Akeso Biopharma trades up after $333m Hong Kong IPO

The company's shares opened at HK$23.80 and soon rose as high at HK$24.25 before settling back to HK$23.80 towards the end of morning trading on April 24. Akeso sold approximately 149.5 million shares for HK$16.18 apiece in its IPO, with cornerstone investors accounting for about half of the offering. It represented a liquidity event for investors such as GTJA Investment Group, Loyal Valley Capital, and China Reform Holdings.

It is only the third private equity-backed offering in Hong Kong this year and the second since the coronavirus outbreak worsened in February. The other successful listing candidate is also a drug developer: InnoCare Pharma, which focuses on treatments for cancer and autoimmune diseases, raised HK$2.24 billion last month.

"Given the coronavirus outbreak, the fundamentals of a lot of companies are shaky, but these companies are benefiting from the situation," Andy Lin, founding partner of Loyal Valley, told AVCJ. "The pandemic exposed the weakness of public healthcare systems globally – there is a huge need for an overhaul. Investment in public health systems, hospitals, vaccines, innovation, and healthcare companies will improve in the years to come."

Loyal Valley is an investor in InnoCare as well as Akeso. Meanwhile, another of its portfolio companies, Shanghai Junshi Biosciences, recently won approval to list on China's STAR Market. The drug developer completed a Hong Kong IPO in late 2018 – one of the first batch of companies to go public in the territory following a regulatory change to allow listings by pre-revenue biotech players.

However, Lin cautions that not every drug developer is guaranteed a positive response. They must have a strong management team and a portfolio of drugs progressing through clinical trials – as opposed to just one or two – as well as be able to demonstrate true innovation in their products. He believes Akeso fits the bill, describing its most advanced oncology drug – known as AK104 or PD-01 – as equal to anything similar being developed in the US.

AK104, which is described as a potential next-generation, first-in-class immuno-oncology backbone drug, has completed phase-two clinical trials in China and has just initiated phase-one trials in Australia. In January, Akeso received written consent from the US Food & Drug Administration (FDA) for a planned registrational trial in the US with a view to submitting a new drug application for accelerated approval.

The company has 20 drug development programs covering innovative antibody treatments, including 12 antibodies in clinical-stage development. It has received four investigational new drug approvals – a prerequisite to conducting any human clinical trials in the US – from the FDA.

Akeso has also out-licensed another treatment, AK107, to Merck for a total consideration of up to $200 million. It marked the first time a China-based biotech company out-licensed a monoclonal antibody it had discovered internally to a global leading pharmaceutical player.

"It shows they have reached the same level of research as global companies," Lin said, adding that Loyal Valley has three portfolio companies currently out-licensing treatments – include those for biosimilars – and 10 conducting clinical trials outside of China.

GTJA is the largest of the pre-IPO investors in Akseo with a 5.19% stake. It led a RMB200 million ($28.7 million) Series B round in May 2017. This was followed by rounds of RMB150 million and $126 million last year. The latter was led by Loyal Valley Capital and Sino Biopharm. Loyal Valley's interest in Akeso is 2.55%.

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• Topics
• Greater China
• IPO
• Healthcare
• China
• Pharmaceuticals
• Loyal Valley Capital
• GTJA Investment Group