Innovent Biologics Plans Hong Kong IPO to Raise $423 Million, Despite Global Downturn

Hong Kong Stock Market numbers with a skyscraper and jet in the background

This summer, the Hong Kong stock exchange created a new set of rules that allowed Chinese biotech companies to launch initial public offerings (IPOs) when they have not made a profit or brought in revenue yet. That’s a condition that applies to most biotech companies. The Nasdaq is the biggest center for biotech IPOs, but the Hong Kong stock exchange created the changes to try and compete.

However, last week was such a horrible week for global markets, with the Dow Jones Industrial Average down more than 1,300 points in two sessions, some doubt was cast on whether this year’s biopharma IPO booms is coming to an end.

But at least one company, China’s Innovent Biologics, reportedly is continuing with its plans to raise $423 million in its Hong Kong IPO. If so, it would be the biggest biotech IPO out of Hong Kong this year.

Innovent is backed by mutual fund Fidelity and Singapore state investor Temasek. It has set a price range of HK$12.5 to HK$14 ($1.59-$1.79 U.S.) per share, which would give the company a valuation of approximately $2 billion.

Reuters reports, “The Shanghai- and Suzhou-based firm, which develops products for treating cancer, autoimmune disorders and other diseases, had revenue of 4.43 million yuan ($636,030) in the first half of this year and 18.5 million yuan in 2017 from a license granted to a biopharmaceutical company in China. It had no revenue in 2016.”

However, the company reported yesterday that its Investigational New Drug (IND) application for its combination therapy of Sintilimab, an anti-PD-1 monoclonal antibody and IBI305, a biosimilar to the recombinant humanized anti-VEGF monoclonal antibody bevacizumab (Genentech’s Avastin) had been approved by China’s National Medical Products Administration (NMPA, formerly known as CFDA) for clinical development. The company will begin clinical trials on the combination in patients with non-small cell lung cancer (NSCLC) and hepatocellular carcinoma (HCC).

“China has the highest burden of cancer patients of all countries in the world,” stated Michael Yu, Innovent’s founder, chief executive officer and chairman. “Lung cancer and liver cancer account for about one-third of all incident cases of cancers in China. At Innovent, an innovative biopharmaceutical company in China, we are dedicated to take advantage of the latest technological advances in science to develop and commercialize new medicines for cancer patients.”

China was one of the hardest hit stock markets in the selloff last week. China and Hong Kong stocks have lost more than 20 percent of their value since January.

According to the Wall Street Journal, “The company has lined up $245 million in purchase commitments from 10 so-called cornerstone investors, including Sequoia Capital, Singapore state-investment company Temasek Holdings Pte. Ltd. and Lilly Asia Ventures.”

According to an unidentified source, bankers had already picked up orders exceeding the number of shares offered to institutional investors.

Reuters notes that the biotechs that have listed in Hong Kong since the new rules haven’t done well. Ascletis is down 55 percent from its launch price and BeiGene dropped 29 percent since its dual-primary listing in Hong Kong.

WuXi AppTec filed for a Hong Kong listing in September. Earlier in this year AppTec raised more than $300 million on the Shanghai exchange and is expected to raise more than $1 billion in Hong Kong.

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