China, IPOs, Outsourcing

Nine listings and $3.8B later, HKEX celebrates one-year biotech anniversary with $194M CRO IPO

So how is Hong Kong stock exchange’s biotech board doing one year after regulators opened up the listing regime to pre-revenue companies in the field?

Depends on how you look at it.

Charles Li

While only nine biotech companies — including one CRO giant — have joined the HKEX this way in the past year, collectively they have raised $3.8 billion. By IPO proceeds, that makes Hong Kong the second largest public biotech hub worldwide after the leader Nasdaq, according to Refinitiv data cited by the local South China Morning Post.

In a sign of the buoyant times, the drug discovery specialists at Viva Biotech are reportedly eyeing $150 million to $194 million (between HK$1.18 billion and HK$1.52 billion) in their public debut. The company first filed last July.

Like fellow CRO WuXi AppTec, Viva is making its pitch to investors with revenue on its hands. The Shanghai-based company is half-incubator and half-contract business, offering both “equity for service” and “cash for service” models to US and Chinese biopharmas looking for outsourcing partners. The listing is expected to both expand their portfolio — 21 startups at last count — and boost their manufacturing capabilities.

“In general, for each of our incubation projects under the EFS model, we plan to contribute an average of US$1.5 million in cash or via drug discovery services we provide, with an aim to exit 50% of our equity/economic interest in 2.5 years after investment and the remaining interest in 5.5 years after investment,” the company wrote in a filing.

Sinopharm Capital and two funds controlled by Shenzhen GTJA Investment Group came in as the cornerstone investors for the IPO, subscribing for a combined 26% of the whole offering, Caixin reported.

The stock is scheduled to debut on May 9. Until then, the key question remains: Will it perform more like the early purveyors like Ascletis, Hua Medicine and BeiGene — all yet to recover from turbulence — or relative newcomers like Innovent, CStone or even CanSino (now up more than 70% from IPO price)?

Overall, though, HKEX chief Charles (Xiaojia) Li would argue they are making good progress.

“Far from being disappointing, we are very pleased with the early development of our biotech and weighted voting rights chapters in Hong Kong,” he wrote to the SCMP.

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