Chinese biotech company Shanghai Junshi Biosciences is seeking up to $414 million in a Hong Kong initial public offering (IPO), making it the latest company to take advantage of new listing rules to attract early-stage drug developers.
Hong Kong’s new rules allow biotech firms with no revenue or profit to list on the city’s stock market, a change designed to lure start-ups away from other financial centers such as New York. The new regulations were introduced in April.
Junshi Biosciences is selling 158.9 million shares at a price range of HKD19.38-HKD20.38 ($2.48-$2.61), according to a term sheet seen by Reuters.
The company could raise as much as $476 million if a greenshoe, or over-allotment option – is exercised within the first month of trading.
Junshi Biosciences did not respond to a request to comment outside regular business hours.
The performance of shares listed under the new regime has been patchy. Ascletis Pharma (1672.HK), the first company to list under the new regulations, is down almost 60 percent since it began trading in August.
Beigene Ltd (6160.HK) and Hua Medicine (2552.HK), the other two biotechs to list under the new rules, have also fallen since their shares began trading.
But Innovent Biologics (1801.HK) bucked the trend and is up 42 percent since its debut on Oct. 31.
Bankers hope that will set the tone for upcoming biotechs, as investors in Hong Kong get more familiar with the sector.
Junshi Biosciences has a pipeline of 13 biologic drug candidates including immuno-oncology drugs and drugs targeting metabolic and inflammation or autoimmune diseases, according to its draft prospectus.
Junshi Biosciences has no revenues from drug sales as it has not commercialized any drugs yet. It had revenues of 1.14 million yuan ($165,859.19) in 2017 from consulting and research services, while it recorded no revenues in the first half of this year.
Its losses for the first half of 2018 widened to 272.9 million yuan from 154.5 million yuan in the same period last year.
The company expects to launch its first drugs commercially in 2019 and 2020, including toripalimab, a monoclonal antibody.
Junshi Biosciences expects to price its IPO between Dec. 14 and Dec. 15 and shares will begin trading on Dec. 24.
CICC is the sole sponsor for the float while Credit Suisse (CSGN.S) is a joint bookrunner.