Why has the core product behind faced commercialization obstacles in the US, and how did the stock price of ACOTEC-B (06669) plunge before reversing?

On August 12, after the market closed, ACOTEC-B (06669) disclosed a profit warning announcement for the fiscal year 26H1. The company stated in the announcement that it expects to incur a net loss not exceeding RMB 80.9 million for the six months ending June 30, 2026, compared to a net profit of approximately RMB 88.6 million in the same period last year, indicating a shift from profit to loss. The primary reason for this shift from profit to loss this fiscal quarter is attributed to the termination of the U.S. clinical trial of the AcoArt Litos paclitaxel-coated balloon catheter for percutaneous transluminal angioplasty (PTA). This decision resulted in a one-time non-cash impairment loss and a provision for one-time expenses related to the termination of the clinical project, totaling approximately RMB 151 million. It was observed that, affected by this negative news, the company's stock price opened lower and continued to decline on August 13, with the price falling by more than 10% within the first hour of trading. Although there was a slight rebound during the day, the stock remained below its daily moving average, with the maximum intraday decline reaching 18.26%, and finally closing down 15.33% after a minor rebound at the end of the trading session. From the year's high to the stock price "halved" After the latest profit warning disclosure, the stock market was significantly affected by the negative news. Following a drastic drop of over 15% on August 13, the stock price of Xianruida Medical further declined during the morning session of August 14, hitting a low of HKD 6.16, which marked a new low for the year with an intraday drop of up to 5.45%. Looking at a longer time frame, the company's stock price has fallen by more than 50% this year. If calculated from the peak of HKD 15.32 on January 26, the maximum decline year-to-date has reached 59.79%. From a market perspective, from the beginning of this year to now, Xianruida Medical's stock price has gone through three key technical nodes driven by various events. First, between January and early February of this year, from a technical perspective, Xianruida Medical's stock price exhibited a pattern of oscillating upward toward a peak. At that time, the stock price fluctuated around the mid to upper Bollinger Bands, but the intraday trading volume noticeably shrank compared to the second half of last year, indicating a weakening buying force in the market and insufficient momentum for further increases. In relation to core driving events, the implementation of the sixth batch of high-value medical consumables national procurement was an important catalyst affecting market sentiment. On January 13 this year, the bidding for the sixth batch of national organized procurement of high-value medical consumables took place in Tianjin, marking the first national-level procurement in 2026. A total of 496 products from 227 companies participated in the bidding, and ultimately 440 products from 202 companies were successfully selected, achieving a selection rate of about 89%, setting a new record for the scale of consumables national procurement. Among them, 32 companies submitted bids for drug-coated balloons, all of which were selected, achieving a "zero elimination" rate. As the domestic procurement guidelines were established, from February to March, Xianruida experienced a period of favorable market conditions, during which some investors chose to take profits at high stock price levels. Coupled with external environmental disturbances impacting the Hong Kong stock market at that time, Xianruida's stock price underwent a noticeable technical correction. From February 23 to March 5, the stock price experienced a "nine consecutive days of decline" and operated mainly along the lower Bollinger Band until March 26, when the company formally disclosed its 2025 performance announcement, resulting in a brief improvement. On March 26, Xianruida Medical released its 2025 annual report, which showed a net profit growth of 128% year-over-year to RMB 119 million, demonstrating strong performance. However, this positive growth in net profit did not drive a rebound in Xianruida's stock price. International expansion has been a core catalyst supporting Xianruida's valuation in recent years, especially following the introduction of Boston Scientific as the majority shareholder, making overseas expansion one of the main focal points in the company's financial reports. However, the 2025 financial report revealed that Xianruida's revenue from countries and regions outside mainland China had decreased from RMB 25.2 million in 2024 to RMB 19.2 million in 2025. Furthermore, in the companys remaining research pipeline, the only heavyweight product aimed at the European and American markets is the second-generation AcoStream (peripheral aspiration system), raising