HONG KONG – On its way to become the fifth firm listed in Hong Kong since the exchange opened to pre-profit biotechs, Shanghai Junshi Biosciences Co. Ltd. plans to raise HK$3.021.6 billion (US$386.7 million) by offering about 158.9 million shares. The IPO would help Junshi advance its core asset, JS-001 (toripalimab), a monoclonal antibody locked in a race to become China's first self-developed anti-PD-1 drug approved in the country.

Investors can start subscribing its shares at an offer price between HK$19.38 (US$2.48) and HK$20.38 per share this week, and shares will start trading under the stock code 1877 on Dec. 24. China International Capital Corp. Ltd. is the sole sponsor in the IPO.

Junshi plans to use 65 percent of the IPO proceeds to develop and commercialize JS-001 and other drug candidates. "Our priority is to spearhead the R&D of our drug candidates and expand our pipeline," said Ning Li, CEO of Junshi, in a press conference in Hong Kong on Monday.

"Twenty-five percent of the proceeds will be spent on M&A with other pharma players and international collaboration, and 10 percent will be used as working capital," Li added.

Before this IPO on the Hong Kong Stock Exchange, Junshi previously raised ¥1.82 billion (US$263.2 million). It has had shares listed on China's National Equities Exchange and Quotations Co. Ltd. since August 2015.

Founded in 2012, Junshi currently has 13 biological candidates in its pipeline, 11 of them self-developed. The 13 include seven immuno-oncology biologics, two for metabolic diseases, three for inflammation or autoimmune diseases, and one for neurologic diseases. Five assets are at the clinical-stage and eight are in preclinical research.

As of the first half of 2018, Junshi recorded a loss of ¥272.9 million.

The focus has been on JS-001, which could be the first to go to market, once Chinese regulators finish reviewing the NDA. Junshi was the first Chinese biotech to file NDA for a PD-1 monoclonal antibody in March, and Chinese drug regulators completed the technical review on Dec. 1.

"We expect to obtain such NDA approval in late 2018 or early 2019 and are preparing to launch JS-001 in the [People's Republic of China] shortly after obtaining NDA approval," the company said in its updated prospectus. The application seeks approval for use as a second-line treatment of metastatic melanoma.

This year, the U.S. FDA granted IND approval for JS-001. A phase I study started in the U.S. in March.

"We plan to launch a global large-scale pivotal clinical trial in the second half of 2019 aiming at obtaining additional overseas regulatory approvals to launch JS-001," Junshi added.

A potential blockbuster for Junshi, the anti-PD-1 agent aims to tackle advanced oncologic indications such as gastric cancer and breast cancer. Clinical trials for most of those indications are in phase I or phase II.

JS-003 is another self-developed asset of Junshi in the PD-1/PD-L1 therapeutic area. The humanized monoclonal antibody targeting PD-L1 protein has cleared IND approval in China.

The PD-1/PD-L1 space is "an extremely fierce market," the company has acknowledged. In China, competitors of JS-001 include Jiangsu Hengrui Medicine Co. Ltd.'s SHR-1210 (camrelizumab), Innovent Biologics Inc.'s IBI-308 (sintilimab) and Beigene Ltd.'s BGBA-317 (tislelizumab). All are awaiting marketing approval. (See BioWorld, Sept. 13, 2018.)

Meanwhile, Junshi's PD-L1 agent, JS-003, is also facing at least three foreign and five domestic competitors.

Junshi also plans to use the IPO proceeds to advance the development of three more clinical-stage assets.

For its anti-TNF monoclonal antibody, UBP-1211, Junshi intends to seek marketing approval in China in the second half of 2019. UBP-1211 is a biosimilar of Humira (adalimumab, Abbvie Inc.) used for the treatment of autoimmune diseases such as rheumatoid arthritis. Junshi has completed enrolling patients for the phase III study.

The company also has plans to push JS-002, an anti-PCSK9 monoclonal antibody, into a phase II study for primary hypercholesterolemia and mixed dyslipidemia this month. That asset has shown efficacy in reducing low-density lipoprotein.

Also starting soon would be clinical trials for UBP-1213, the first and only homegrown anti-BLyS monoclonal antibody. Having secured an IND approval, Junshi will look into its potential to treat systemic lupus erythematosus and other autoimmune diseases.

Lower valuations ahead?

To date, four biotech companies are listed on the Hong Kong bourse – Ascletis Pharma Inc. (HKG:1672), Beigene (HKG: 6160), Hua Medicine Ltd. (HKG:2552) and Innovent (HKG:1801) – though their post-listing performances have been mixed. On Tuesday, Innovent dropped 0.74 percent to HK$20.10, Ascletis shares added 0.33 percent to HK$6.14, Beigene gained 1.01 percent to HK$80.10 and Hua Medicine stayed flat at HK$8.09. Among them, only Innovent's share price remains higher than the IPO price.

Market watchers have said the high valuation of those biotech companies is to blame, and that Hong Kong investors are simply not familiar enough with the biotech sector.

"We expect to see lower valuation of biotech companies next year, within the HK$100 million range," Lewis Ho, partner of life sciences at Loeb & Loeb LLP, said at a roundtable event in Hong Kong last week.

Asked at Monday's press conference about the prospects for Junshi's share price, Li expressed optimism. "We are strong in innovation. I will leave it to the shareholders to decide," he said.