PE-backed InnoCare raises $288m in Hong Kong IPO

The company sold approximately 250.3 million shares for HK$8.95 apiece, representing the top end of the indicative range, according to a filing. Nearly 60% of the offering – assuming the overallotment option is not exercised – was covered by 12 cornerstone investors, including existing backers Vivo Capital, Loyal Valley Capital, Hankang Biotech, and 3H Health Investment Management.

The Hong Kong bourse has been relatively inactive since the coronavirus outbreak. AVCJ Research has records of just one other private equity-backed offering since the start of the year and it was completed in mid-January, before the situation worsened. In the last two months of 2019, a total of $3.6 billion was raised through eight PE-backed IPOs in Hong Kong.

InnoCare was founded in 2015 by Yigong Shi, a structural biologist, and Jasmine Cui, who previously worked for Merck and Chinese contract research organization BioDuro. Cui continues to serve as CEO. The company has a 150-strong R&D team based in Beijing and Nanjing that has discovered nine drug candidates, of which two have been accepted for review by China’s National Medical Products Administration. Most of the others are in stage-one and stage-two clinical trials.

The most advanced treatments are for chronic lymphocytic leukemia and mantle cell lymphoma. To support these near-term product launches, InnoCare has assembled a sales and marketing team that is expected to number 80-90 people by the end of the year. They will cover approximately 300 leading hospitals. The team will be even larger should these treatments be included in China’s national reimbursement drug list.

Loyal Valley currently holds a 12.08% stake in the company, with Vivo owning 8.49%, and Hankang, 3H and Nan Fung Group on 4.75%, 3.12%, and 1.78%, respectively. Loyal Valley led a $160 million round for InnoCare in late 2018 – it was announced in early 2019 – with participation from Vivo, 3H, Hankang, Nan Fung, and Epiphron Capital. This followed a $55 million Series C earlier the same year led by Vivo.

InnoCare has negligible revenue and substantial losses, which rose from RMB341.7 ($48 million) million in 2017 to RMB554 million in 2018 and then RMB653.2 million in the first nine months of 2019. It will list under provisions that allow zero-revenue biotech companies to pursue IPOs in Hong Kong.

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• Topics
• Greater China
• Healthcare
• IPO
• China
• Pharmaceuticals
• Loyal Valley Capital
• Vivo Ventures