HONG KONG - Ocumension Therapeutics Ltd., a China-based ophthalmic pharmaceutical company, launched its IPO on the Hong Kong Exchange (HKEX) this week. The company seeks to raise more than HK$1.5 billion (US$190 million), a similar amount compared to other biotechs such as Beijing-based Immunotech Biopharm Ltd., which disclosed plans early in the week to raise up to HK$1.1 billion on the HKEX.
Ocumension’s IPO, filed on April 29, is offering roughly 10% of the company’s shares.
Jointly sponsored by Morgan Stanley Asia Ltd. , Goldman Sachs (Asia) LLC and UBS AG Hong Kong Branch, the IPO marks the fifth biotech IPO in Hong Kong as of June. Biotech IPOs are one of the biggest IPO contributors for the HKEX this year, bringing in more than HK$10.1 billion, almost double the amount compared to 2019 over the same period.
In addition to the COVID-19 pandemic massively focusing investment attention to the biotech field, the new rules made during HKEX’s reform two years ago continue to help Hong Kong’s IPO market diversify and thrive.
“We expect biotech IPO to continue its strong game for the remainder of the year, reaching up to a total of 10 successful IPOs or more,” Benson Wong, entrepreneurial group leader of financial service provider Pricewaterhousecoopers (PwC), told BioWorld. He attributed the increase of IPOs coming from China to the HKEX to logistical as well as exposure factors.
“When a company chooses where it is launching its IPO, it is a very complex procedure, taking into account many factors. Aside from logistical concerns that directly impacts manufacturing, companies also tend to choose a location where it is easier for them to get attention from potential investors,” he said.
Mainland China could also see more traction in terms of biotech listings.
Since the launch of the Science and Technology Innovation Board (STAR Market) a year ago, China’s capital market has been diversified by the increased number of listing choices for technology and innovation enterprises with different listing needs. The accelerated reform of the Shenzhen ChiNext registration system will help innovative SMEs go public and be conducive to the healthy development of China’s capital market.
Ocumension was founded in 2018 as an incubation project under mainland health care private equity fund 6 Dimensions, which is the majority holder with 55.61% of shares. The company has previously completed two rounds of pre-IPO financing, with shareholders including Singapore's Temasek Holdings and American private equity firm General Atlantic holding 10.42% and 4.37% of pre-IPO shares, respectively.
The company only started to record revenue last year, to the amount of ¥190,000 (US$20,322), while net losses surged by 5.3 times to ¥1.33 billion in 2019. That was mainly the result of a ¥1.1 billion loss from fair value exchanges of financial instruments it had issued, according to the prospectus.
Products that are in the company’s pipeline include acetazolamide for acute glaucoma, and stem cell technologies for retinitis pigmentosa and dry age-related macular degeneration (AMD) as well as optic neuritis. However, the most high-profile product in recently months is its corticosteroid intravitreal implant for chronic non-infectious uveitis affecting the posterior segment of the eye, which is currently in phase III trials.
Around 60% of the company's drug candidates are from overseas drugmakers. For example, it is collaborating with Nicox SA, of France, to be the exclusive developer and manufacturer for NCX-70, a second-generation nitric oxide-donating prostaglandin analogue formulated for the reduction of intraocular pressure in patients with open-angle glaucoma and ocular hypertension.
According to PwC, the Hong Kong market is increasingly active, and is on track to secure a top three global IPO fundraising position this year. Total funds raised in the first six months of 2020 outperformed last year, while the expected whole year total fundraising is between HK$230 billion and HK$260 billion, with biotech and other new economy enterprises continuing to be the main drivers.
“In the long run, Hong Kong will continue to offer unique values and business opportunities for enterprises and investors,” Wong said. “As the best financing platform in Asia, Hong Kong will be able to play an active and important role in establishing China’s multilevel capital market.”