Investment Bankers Leave Firms for Roles in Hong Kong Biotech Companies

Hong Kong

More and more pharma companies follow the trend of planning initial public offerings on the Hong Kong Stock Exchange. Another trend following this path is the number of prominent investment bankers who have left their firms for biotech companies in the former British colony.

Since December, Bloomberg reported that at least seven “senior bankers and analysts from top-tier securities firms” have left their lofty positions in the financial sector to take roles in biotech companies based in Hong Kong. The shift is a response to a recent rule change regarding the listing of IPOs on the Hong Kong Stock Exchange. The rule change allows companies to IPO even if they are not yet profitable. Several U.S. companies are rumored to be preparing to take advantage of that change. Among those companies are GRAIL, Inc., which secured a whopping $300 million in an oversubscribed Series C financing round led by multiple Chinese investment groups earlier this summer. Other companies that have planned IPOs this year in Hong Kong include Ascletis, which planned on raising $100 million in a Series C round earlier this year. In May Ascletis filed for an IPO on the Hong Kong exchange as it prepares to launch its hepatitis C treatment Danoprevir by September.

The investment bankers and analysts moving into the biotech world are leaving noted companies like Goldman Sachs, Bank of America Corp., Deutsche Bank AG, Citigroup Inc. and Jefferies Group LLC, Bloomberg reported. The latest banker to leave his post is Richard Yeh, a healthcare analyst with Goldman Sachs. He is taking over the role of chief financial officer at CStone Pharmaceuticals, a Chinese immuno-oncology company.

JHL Biotech, which de-listed from the Taiwan Stock Exchange earlier this year, hired two of the seven bankers to bolster its leadership team ahead of a potential Hong Kong IPO, Bloomberg said. Ellis Chu and Lee Henely, both formerly with Bank of America, took positions with JHL in May. JHL plans on seeking a $35 million IPO next year, Bloomberg said.

In an interview with Bloomberg, Chu said he is “getting in on a sector” where he sees “huge potential.”

“Biotech is an industry that’s exploding, yet still in its infancy in China. There are all sorts of tailwinds,” Chu said.

BioSpace has reported on the significant expansion of the biotech industry in China – an expansion that is expected to continue for years to come. IQVIA (formerly QuintilesIMS) data shows China’s pharmaceutical market is expected to grow to between $145 billion and $175 billion by 2022. Last year Lan Huang, the chief executive officer of BeyondSpring, told BioSpace that China is a well-spring of biotech opportunity. Huang predicted that companies will increasingly make use of China’s clinical resources to lower time and cost in drug development.

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