BeiGene bags a stag­ger­ing $903M IPO on the HKEX — and still man­ages to spark some ner­vous fret­ting

BeiGene’s sec­ondary IPO on the Hong Kong ex­change says a lot about the sky-high ex­pec­ta­tions of the biotechs lin­ing up to cash in there un­der more lib­er­al list­ing rules.

The biotech raised $903 mil­lion, and that was on the low end of the range.

HKEX is com­mand­ing at­ten­tion from bio­phar­ma for a sec­ond day with the news that BeiGene’s IPO fell shy of the $1 bil­lion ceil­ing it was reach­ing for.

BeiGene’s sec­ondary IPO, as re­port­ed by Reuters, comes as biotechs join the queue for a bo­nan­za of wind­fall rais­es in Hong Kong. The first of them, As­cle­tis Phar­ma, be­gan trad­ing Wednes­day af­ter pock­et­ing $400 mil­lion and closed flat.

By every ac­count, BeiGene’s haul to­day is stag­ger­ing. BeiGene’s 2016 Nas­daq de­but $BGNE brought home $158 mil­lion, and the largest biotech IPO on Nas­daq so far this year went to Ru­bius at $241 mil­lion.

The list­ing price, though, does rep­re­sent a dis­count of 1.6% against its clos­ing price in the US on Wednes­day. Quot­ing bro­kers, South Chi­na Morn­ing Post ex­plained that Chi­na’s re­cent fake vac­cine scan­dal, adding to poor mar­ket sen­ti­ment in gen­er­al, is to blame for the luke­warm re­tail re­sponse that caused the “huge set­back.”

“The re­tail in­vestors are more short-term mar­ket dri­ven,” Joseph Tong of Mor­ton Se­cu­ri­ties told the SCMP. “The in­sti­tu­tion­al side will be longer term and judge it on com­pa­ny fun­da­men­tal val­ues.”

Pri­or to the pub­lic launch, Bei­jing-based BeiGene se­cured four cor­ner­stone in­vestors on both sides of the Pa­cif­ic to buy 19.8 mil­lion shares out of the 65.5 mil­lion new shares, or 8.55% of its en­larged share cap­i­tal, it was sell­ing. They in­clude New York-based hedge fund Bak­er Bros Ad­vi­sors, Sin­ga­pore’s sov­er­eign wealth fund GIC, and two of Chi­na’s most in­flu­en­tial biotech VCs, Hill­house Cap­i­tal Man­age­ment and Al­ly Bridge.

Aside from the price and the list of mar­quee cor­ner­stone back­ers, BeiGene’s IPO jour­ney was al­so re­mark­able for its speed. While it was un­clear when BeiGene first sub­mit­ted its ap­pli­ca­tion for the dual list­ing — word on the street was around mid-June — its meet­ing with the HKEX list­ing com­mit­tee took place less than two weeks ago. Its stock is slat­ed to go live on Au­gust 8.

That will cer­tain­ly mark an­oth­er mile­stone for HKEX as it con­tin­ues to brand it­self as the ide­al des­ti­na­tion for Chi­nese biotech IPOs. Af­ter­all, the im­mense suc­cess that BeiGene had en­joyed on Nas­daq was long seen as an im­pe­tus for Hong Kong to change its rules in the first place.

In its fil­ing, BeiGene wrote that it be­lieves it’s “well po­si­tioned to cap­ture the sig­nif­i­cant mar­ket op­por­tu­ni­ties in Chi­na” with its im­muno-on­col­o­gy drugs zanubru­ti­nib, tislelizum­ab and pami­parib, all of which would ben­e­fit from the raise, from clin­i­cal tri­als to reg­is­tra­tion and com­mer­cial­iza­tion in both Chi­na and the US.

Part club, part guide, part land­lord: Arie Bellde­grun is blue­print­ing a string of be­spoke biotech com­plex­es in glob­al boom­towns — start­ing with Boston

The biotech industry is getting a landlord, unlike anything it’s ever known before.

Inspired by his recent experiences scrounging for space in Boston and the Bay Area, master biotech builder, investor, and global dealmaker Arie Belldegrun has organized a new venture to build a new, 250,000 square foot biopharma building in Boston’s Seaport district — home to Vertex and a number of up-and-coming biotech players.

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Novotech CRO Ex­pands Chi­na Team as Biotech De­mand for Clin­i­cal Tri­als In­creas­es up to 79%

An increase in demand of up to 79% for clinical trials in China has prompted Novotech the Asia-Pacific CRO to rapidly expand the China team, appointing expert local clinical executives to their Shanghai and Hong Kong offices. The company is planning to expand their team by 30% over the next quarter.

Novotech China has seen considerable demand recently which is borne out by research from GlobalData:
A global migration of clinical research is occurring from high-income countries to low and middle-income countries with emerging economies. Over the period 2017 to 2018, for example, the number of clinical trial sites opened by biotech companies in Asia-Pacific increased by 35% compared to 8% in the rest of the world, with growth as high as 79% in China.
Novotech CEO Dr John Moller said China offers the largest population in the world, rapid economic growth, and an increasing willingness by government to invest in research and development.
Novotech’s 23 years of experience working in the region means we are the ideal CRO partner for USA biotechs wanting to tap the research expertise and opportunities that China offers.
There are over 22,000 active investigators in Greater China, with about 5,000 investigators with experience on at least 3 studies (source GlobalData).

