China, IPOs

Another IPO frenzy? Two US biotechs head to Hong Kong for a public market debut

Two US-based biotechs, Stealth BioTherapeutics and AOBiome, have joined the queue to apply for an IPO in Hong Kong — a first since the city’s exchange changed its rules late April to attract pre-revenue drugmakers.

While neither companies currently have operations in China, both expressed a keen interest in capitalizing on the market there, with Stealth ready to set up R&D shop in Shanghai. The much-watched development — analysts have long predicted a string of US biotech unicorns going for a gold-rush to maintain their high valuations — came on the heels of two IPO applications by China-based companies, Innovent and MicuRx.

Vincent Cheung

Of the two, Stealth has a more obvious connection to China. Just days ago, the Boston startup welcomed Vincent Cheung to the board as his Nan Fung Group led a $100 million megaround to fund its programs in rare mitochondrial and other age-related diseases. BVCF and Morningside, two high profile China-focused funds, are also among its backers.

CEO Reenie McCarthy remarked then that they “particularly welcome the new investors’ deep experience within the China healthcare market, which we view as an important frontier both for rare mitochondrial diseases under China’s recent rare disease initiative, as well as for diseases of aging.”

Reenie McCarthy

Stealth expects the IPO raise — the exact amount of which they would not disclose at this stage — to last through 2020. By then, the vision goes, the company would have begun to commercialize its lead product, elamipretide, in Barth syndrome and mitochondrial myopathy; moved into Phase III with the same drug in age-related macular degeneration; and brought a new compound into the clinic.

A second drug candidate, SBT-20, is being developed preclinically for neurodegeneration.

Jun Wang

AOBiome’s point-person in China is Jun Wang, the young founder and former CEO of Beijing Genomics Institute. Through iCarbonX, his new venture harnessing data for personal health monitoring, he infused $30 million into the microbiome-focused startup. He was recently named chairman of the board.

The star and namesake of AOBiome’s pipeline is the ammonia oxidizing bacteria, which is being applied to six indications all in mid or late stage Unlike most biotechs working on the microbiome, which tend to focus on the gut, AOBiome is starting out with dermatological ailments, with plans to begin a Phase III trial in acne in 2019 and Phase II eczema and rosacea studies to follow.

That focus was informed by the company’s early experience, as it began commercializing several AOB-based cosmetic products in 2014, which it has subsequently sold.

Todd Krueger

By owning AI Enterprise II (36.32%) and Biome Holding (11.64%), Wang is the controlling shareholder of the company, which is led by president and CEO Todd Krueger.


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