InnoCare IPO oversubscribed 300x as Hong Kong investors turned to biotech amid runoff
Forget the global stock meltdown. Or at least Chinese biotech InnoCare did, forging ahead with a more than $250-million IPO in Hong Kong despite the exchange being in the midst of a Kingda Ka-esque freefall.
It worked. InnoCare wrote in a filing that retail investors subscribed to 7.98 billion shares – about 300 times the amount the number offered to them, according to the South China Morning Post. With institutional investors agreeing to chip in and buy US$164 million (HK$1.28 billion) of shares, the company will raise $289 million (HK$2.2 billion). Shares priced at the high end of an HK$8.18 to HK$8.95 range.
InnoCare’s success was likely driven by the same forces collapsing stocks around the globe. As the Covid-19 pandemic has slowed economic activity around the world and driven the stock market down with the speed of a bear physically tackling an unsuspecting bull, investors have turned to pharmaceutical stocks, particularly for those companies who have joined in on the hunt for a coronavirus treatment or vaccine. InnoCare, focused on cancer and autoimmune disorders, is not one of those companies, but a local VC suggested they still likely benefited from the frenzy.
“I would be cautious on this stock since the response could be driven by short term speculation, and half the shares are in the hands of the cornerstone investors,” VC Asset Management managing director Louis Tse Ming-kwong told the Post.
InnoCare has 9 programs aiming to the best or first-in-class, but the lead program — and the recipient of half of the IPO’s proceeds — is to orelabrutinib, a BTK inhibitor now being tested preclinically or in early-stage human trials against a long list of cancers.
By the Post’s count, InnoCare is the 11th company to list under Hong Kong’s biotech exchange since it debuted 2 years ago. Many of the others came with similar pitches around autoimmune and cancer. Nevertheless, InnoCare stands out for its staff, with Merck vet Jasmine Cui as CEO and prestigious academic Yigong Shi as president of the scientific advisory board.
In a Phase II trial last year, orelabrutinib led to a response rate of 89% and a 12-month progression free survival rate of 64% in 106 reduced/refractory mantle cell patients.