Walvax Biotechnology Co. Ltd. (SZ:300142) raised an additional ¥450 million (US$73 million) through a private placement.

The private placement of 15 million shares will be offered to Li Yunchun, one of Walvax's major shareholders, as well as investment companies Yuxi Gaoxin Private Capital Management, Shenzhen Deruntianqing Investment Management Partnership and Yuxi Runtai Investment Management Partnership. Under terms of the proposed placement, the shares cannot be traded publicly for three years.

Walvax stopped trading on the Shenzhen Stock Exchange on July 30 as it prepared for the issue, but the company resumed trading on Aug. 5 and the stock price rose 10 percent, the maximum allowed in a single day in Chinese stock markets, from ¥32.20 (US$5.2) to ¥35.42 (US$5.7).

Walvax plans to use the capital to meet its growing financial needs. About $51 million of the $73 million the company plans to raise will be used to repay loans and the other $22 million will help boost the company's liquidity pool.

"The rapid development of the [pharmaceutical] industry creates a good market environment for the company's business growth," said Walvax in a note explaining how it plans to use the new funds. "However, it also requires a stronger financial backup."

Industry intelligence provider IMS reported in a recent outlook on the global use of medicines that global drug expenditures will be more than $1 trillion this year and probably hit $1.2 trillion in 2017. The fastest rate of growth is likely to be in merging markets, with the Chinese market expected to record growth in drug expenditures of between 14 percent and 17 percent to $190 billion.

Biosimilars, one of Walvax's core businesses, are expected to represent a growing portion of the total, adding up to as much as 36 percent.

Before 2013, Walvax focused exclusively on developing vaccines, but it then switched to a tripartite business focus and is now working on vaccines, blood products and monoclonal antibodies (MAb).

In 2012, Walvax planned to invest more than ¥100 million (US$16 million) to acquire a 51 percent stake in Shanghai Fengmao Biotechnology Co. Ltd and enter into a co-developing agreement with Fengmao that covered the company's six biosimilars: panitumumab, rituximab, bevacizumab, adalimumab, denosumab and aranesp. The deal was shut down in 2013 following a court decision.

Walvax then acquired biosimilar maker Genor Biopharma Co. Ltd. at the end of 2013. Through this deal, Walwax acquired a strong biosimilar MAb pipeline.

The CFDA granted Walvax's biosimilar trastuzumab (Herceptin) permission to commence clinical trials in July 2013. The company's biosimilar adalimumab (Humira) and biosimilar infliximab (Remicade) are undergoing the CFDA's technical review for clinical trial approvals. The drugs are used to treat breast cancer, rheumatoid arthritis and autoimmune diseases, respectively.

Walvax's absorbed tetanus vaccine and pneumococcal vaccine polyvalent have both finished clinical trials and were filed for manufacturing approval this March. Its recombinant hepatitis B vaccine combined with CpG oligodeoxynucleotide received clinical trial approval. The recombinant human papilloma vaccine has progressed to phase II clinical trials. Three types of typhoid vaccines have finished preclinical preparation. Meningococcal group A and C conjugate vaccine and inactivated hepatitis A vaccine received re-registration approval.

For Walvax's blood products, the human immunoglobulin (ph4) for intravenous injection is undergoing review. The human immunoglobulin got approval for its supplementary application for change of manufacturing technique.

Walvax says that "while the coordinated development of vaccines, blood products and MAbs helps with the company's growth, it also demands more liquid capital."

To the end of March, the company's asset-liability ratio was 52.35 percent with gross liabilities of ¥3.4 billion (US$6 million). Walvax's liquidity ratio was at a low 1.19 putting a bit pressure on the company for debt payment.

"After issuing the private placements, the working capital pressure of the company will be partly relieved," said Walvax. "It will also help enhance the company's profitability and perfect our financial structure."

"Using the raised funds to meet the company's liabilities will lower the asset-liability ratio and reduce the interest cost as well," said Walvax. "The borrowing power and resource integration capability of our company will be improved."