
PE-backed Mabpharm trades down after $157m HK IPO
Mabpharm, a China-based biopharmaceutical company backed by CDH Investments, saw its stock drop almost 20% on debut following a HK$1.23 billion ($157 million) IPO in Hong Kong.
According to a filing, a total of 823 million shares - including an overallocation - were sold at HK$1.50 each, the low end of the indicative range. After its debut on May 31 the stock closed at HK$1.21; it opened slightly higher on June 3 at HK$1.25, before dropping again to HK$1.21 by midday.
Mabpharm was founded in 2015 as a subsidiary of Chinese biopharmaceutical company Sinomab Bioscience focused on monoclonal antibody drugs for cancer and autoimmune diseases. CDH committed $111 million to Mabpharm in 2015 and held a 22% stake prior to the listing. This was diluted to 18% following the IPO, according to the prospectus.
Mabpharm has recorded no revenue to date, and reported a loss of RMB47.7 million ($6.9 million) for the year ended December 2017, up from a RMB34.7 million loss the year before. The company is one of several Chinese biopharmaceutical developers that have pursued public listings in Hong Kong since last year, taking advantage of rules announced in 2018 that allow biotech companies with no revenue or profit to list in the territory.
Under these rules such companies can list as long as they have a minimum market capitalization of HK$1.5 billion and enough working capital for at least 12 months. Candidates must also secure support from a sophisticated investor such as a PE firm specializing in healthcare or a major pharmaceutical company at least six months before the IPO.
The first PE-backed biotech player to pursue this path was Ascletis, which went public last July. Since then, BeiGene, Hua Medicine, Innovent Biologics, CStone Pharmaceuticals, and Junshi Biosciences have listed. Innovent and Junshi are the only ones trading above their offering prices. The likes of Ascentage Pharma and Shanghai Henlius Biotech have also filed for IPOs.
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