CanSino reaps $748M windfall from Shanghai IPO — as it warns Covid-19 vaccine won't be a huge money maker
CanSino began the year with a clear goal to secure a secondary listing on Shanghai’s STAR market. Then something more urgent came along: As a rising vaccine developer on a mission to bring global standard immunizations to China, it heeded the call to make a vaccine to protect against a virus that would paralyze the whole world.
Xuefeng Yu and his team managed to keep doing both.
More than a month after CanSino’s Covid-19 vaccine candidate is authorized for military use in China, the Hong Kong-listed company has made a roaring debut in Shanghai. It fetched $748 million (RMB$5.2 billion) by floating 24.8 million shares, and soared 88% on its first trading day.
At RMB$209.71 apiece, it’s the second most expensive IPO ever on the nascent tech board, according to the South China Morning Post.
In opening the STAR market last year, Shanghai’s stock exchange followed its Hong Kong counterpart’s footsteps. By lowering the listing requirements to accommodate pre-revenue tech and biotech companies, both bourses are looking to lure domestic upstarts back from Nasdaq.
It’s not uncommon for STAR stocks to jump dramatically or even double upon their debuts. In fact, CanSino closed at a lower price than expected.
“The first-day gain turned out to be smaller than traders expected because of worries about frothy valuations on the overall A-share market,” Ivan Li, a money manager at Shanghai-based Loyal Wealth Management, told SCMP. “But investors still have confidence in the stock and its vaccines in the pipeline.”
Covid-19 has delayed clinical plans for its earlier-stage vaccines, CanSino reported in its prospectus, which are candidates designed to protect against pneumococcal diseases as well as diphtheria, tetanus and pertussis.
Meanwhile, logistical troubles are still stalling the plan to test the coronavirus vaccine, Ad5-nCoV, in Canada. With political tension and speculation running high, CanSino has turned to Saudi Arabia to kick off its first Phase III test — like all the other Chinese vaccine makers, it’s opting to do late-stage studies in places where infections are still widespread.
Even if the Phase III results are positive, though, don’t expect it to be a money maker. CanSino noted that the Chinese government might be taking control of pricing and supply as well as exports, leading to a lower profit margin than other products.
An Ebola vaccine developed with a scientist from China’s army — who’s also a collaborator on the Covid-19 program — remains the only approved product in CanSino’s portfolio. Two meningococcal vaccines are now under regulatory review.
The company wrote that it’s building a sales and marketing team, with the goal being to expand from the current 20-plus to 100 by the end of 2020.