Alphamab Oncology sets sights on $220M IPO as HKSE continues to gain momentum

Alphamab Oncology is aiming to raise about HK$1.7 billion ($221.1 million) in an IPO on the Hong Kong stock exchange next week in an offering that would value the company at HK$8.7 billion if priced at the midpoint of the proposed range.

The pre-profit company proposed to sell 179.4 million shares at HK$9.10-HK$10.20 on the exchange’s biotech chapter.

The announcement came on the heels of an IPO on the exchange by Pharmaron Beijing Co. Ltd. (Shenzhen:300759; HKSE:03759), which began the year by listing on the Shenzhen exchange and closed it out with a raise of HK$4.6 billion in Hong Kong on Nov. 27.

Alphamab Oncology Ltd. spun out of Suzhou Alphamab Co. Ltd. last year to focus on oncology (see “Alphamab’s Cancer Cash”).

The company has eight biologics in development, including four in clinical testing.

About 75% of the financing will support clinical development of KN046, a bispecific mAb targeting CTLA-4 and PD-L1 in Phase Ib/II for various solid tumors; KN026, a bispecific mAb targeting two HER2 epitopes, in Phase I to Phase II testing for solid tumors including breast and gastric cancers; and the Nulojix belatacept biosimilar KN019, which the company plans to take into a Phase II trial in August for rheumatoid arthritis.

Alphamab Oncology plans to submit BLAs for KN046 and KN026 in 3Q21 and 4Q22, respectively.

Morgan Stanley, CLSA and Jefferies are underwriters. If priced at the midpoint, cornerstone investors Matthews Funds, OrbiMed, Greenwoods, MSAL, Lake Bleu Capital, Luye Pharma and Taiking Life would be eligible to purchase 60% of the offering.

Entities associated with founder, Chairman and CEO Ting Xu will hold a 37% post-IPO stake in the company. Xu holds a 51% stake in Suzhou Alphamab, of which he is chairman.

Alphamab Oncology expects to announce the IPO price on Dec. 11 and begin trading Dec. 12.

The exchange’s pre-revenue chapter is showing signs of life after a summer lull, with three biotechs going public since September (see “After Lull, Local Demand Boosts Ascentage”)

Pharmaron prices

In its first day of trading Nov. 28, Pharmaron's stock gained HK$2.75 to HK$42.25 in Hong Kong before dipping to a close of HK$40.45 on Monday.

The Beijing-based company sold 117 million shares at HK$39.50 in the deal, which was underwritten by Goldman Sachs, CLSA, Orient Securities and China Renaissance. The dual listing valued the CRO at HK$30.7 billion.

Both of the Hong Kong IPO’s tranches were oversubscribed. The company initially offered to sell 11.6 million shares to Hong Kong investors and 104.9 million shares to the international community. The final IPO comprised 58.3 million shares to local investors and 58.3 million shares to international investors. Pharmaron received local investor applications for 1.3 billion shares, which prompted the international share re-allotment.

Cornerstone investors China Structural Reform Fund, Lake Bleu Prime Healthcare Master Fund, OrbiMed, Worldwide Healthcare Trust, Athos Asia Event Driven Master Fund and Oaktree purchased about 31.7 million shares of the offering

The company, which has operations in China, the U.S. and the U.K., provides laboratory, clinical development and CMC services to biotech start-ups and global pharma.

Pharmaron reported net profits of RMB156.7 million in 1H19, up 30% from RMB120.4 million in the same period last year. In 2018, North American, European and Chinese customers contributed 62%, 22% and 10% of the company’s revenues, respectively.

The company plans to use around 30% of the funding to expand its capabilities in China in response to increasing demand for its laboratory and CMC services. Pharmaron will allocate around 10% of the funds to expand its operations in the U.S and U.K., 20% to establish a biologics R&D platform and another 15% for acquisition of CRO and CMO companies in U.S., Europe, Japan or China.

In May, the company completed a series of equity purchases in Nanjing-based clinical CRO CR Medicon, gaining a 55.6% stake in return for RMB150 million in cash.

Targets: CTLA-4 (CTLA4; CD152) - Cytotoxic T-lymphocyte associated protein 4; HER2 (EGFR2; ErbB2; neu) - Epidermal growth factor receptor 2; PD-1 (PDCD1; CD279) - Programmed cell death 1

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