BEIJING After Suzhou, China-based Ascentage Pharma Group International launched a $53 million IPO on the Hong Kong Stock Exchange (HKEX) Monday, Tot Biopharm International Co. Ltd., also from Suzhou, and Sinomab Bioscience Ltd., of Hong Kong, will also debut on the bourse to reap as much as $87 million and $223.1 million, respectively, in the following two weeks.
Hong Kong's biotech IPO pipeline remains robust. After Tot Biopharm and Sinomab go public expected on Nov. 8 and Nov. 12, respectively the HKEX will be housing a total of 11 pre-revenue biotech players since its revamped listing regime of April last year.
On Monday, Ascentage (HKEX:6855) debuted on the bourse, with its share price rising as high as 57%. The company issued 12.18 million shares and raised HK$416.6 million (US$53 million) by pricing the share at HK$34.2 apiece.
Despite launching the smallest biotech IPO, Ascentage received an encouraging response from retail investors. The retail portion of its offering was said to be oversubscribed more than 750 times, the highest ratio among Hong Kong listings this year. It helped that Ascentage is being backed by a cornerstone investor, pharma giant Sino Biopharmaceutical Ltd., which boosted investors' confidence in the firm.
Ascentage plans to use nearly half of the net proceeds to develop and commercialize its core product, HQP-1351, as a monotherapy for chronic myeloid leukemia. It is a third-generation Bcr-Abl/KIT multikinase inhibitor targeting Bcr-Abl mutant cancers and is undergoing pivotal phase II trials. Assuming positive results, the company plans to submit an NDA for China in mid-2020.
"The valuation for Ascentage is a bit too low, but it's not necessarily a bad thing to have a lower offer price," Xiao Fei, an investment manager at Beijing-based iMeta Health Information Consulting Co. Ltd., told BioWorld. Ascentage's market capitalization sits at around HK$7.2 billion this week.
The oversubscription reflected that investor appetite for biotech stocks has not retreated, despite the economic downturn in Hong Kong due to the months-long protests. Since May, the city's major market tracking indicator, the Hang Seng Index, has been down around 10%.
In September, Shanghai Henlius Biotech Inc. went ahead with its HKEX listing plan amid the uneasy times in the city, pricing a sizable IPO amounting to $410 million. The Chinese firm is developing biosimilars. (See BioWorld, Sept. 18, 2019.)
The health care sector has outperformed other sectors on the HKEX this year, according to investment bank J.P. Morgan. The sector is believed to have a positive outlook in general due to a stronger demand driven by the growing aging population.
Two more to come
The HKEX is expected to welcome the two latest pre-profit biotech startups over the coming two weeks.
Listing one week after Ascentage is Chinese cancer drug developer Tot Biopharm (HKEX:1875). The company offers shares between HK$6.55 and HK$7.55 apiece, aiming to raise as much as HK$679.5 million by issuing 90 million shares. It will be the sixth pre-revenue biotech player listed in Hong Kong this year.
Around 30% of its IPO proceeds will be used to fund the clinical trials and commercial launch of its core product, TAB-008, which is a biosimilar to Roche Holding AG's blockbuster cancer drug, Avastin (bevacizumab). The biotech expects to launch it between late 2020 and early 2021.
Half of the proceeds will support clinical programs of its other drug candidates, which include TAA-013, an antibody-drug conjugate candidate referencing Kadcyla (ado-trastuzumab emtansine, Roche Holding AG), undergoing phase I trials in China.
Tot also has TOM-312, a generic drug candidate of Megace; TAB-014, a bevacizumab-based antibody the company said has first-in-class potential; and TAD-011, an anti-EGFR monoclonal antibody candidate with the same primary sequence as nimotuzumab.
After two rather small IPOs by Ascentage and Tot Biopharm, investors are expected to see a quite sizable IPO launched by Sinomab. Set to go public just four days after Tot Biopharm, the immunological diseases specialist is seeking to issue 182 million shares priced at HK$9.6 per share (at maximum) to raise HK$1.7 billion.
Sinomab (HKEX:3681) plans to use half of the proceeds to develop and commercialize its drug candidates, with around 15% to be spent on advancing core asset SM-03, a first-in-target anti-CD22 monoclonal antibody for treating rheumatoid arthritis and potentially other immunological diseases. It is currently in phase III trials for rheumatoid arthritis in China.
As of October, five more pre-profit biotech companies are waiting to list in Hong Kong, including Innocare Pharma Ltd., Immunotech Biopharm Ltd., Venus Medtech (Hangzhou) Inc., Alphamab Oncology, and Tasly Biopharmaceuticals Co. Ltd.
According to data from Dealogic, Hong Kong has become the second largest fundraising center for biotech companies globally.
"We are confident that Hong Kong is on its way to becoming one of the world's major health care and biotech capital formation centers," said the HKEX.