concerns in the market regarding the company's collaboration with the majority shareholder Boston Scientific and its future prospects for continued international expansion, ultimately leading to a significant drop in the stock price since April of this year. Entering April, it was observed that Xianruida's stock price began to weaken significantly, and the continuous decline from April 8 to May 6 reflected a certain degree of spreading market pessimism. At the same time, the stock price's fluctuation and decline were also related to the preferences of liquidity in the broader market at that time. In the past year, southern capitals holdings in Hong Kong stock medical device stocks overall increased by about 2 percentage points. As of March this year, among the stocks eligible for trading under the Stock Connect, there were as many as 250 stocks in which southward capital held more than 20% of the shares, with the healthcare sector leading with 54 stocks. However, southern capital is seen as both a "ballast" and a "double-edged sword" for Hong Kong medical device stocks. In April and May of this year, the sector preferences of southern capital became increasingly evident: the internet and banking sectors attracted recent marginal increases in southern capital, while the medical device sector's proportion of total trading on the Hong Kong Stock Exchange dropped from 7% at the beginning of the year to a low point. In such a market environment, Xianruida faced another significant blow in July and August of this year. FDA policy setback, core product terminates clinical trials In the evolving landscape of domestic innovation drug and device procurement, "going international" has almost become a "mandatory option" for domestic innovative device companies. This "going international" has been a crucial factor in supporting Xianruida Medical's long-standing valuation. It is understood that Xianruida's collaboration with Boston Scientific began with AcoArt Litos, the worlds first drug-coated balloon for below-the-knee applications, which is a paclitaxel-coated balloon used for treating below-the-knee arterial disease, having won FDA "breakthrough device" certification. It is also the first drug-coated balloon product approved for marketing based on results from multicenter randomized controlled clinical trials. With the innovation and excellent clinical data of this product, Xianruida gained recognition from Boston Scientific. In 2022, Boston Scientific announced the acquisition of approximately 65% of Xianruidas shares for USD 523 million (completed in early 2023). From the perspective of the aforementioned cooperation agreement, although Xianruida and Boston Scientific signed an overseas distribution agreement as early as 2023, subsequent overseas revenue from Xianruida did not exceed 5% in both 2023 and 2024, indicating that the release of the synergistic effect was not instantaneous. Under these circumstances, the market had placed more hope on the product AcoArt Litos that had received FDA "breakthrough medical device" certification. However, in July of this year, the U.S. Centers for Medicare & Medicaid Services (CMS) released the final rule for the hospital prospective payment system for the 2027 fiscal year, planning to abolish the NTAP alternative pathway for breakthrough medical devices starting from the 2028 fiscal year. This move severed a crucial commercial transition bridge for medical devices with FDA breakthrough status. For Xianruida, even if AcoArt Litos is approved in the U.S. in the future, it faces the dilemma of not being able to obtain sufficient insurance reimbursement support post-marketing, significantly affecting its commercialization prospects. Meanwhile, from 2019 to 2026, overseas competitors have not remained idle. For instance, Medtronics IN.PACT series (paclitaxel DCB) has continued to accumulate long-term data for below-the-knee indications, having released 3-year and 5-year follow-up data in 2024-2025, establishing a comprehensive clinical evidence chain; although Boston Scientific, as a majority shareholder of Xianruida, is iterating its own Ranger series, releasing versions with lower drug loading and superior excipients, updated reimbursement data was released in 2025; additionally, BD's Lutonix series is also iterating, with new generation product data for below-the-knee lesions released in 2025. Moreover, as Xianruida's main competitor overseas, Medtronic and Boston Scientific have significant monopolistic positions in relevant fields abroad, and their products possess established insurance reimbursement codes and payment pathways, unaffected by the abolition of NTAP. These multiple factors may have been crucial in prompting Xianruida to halt the U.S. clinical trials for AcoArt Litos. This decision has resulted in a one-time non-cash impairment loss and a provision for related one-time expenses totaling approximately RMB 151 million, exceeding the companys net profit of RMB 119 million for the entire last year.