Shares for Suzhou-based Ascentage Pharma surged as high as 57% during trading on Monday following a $53 million initial public offering (IPO) on the Hong Kong stock exchange on Friday, ending with a 9.9% gain on its IPO share price by market close.
Why it matters: The IPO breathes life back into HKEX’s biotech category, which hasn’t seen a listing since Shanghai Henlius’s $410 million debut in September—the fourth-largest biopharma IPO in 2019 globally.
- It also follows in step with the exchange’s recent uptick in IPOs, which have raised almost $10 billion over the past two months despite Hong Kong’s prolonged political unrest.
Details: HKEX-listed conglomerate Sino Biopharm was a cornerstone investor with an order for $20 million-worth of shares, joined by YuanMing, Oriza Seed Venture Capital, Teng Yue Partners, ArrowMark Partners, HDY International Investment, CTS Capital, and CCB International in backing Ascentage.
- The firm’s retail portion of its offering was more than 750 times oversubscribed last week, the highest ratio among Hong Kong listings this year, according to a Bloomberg report.
- Ascentage’s IPO follows a $150 million Series C last year, which brought its total capital raised since launch to around $240 million.
- Much of the IPO proceeds are expected to be earmarked for development of the company’s lead drug, which targets BCR-ABL-mutations in chronic myeloid leukemia patients.
- Dubbed HQP1351, the drug is in Phase II/III trials and is the only asset that company allocated money for commercialization in its IPO filing.
- Some cash has also been designated for other programs focusing on various cancers and hepatitis B.
Amid Hong Kong unrest, Shanghai Henlius Biotech raises $410 million in IPO
Context: Ascentage’s IPO comes as the firm plans to increase the size of its team to 400 across China, the US, and Australia by the end of 2019. It is also in the process of constructing a research and development center and manufacturing center.
- With nearly 4 million people in China diagnosed with cancer each year, the government is investing significantly in its hospitals and has overhauled its regulatory process to help fast track treatments to market as part of its “Healthy China 2030” initiative.
- Ascentage is one of nine biotech firms to list on HKEX without profit or revenue after the exchange relaxed its rules earlier this year.
- Venture capital firms invested $17.6 billion in Chinese biotech startups in 2018.