China, IPOs

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.

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Research Scientist - Immunology
Recursion Pharmaceuticals Salt Lake City, UT
Director of Operations
Atlas Venture Cambridge, MA

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