China, IPOs

Eyeing NDA for its diabetes drug, Hua Medicine knocks at HKEX’s door with an IPO application

A month after the Hong Kong Stock Exchange opened its doors to pre-revenue biotechs — and received one guest, Ascletis — Hua Medicine has walked in with its own application to list.

Li Chen

The Shanghai-based diabetes drugmaker is seeking $200 million in the IPO, South China Morning Post reports, although there was no way to confirm the number on the heavily redacted application proof. That would mark a decrease from the $300 million to $400 million that it was previously rumored to be seeking, but it would get Hua through Phase III trials, further R&D and potential launch of its lead drug, dorzagliatin, in China.

Hua bought the drug in 2011, when it first got going, from Roche — for whom founder and CEO Li Chen used to run an R&D center in China. Back then, it was an early-stage candidate. Today, the oral glucokinase activator is in two Phase III studies in China.

Touted as a first-in-class drug, dorzagliatin treats type 2 diabetes by going after the underlying cause: an impaired “glucose sensor.” If you fix the enzyme serving that function, Hua theorizes, you can better regulate the body’s glucose metabolism.

It’s a theory that marquee investors from China and the US alike have bought into. In five financing rounds — capped by a combined Series D and Series E that reaped $117 million just this March — Hua has earned the backing of Arch Venture Partners, Venrock, Eight Roads, F-Prime and WuXi. Prior to the IPO, Arch is the largest shareholder, holding 15% of the shares, followed by Venrock at 12%. Ge Li’s WuXi has almost 9% while his family fund also chipped for 3%.

If all goes according to plan, Phase III results for dorzagliatin both as a monotherapy and in combination with metformin will come out in the second half of 2019, followed by a filing to the CDA (CFDA no more). Hua is aiming for an approval in 2020. In the interim, the 83 staffers — including 59 scientists — will keep themselves busy with more combo trials for the lead drug and some clinical work on a preclinical candidate.

Here’s the breakdown for how they’re going to spend the money:

  • 24% to complete the two Phase III trials for dorzagliatin
  • 14% for further R&D — think combo and differentiation trials — of dorzagliatin
  • 30% for launch and commercialization of dorzagliatin
  • 10% toward mGLUR5, a potential drug candidate for treating dyskinesia induced by Parkinson’s therapy levodopa
  • 12% for additional licensing and partnership opportunities
  • 10% for general and corporate purposes

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Biotech Investment Analyst
SV Health Investors Boston, MA
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Recursion Pharmaceuticals Salt Lake City, UT
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Recursion Pharmaceuticals Salt Lake City, UT
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Cadent Therapeutics Cambridge, MA
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