OTC-traded Chinese Biotech Zhong Yuan Seeks to Shift to Nasdaq

(CapitalWatch, Oct. 31, New York) An obscure Chinese biotech company, Zhong Yuan Bio-Technology Holdings Ltd., has filed for an initial public offering in New York.

Headquartered in Beijing, ZY Biotech is in the early stage of the nervonic acid health product industry, according to its prospectus, filed last week. Its main business covers the development of early detection kits for brain diseases, plant-derived Nervonic Acid health supplements, and new drugs for neurological diseases.  

Over the past 10 years, the company has focused on the research of neurological diseases and discovered that "Nervonic Acid" can be used as a core molecular marker, laying the foundation for the development of the kit. At the same time, breakthroughs have been made in the research and development of new drugs to overcome cognitive impairment, brain atrophy, and other encephalopathy caused by brain white matter damage.

Nervonic acid is considered to be an important biomarker for many neurological diseases, such as ADHD in children and neurodegenerative diseases in the elderly and, thus, in high demand among those populations, according to the prospectus. ZY Biotech's marketing efforts are primarily aimed at the elderly population. 

The company sells its products both to individuals and to wholesale and retail outlets. It generated $2.3 million revenue for the fiscal year ended March 31, 2022, as compared to $1.63 million for the fiscal year ended March 31, 2021. It currently relies on four products for its revenue and its key product "Neuro Enhancer"  line accounts for more than 65% of its total revenue.

For the fiscal year ended March 31, 2022, ZY Biotech had a net loss of $1.12 million as compared to a net loss of $28,022 for the fiscal year ended March 31, 2021. The increase in net loss was mainly attributable to the $565,006 increase in cost of sales that resulted primarily from inventory losses and provision for slow-moving Acer truncatum seedling inventory and the increase in operating expenses. 

The company plans to use the net proceeds from this offering for research and development of an in vitro diagnosis kit for early screening of neurological diseases and also research and development of new drugs for neurological diseases.

Prior to this offering, the company shares were traded on the OTC Market under the symbol ZHYBF, and it expects to go public on the Nasdaq.