Since the beginning of June, the Hang Seng Index has experienced a sustained period of gradual decline.

From June 3rd to June 11th, the index charted a consecutive downtrend, technically falling from the middle to the lower Bollinger Band.

Despite a brief rebound on June 12th and 15th, the upward momentum faltered, with the index failing to reach the middle band, subsequently leading to a 'nine consecutive down days' pattern.

The index touched an interim low of 22,518.00 points during the June 26th session.

During this period, market capital showed a strong preference for high-growth, innovative technology sectors like AI and semiconductors, heavily concentrating on leading large-cap stocks within these themes.

This shift in market risk appetite was fully reflected in less popular sectors such as innovative pharmaceuticals and medical devices.

However, as the Hong Kong healthcare sector initiated a new rebound wave in late June and early July, previously resilient stocks began to turn upward, with many experiencing sharp rallies spurred by significant positive catalysts, and Venus Medtech-B (02500) was among them.

Following a 9.76% gain on July 2nd, the company's stock price surged dramatically by 28.15% on July 3rd, accompanied by a clear increase in both price and trading volume, with the day's turnover exceeding 8 million shares.

After a modest 1.65% rise in June, these two consecutive days of gains propelled its July increase to over 40%.

Significant Positive News Drives Sharp Price Appreciation

Prior to this sharp rally, Venus Medtech-B had undergone a prolonged downtrend.

After hitting an intra-year high of HK$3.86 on January 19th, the stock price began to decline alongside a broader correction in the Hang Seng Healthcare Index, reaching a low of HK$1.06 on June 10th.

From a technical perspective, this decline was largely characterized by falling prices on diminishing volume.

During this period, the stock price generally oscillated around the middle Bollinger Band, with a noticeable reduction in average daily volume.

Compared to daily turnovers often exceeding 8 million shares in early January, the highest daily volume during the downtrend was only about 5 million shares, with the lowest even dipping below 400,000 shares.

The persistent pattern of falling prices on shrinking volume from January 19th to June 10th indicated a severe lack of buying interest, with external capital unwilling to buy the dip and no funds entering to support the price, thus perpetuating the downward trend.

However, after June 10th, the decline halted on low volume, and a low-volume doji candlestick even appeared on June 12th, suggesting to some extent that selling pressure within the market was exhausted and sentiment was stabilizing.

The subsequent frequent appearance of small positive candles near the bottom could be seen as an initial signal of a base forming.

In other words, from a technical standpoint, Venus Medtech-B's stock price had moved towards stabilization and a potential rebound trend after June, with the sharp rallies on July 2nd and 3rd being the direct result of a major positive catalyst.

State-Owned Platform Backing Boosts Market Confidence

Before the market opened on July 1st, Venus Medtech-B announced it had entered into an investment term sheet with Hangzhou High-tech and Hangzhou Yingzhiqin.

According to the terms, Hangzhou High-tech and Hangzhou Yingzhiqin expressed their intention, together with other potential investors, to invest in Venus Medtech-B through potential transactions, including a potential share subscription and a potential convertible bond subscription, with a total maximum investment amount of up to RMB 500 million.

This announcement is the core reason behind the stock's sharp rally.

Due to the dual impact of a distribution model shift from direct sales to distributors leading to lower ex-factory prices, and previous compliance investigations and management changes, the company's domestic TAVR implant volume for 2025 fell by 14% year-on-year.

Corresponding annual revenue was only RMB 307 million, a significant decline of 34.8%, with an annual loss exceeding RMB 400 million.

Consequently, to alleviate funding pressure and optimize its shareholder structure, Venus Medtech-B initiated a crucial equity financing plan in the first half of this year.

According to the earlier announcement, the company planned to introduce a single controlling largest shareholder, with an expected share issuance ratio exceeding 20%, aiming to raise approximately HKD 300 to 500 million.

This move to attract strategic investment was seen as a critical step for the company to overcome its difficulties.

At the time, the combined shareholding of the company's management and Qiming Venture Partners was between 10%-15%, and the entry of a new major shareholder was anticipated to fundamentally alter the company's governance structure and financial reserves.

The identity of the new investor, as revealed in the latest announcement, has also garnered significant market attention.

According to the announcement, Hangzhou High-tech, a state-owned capital platform, is the core investor in this round.

Upon completion of the new share and convertible bond issuance, it is set to become the largest single shareholder of Venus Medtech-B.

As previously anticipated by the market, the company's ownership structure has been fundamentally optimized.

From a cash reserve perspective, the financial report shows that Venus Medtech-B's cash and cash equivalents at the end of 2025 were RMB 158 million, a 46.9% decrease from RMB 298 million in the same period last year.

However, following this strategic investment, the company stands to receive up to RMB 500 million, which will significantly ease its research, development, and operational pressures for 2026-2027.

This is undoubtedly a major positive for Venus Medtech-B, which is still engaged in a patent battle with multinational giants.

In January of this year, a subsidiary of Venus Medtech-B, Cardiovalve, filed a patent infringement lawsuit in the Delaware court in the United States against global valve giant Edwards Lifesciences, targeting its blockbuster product, the PASCAL system.

Data indicates that Edwards' transcatheter mitral and tricuspid therapies division, to which PASCAL belongs, has seen global sales growth exceed 50% annually over the past three years, with projected global sales reaching $550 million in 2025.

As the flagship product, PASCAL's annual sales are already in the hundreds of millions of dollars, with future potential to become a blockbuster product exceeding $1 billion in annual sales.

The confidence behind Venus Medtech-B's lawsuit stems from a key intellectual property asset acquired through strategic acquisition—U.S. Patent No. 10,702,385.

This patent, titled "Heart Valve Implant," covers core technologies for the clamping and support structure of transcatheter artificial heart valves.

The technology is specifically designed for minimally invasive treatment of mitral and tricuspid valves, with its core advantage lying in a unique independent dual-clip control system that enables more precise and safer "edge-to-edge" leaflet repair.

Cardiovalve had developed similar technology and secured this patent as early as 2011.

In fact, the two parties have previously appealed to U.S. courts multiple times over this patent dispute, with repeated rulings upholding the validity of Venus Medtech-B's patent.

Looking at similar past cases, Abbott sued Edwards over the PASCAL system with a similar patent in 2019, ultimately reaching a settlement in 2020: Edwards made a one-time payment of $368 million plus approximately $100 million in licensing fees over several subsequent years.

If the final outcome of this patent case proves favorable for Venus Medtech-B, Edwards may have to pay substantial patent licensing fees or reach a settlement agreement to avoid infringement risks, meaning Venus Medtech-B could potentially convert its patent advantage into significant cash flow.

In recent years, Venus Medtech-B has been actively expanding its innovative medical device business overseas.

Its core product, VenusP-Valve, as the first Chinese heart valve product approved for clinical studies in the U.S., has gained U.S. Medicare reimbursement support due to excellent 10-year follow-up data, driving the proportion of the company's overseas revenue to over 30%.

This is also one of the most critical factors currently supporting the company's valuation.

However, judging by the company's stock price and valuation performance, the market had already fully priced in the previous internal control risks and operational performance, assigning an extreme valuation of 0.39x P/B and 2.14x P/S, far below the industry average.

The investment by the state-owned Hangzhou High-tech platform into Venus Medtech-B not only provides the company with crucial additional cash flow but, more importantly, offers a stable state-owned platform endorsement for its future operations, significantly boosting market confidence.

The recent sharp rally in the company's stock price may mark the beginning of a new upward cycle for Venus Medtech-B.