice of criticism may have a
negative impact on
the value of the Ordinary Shares or the operating entity's business,
please revise your risk
factor disclosure accordingly.
Compensation of Directors and Executive Officers, page 107
36. Please revise your disclosure to provide the amount of compensation
paid to each of
the directors and executive officers individually or, alternatively,
please explain why you
are not required to do so. Refer to Item 4a of Form F-1 and Item 6B of
Form 20-F for
guidance.
Notes to the Consolidated Financial Statements
2. Summary of Significant Accounting Policies
Noncontrolling interests, page F-14
37. Please revise your disclosure to identify the noncontrolling interests
as 15.2439% held by
Jilin Economic and Technological Development Zone Economic and
Technological
Development General Corporation, 0.9146% held by Jilin Jinqiao
Investment Co. Ltd and
0.0001% held by Yufeng Liu.
General
38. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communications.
You may contact Franklin Wyman at 202-551-3660 or Daniel Gordon at
202-551-3486 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Doris Stacey Gama at 202-551-3188 or Joshua Gorsky at 202-551-7836 with
any other
questions.
Sincerely,
Division of
Corporation Finance
Office of Life
Sciences
cc: Ying Li, Esq.