5:59 PM
 | 
Aug 03, 2018
 |  BioCentury  |  Finance

Hong Kong’s first wave

How Ascletis’ performance could affect up to 100 biotechs hoping to list on HKEX

Having broken the seal on the new biotech chapter of Hong Kong Exchange and Clearing Ltd., the performance of Ascletis Pharma Inc. and the next few companies to go out could determine what happens to as many as 100 other companies hoping to float over the next 18 months.

Now that BeiGene Ltd. has priced its secondary offering on the exchange, the current queue contains seven companies that will likely go out over the next two to five months. That includes two U.S. biotechs -- mitochondrial disease company Stealth BioTherapeutics Corp. and microbiome play AOBiome Therapeutics Inc. -- hoping the exchange will reward them with more money and larger valuations than they could achieve at home even during the boom in new offerings on NASDAQ.

Three Hong Kong market watchers told BioCentury they expect domestic innovators including Ascletis, diabetes play Hua Medicine Ltd. and autoimmune and cancer company Innovent Biologics Inc. to serve as harbingers of investor appetite, because they represent the top tier of China’s private biopharma sector.

The reception for Stealth and AOBiome could determine whether or not other U.S. biotechs will seek a listing on the exchange.

The first-wave companies will have to execute, as exchange officials and industry stakeholders fear investors could sour on pre-revenue biotechs if a few of them fail to deliver.

“Whatever the company said it would do during the roadshow or communicated to investors, they have to deliver,” Ally Bridge’s Bin Li told BioCentury.

Ascletis has already delivered on one of its milestones. On its first day of trading, the biotech announced it submitted an NDA in China for its second HCV therapy, ravidasvir, a second-generation HCV NS5A protein inhibitor. In June, Ascletis launched HCV NS3/4A protease inhibitor Ganovo danoprevir in China.

“They don’t want to have a bad outcome in the first few companies.”

Helen Chen, L.E.K.

Based on Ascletis’ strong IPO, Li and the others are confident the Hong Kong IPO queue will continue to fill up over the next year. One source who wished to remain anonymous said as many as 100 biotechs could file over the next 18 months.

High quality companies that market watchers expect to enter the queue in the mid-term include cancer play CStone Pharmaceuticals Co. Ltd. and Tasly Biopharmaceuticals Co. Ltd.

First out

Hong Kong Exchange and Clearing Ltd. (HKEX) launched its biotech chapter on April 30, allowing pre-revenue and pre-profit companies to list for the first time (see “Hong Kong’s New Chapter”).

Ascletis was first to apply for listing in May, and first to go out. The antiviral company priced its IPO on July 26, raising HK$3.1 billion ($400 million) at a valuation of HK$15.7 billion ($2 billion). The offering was the eleventh largest biotech IPO recorded in BioCentury’s BCIQ database since 2000.

Ascletis’ splashy entrance onto HKEX has been followed by something of a whimper in the aftermarket. The biotech was flat at...

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