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Coronavirus could stall China IPOs

Bio-Thera raises $281M in STAR IPO but other biopharmas’ debuts in Hong Kong, Shanghai face delays

Although Bio-Thera priced its Shanghai IPO Monday, the Guangzhou-based antibody company will likely prove to be the exception among biotechs planning to debut on the Shanghai and Hong Kong exchanges as Asian markets remain volatile and 2019-nCoV-related travel restrictions scuttle plans for roadshows.

Qiming Ventures’ Nisa Leung told BioCentury she expects biotech listings in Hong Kong and mainland China to slow down. “I think it’s affecting everything right now,” she said, referring to the coronavirus.

At least 11 companies have active applications that could be affected (see Table: “Chinese Biotech IPO Queue”).

“It’s very difficult for management teams to actually go on roadshows,” said Leung. Even though travel from Hong Kong to the U.S. is not blocked, teams making the trip face a 14-day quarantine, she said, adding that “a lot of the investors would prefer not to meet with people from China.” Even within Hong Kong, the government and many companies have advised employees to work from home, she said.

In January, the U.S. Department of Health and Human Services declared 2019-nCoV a public health emergency, blocking travel of non-U.S. citizens from mainland China to the U.S. from Feb. 2 (see “U.S. Declares 2019-nCoV a Public Health Emergency”).

The Hong Kong exchange is also adjusting its plans. On Monday HKEX indefinitely postponed its Biotech Week 2020 conference due to coronavirus safety concerns; the event was originally scheduled for March.

Despite the slowdown, Leung said that listings are continuing; however, companies are delaying celebratory events.

Bio-Thera Solutions Ltd. (Shanghai:688177) raised RMB2 billion ($280.7 million) in its IPO on Shanghai’s STAR market. The company sold 60 million shares at RMB32.76, for a valuation of RMB13.6 billion.

At least two other life sciences companies have completed their IPOs so far this year: Suzhou Zelgen Biopharmaceuticals Co Ltd (Shanghai:688266) and Zhejiang Orient Gene Biotech Co. Ltd. (Shanghai:688298).

Companies recently joining the queues in Hong Kong and Shanghai include CanSino Biologics (HKEX:6185), which applied Jan. 22 for a dual listing on the STAR market; and Akeso Inc., which refiled for a Hong Kong IPO on Feb. 3. In December 2019, Akeso’s previous application was returned by the exchange for undisclosed reasons.

Table: Chinese biotech IPO queue

At least 11 biopharmas have filed to go public on the Hong Kong and Shanghai stock exchanges. Companies proposing Hong Kong IPOs have filed applications but have not yet submitted post-hearing information packs to the exchange, a required step before listing. Expected IPO amounts are disclosed on the Hong Kong exchange after applicants set IPO terms. Applications for listing on the Shanghai's STAR board must be approved by the exchange before being submitted to the China Securities Regulatory Commission (CSRC) for registration. (*) CanSino Biologics is listed on HKEX and pursuing a dual listing in Shanghai. Source: Hong Kong and Shanghai exchanges.

 

Jin Li, chairman and CEO of HitGen Inc., was cautiously optimistic about his company’s pending IPO on STAR. The offering “is going through the normal approval process, and hopefully it is not affected too much by the current situation,” Li told BioCentury. “The relevant regulatory bodies of financial services and markets have all issued statements and policies to reduce the impact of this outbreak.”

However, when trading resumed on Feb. 3 following the conclusion of the Lunar New Year holiday, which began Jan. 24, the Shanghai Composite Index dropped 8%. Hong Kong's Hang Seng index dropped 6% over the same period. “It is clear that the market is quite nervous and uneasy about the situation,” said Li.

Leung expects the outbreak will affect drug sales for the first few months of the year, with therapies for non life-threatening conditions being most affected.

She hopes the effect on the markets will not last longer than two months.

Further analysis of the coronavirus crisis can be found at https://www.biocentury.com/coronavirus. The 2019nCoV content is free to all who visit the site.

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