BEIJING – Zhongshan, China-based Akeso Inc., which focuses on bispecific antibodies, is again seeking pre-revenue listing on the Hong Kong Stock Exchange (HKEX), after its first IPO attempt failed to go through in December. The move comes at a time when analysts believe the coronavirus outbreak is weighing on the city’s IPO market.
The second application, submitted on Feb. 3, was again supported by Morgan Stanley and J.P. Morgan. The clinical-stage biotech is reportedly seeking $300 million to support its R&D through the IPO, particularly its core asset, AK-104, a PD-1/CTLA4 bispecific antibody.
The first application, filed on Dec. 3, was returned by the HKEX two days later. While the HKEX did not disclose the reason for that, many believe it was due to a failure to meet regulatory requirements. Akeso reportedly failed to disclose the financial information for the past three financial years required by the bourse, as the application stated the expected listing date would fall in the second quarter of this year, rather than in the first quarter (which would not have required the three years of financial reporting) the firm was looking for.
It is rare for the bourse to send back IPO applications. Since 2014, only 11 applications for the main board have been returned, out of thousands lodged. Akeso promptly refiled the application eight weeks later as required by the HKEX.
Akeso did not respond to BioWorld’s request to confirm the amount anticipated to be raised or details regarding its IPO attempts.
The biotech is seeking to attract investors and stand out in a competitive landscape that is growing more difficult for PD-1-focused players. Akeso is looking to demonstrate its competitive edge via its bispecific antibody candidates and its partnerships with big pharma companies such as Merck & Co. Inc. and Sino Biopharmaceutical Ltd.
BsAbs: The next field for competition
Along with AK-104, Akeso’s core assets include PD-1/VEGF bispecific antibody AK-112. Akeso CEO Michelle Xia told BioWorld in November that the firm will move both into clinical trials in the U.S. soon.
According to the latest IPO application, AK-104 is in phase Ib/II and phase II studies in China across multiple tumor types. In January, Akeso received written consent from the FDA regarding the overall study design of a planned registrational trial for AK-104 in the U.S. for second- and third-line cervical cancer patients and for a potential NDA submission to the U.S. agency for cervical cancer via the accelerated approval pathway.
Meanwhile, AK-112 is in a phase I study for the treatment of solid tumors in Australia, and a phase I trial is expected to begin in the U.S.
"The industry wants next-generation drugs and to do something beyond the PD-1 monoclonal antibodies," Xia told BioWorld. She said she believed developing PD-1-based bispecific antibodies could be a way to stand out in the market.
China has already approved two imported and four homegrown PD-1 antibodies, as well as one imported PD-L1 antibody. In China, the PD-1/PD-L1 market for those agents for monotherapy use is getting saturated.
Akeso’s competitor, HKEX-listed Alphamab Oncology Co. Ltd., is also advancing its PD-L1/CTLA4 bispecific antibody, KN-046. The drug candidate is in phase II trials for multiple indications.
At least seven Chinese biotech companies are known to be developing PD-(L)1-based bispecific antibodies, including Jiangsu Hengrui Medicine Co. Ltd., Innovent Biologics Inc., Elpiscience Biopharmaceuticals Co. Ltd./Inhibrx Inc., Hanx Biopharmaceuticals Inc. and Transcenta Holding Ltd.
Endorsement from big pharma
As well as its focus on bispecific antibodies, Akeso has a PD-1 monoclonal antibody candidate, AK-105 (penpulimab), that could be its first drug to enter the market. But the biotech firm is already running behind in the PD-1 race.
To reassure its potential investors, Akeso said it partnered with Chia Tai Tianqing Pharmaceutical Holdings Co., a subsidiary of Sino Biopharm to jointly develop and commercialize AK-105 to leverage the partner’s commercial capabilities. AK-105 will also be the only PD-1 candidate that Sino Biopharm uses to develop PD-1-based combination therapies.
Akeso also boasts of its innovation ability by reiterating that Merck in-licensed its CTLA4 antibody, AK-107, for $200 million in 2015. Under the terms, the U.S. firm, also known as MSD, obtained global rights to the drug candidate.
“We are the first China-based biotech company to out-license a fully internally discovered monoclonal antibody to a global leading pharmaceutical company,” Akeso said in its prospectus.
Akeso added that it has a diversified antibody pipeline in China that includes more than 20 drug development programs, including 10 clinical-stage antibodies, six bispecific antibodies, and four antibodies with IND approvals from the FDA.
The biotech recorded losses of $22.12 million and $20.81 million for 2018 and the first three quarters of 2019, respectively. Its $150 million series D financing round that closed last November reflected confidence from the investors.
Akeso’s second IPO attempt comes at a time when Hong Kong’s Hang Seng Index has lost almost 6% since the Chinese New Year holiday, as the 2019-nCoV coronavirus continues to spread.
Another applicant, Innocare Pharma Ltd., was said to have decided to postpone investor meetings for its HKEX listing due to the impact of the virus outbreak, a move that could delay its share sale. The company did not respond to BioWorld’s request for comment.
Analysts believe the virus outbreak could disrupt the companies’ IPO plans.
“Between Jan. 15 and Feb. 14 last year, there were nine IPOs in Hong Kong, compared to only three during the same period so far this year,” Thomas Nip, equity research analyst at Futu Securities International (Hong Kong) Ltd., told BioWorld. “This demonstrates the virus outbreak’s impact on the IPO market.”
Three more biotech companies are seeking pre-revenue listing in Hong Kong. They are Suzhou-based med-tech firm Peijia Medical Ltd., Suzhou-based cancer drug developer Kintor Pharmaceutical Ltd. and Beijing-based T-cell immunotherapy firm Immunotech Biopharm Ltd.