Chinese biotech Ascletis Pharma Inc (1672.HK) raised $400 million after pricing its IPO in the middle of an indicative range, three people said, in the first such Hong Kong listing under rules designed to attract early-stage biotech firms.
The initial public offering (IPO) is widely seen as a test of the new regime as Hong Kong seeks to establish itself as a financing center for the growing number of Chinese drug developers.
New York is currently the established center for biotech IPOs, with $2.4 billion worth of such shares sold last year. The largest early-state biotech deal was in 2014 when Juno Therapeutics raised $304 million, Thomson Reuters data showed.
Nine biotechs have so far filed for Hong Kong listings, and at least another four plan to follow suit, bankers said.
Ascletis, which makes anti-viral, cancer and liver disease drugs, sold 224 million new shares, or 20 percent of its enlarged share capital, at HK$14 ($1.78) each, the middle of a price range of HK$12 to HK$16, the people said. The deal values the company at $2 billion.
Ascletis declined to comment. The people declined to be identified as the information was not public.
Company founder Wu Jinzi, a former GlaxoSmithKline executive, last week said Ascletis faced “some challenges” in valuing the company because its IPO was the first under the new rules.
“It’s always risky to invest in pre-revenue biotech firms because what they are working on is innovative. But you will only be rewarded if you take the risk,” he said.
Singapore sovereign wealth fund GIC Pte Ltd [GIC.UL] last week committed to buy $75 million worth of shares as a cornerstone investor.
Under the new rules, in place since April 30, biotech firms without revenue or profit can apply to list in Hong Kong. More than 10 companies – mostly Chinese, including Innovent Biologics, backed by Singapore state investor Temasek Holdings (Pte) Ltd [TEM.UL], and Shanghai Henlius Biotech – plan to list and some have dropped U.S. IPO plans in favor of listing closer to home.
JPMorgan analysts forecast China’s biologics industry to double in size to $52 billion by 2021 compared with a global growth rate of 60 percent. Biologics are products made by biotechnology and biopharmaceutical firms.
Founded in 2013, Hangzhou-based Ascletis has two hepatitis C virus drug candidates at or near commercial stage and one HIV drug that has completed a phase IIa clinical trial. It also has a liver cancer drug candidate that has completed phase I and phase I extension clinical trials.
Its shares start trading on Aug. 1.
China Merchants Securities, Goldman Sachs and Morgan Stanley are joint sponsors for the deal.