UP­DAT­ED: With loom­ing ‘apoc­a­lypse of drug re­sis­tance,’ Mer­ck’s com­bi­na­tion an­tibi­ot­ic scores FDA ap­proval on two fronts

Merck — one of the last large biopharmaceuticals companies in the beleaguered field of antibiotic drug development — on Wednesday said the FDA had sanctioned the approval of its combination antibacterial for the treatment of complicated urinary tract and intra-abdominal infections.

To curb the rise of drug-resistant bacteria and maintain the efficacy of the therapy, Recarbrio (and other antibacterials) — the drug must be used to treat or prevent infections that are proven or strongly suspected to be caused by susceptible gram-negative bacteria, Merck $MRK said.

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John McHutchison in 2012. Getty Images

The $1.1M good­bye: Gilead CSO John McHutchi­son is out as Daniel O’Day shakes up the se­nior team

Just a little more than a year after John McHutchison grabbed a promotion to become CSO at Gilead in the wake of Norbert Bischofberger’s exit, he’s out amid a shakeup of the senior team that is also triggering the departure of two other top execs.

Gilead stated that McHutchison “has decided to step down” from the job as of August 2nd. And their SEC filing notes that he’ll be getting a $1.1 million check to settle up on his contract.

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Thomas Gajewski, David Steinberg. (CRI, Pyxis)

Bay­er, Long­wood back star re­searcher's deep dive in­to the tu­mor mi­croen­vi­ron­ment for new I/O tar­gets

From PD-1 targeting to the RAS pathway to the STING complex, Thomas Gajewski has spent the past two decades of his career decoding the various ways the immune system can be unleashed to defend against cancer. So when the University of Chicago professor comes around to putting all his findings into a new platform for finding new targets, VCs and pharma groups alike pay attention.

“He’s been studying T cells for 20 years, plus he’s one of the world’s leaders if not the world leader in the space,” David Steinberg, partner at Longwood Fund, said. “Furthermore, let me add he did a lot of the foundational research and also some of the seminal clinical trials in the existing set of I/O agents. He understands the space really well, he understands the current strengths, and I think he understood really well what was missing, so he knew where to look.”

Kamala Harris speaking yesterday at the Des Moines Register Iowa Presidential Candidate Forum [via Getty]

Who’s the tough­est on drug prices? A game of po­lit­i­cal one-up­man­ship is dri­ving the pol­i­cy de­bate in Wash­ing­ton

Earlier this week we got a look at Senator Kamala Harris’ position on drug prices. She’s proposing that HHS take an average price from single-payer systems like the UK, Germany and Canada — which leverage market access for lower prices — and use that to set the US price. Anything drug companies collect above that would be taxed at a rate of 100%.

And the rhetoric is scathing:
While families struggle to make it to the end of the month, pharmaceutical companies are turning record profits. They’re spending nearly as much on advertising as R&D. They’re manipulating their market power to hike prices on lifesaving generic drugs. They’re making twice the profit of the average industry in America and still increased drug prices by 10.5% over the past six months alone. Meanwhile, they are charging dramatically higher prices to American consumers.
That’s an escalation on Joe Biden’s plan, which includes drug importation from those cheaper markets as well as allowing Medicare to negotiate prices — something that virtually all Dems agree on now.

SJ Lee [File photo]

Go­ing in­side cells, Sung Joo Lee has sketched some big goals for his small — but glob­al — team of drug hunters

For a small biotech based in South Korea with a research arm in Cambridge, MA, Orum Therapeutics has sketched out some big goals aimed at developing antibodies for intracellular targets. And now they have a new $30 million round to push the work forward, aiming at a slate of currently undruggable quests.

Orum has been working on a platform tech out of Ajou University that relies on endocytosis to smuggle antibodies and their cargo inside a cell. They’ve published work in Nature that illustrates its preclinical potential in RAS mutations, and KRAS is on their list of targets. 

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Astel­las buys in­to Fre­quen­cy's re­gen­er­a­tive med strat­e­gy with a $625M al­liance on hear­ing loss

The executive team at Frequency Therapeutics never oversold the results of their maiden Phase I/II study for a new drug to rectify hearing loss. It was, they said back in April, primarily about safety and tolerability, where their drug FX-322 performed as they had hoped. 

That early glimpse of efficacy everyone searches for in their first try on humans? 

(I)mprovements in hearing function, including audiometry and word scores, were observed in multiple FX-322 treated patients.

We don’t know exactly what that means. But whatever the details, Astellas found enough in the data to jump in with a sizable collaboration deal.

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H1 analy­sis: The high-stakes ta­ble in the biotech deals casi­no is pay­ing out some record-set­ting win­nings

For years the big trend among dealmakers at the major players has been centered on ratcheting down upfront payments in favor of bigger milestones. Better known as biobucks for some. But with the top 15 companies competing for the kind of “transformative” pacts that can whip up some excitement on Wall Street, with some big biotechs like Regeneron now weighing in as well, cash is king at the high stakes table.

We asked Chris Dokomajilar, the head of DealForma, to crunch the numbers for us, looking over the top 20 deals for the past decade and breaking it all down into the top alliances already created in 2019. Gilead has clearly tipped the scales in terms of the coin of the bio-realm, with its record-setting $5 billion upfront to tie up to Galapagos’ entire pipeline.

Dokomajilar notes:

We’re going to need a ‘three comma club’ for the deals with over $1 billion in total upfront cash and equity. The $100 million-plus club is getting crowded at 164 deals in the last decade with new deals being added towards the top of the chart. 2019 already has 14 deals with at least $100 million in upfront cash and equity for a total year-to-date of over $9 billion. That beats last year’s $8 billion and sets a record.

Add upfronts and equity payments and you get $11.5 billion for the year, just shy of last year’s record-setting $11.8 billion.

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