Hong Kong sees rush of VC-backed biotech IPO filings
Five VC-backed pre-revenue Chinese biotech companies have filed to list in Hong Kong over the past two weeks, doubling the size of the IPO pipeline in this category.
Adlai Nortye – which announced a $100 million in Series D round as recently as July 13 – has joined biotech rollcall that features Beijing Mabworks Biotech, Jiangsu Recbio Technology, Sirnaomics, and Edda Healthcare & Technology. Those already in line for listings include Canbridge Pharmaceuticals, Abbisko Cayman, Lepu Biopharma, Beijing Advaccine Biotechnology, and Clover Biopharmaceuticals.
The Hong Kong Stock Exchange altered its listing ordinance in early 2018 to allow pre-revenue biotech players to go public. The first IPO came in July of that year. As of June 2021, 33 companies had completed offerings, raising HK$87 billion ($11.2 billion). Over the same period, 67 listings in the broader healthcare sector generated aggregate proceeds of HK$209 billion.
The reforms have turned Hong Kong into Asia’s largest biotech fundraising hub, and the second-largest globally. Of the 50 healthcare companies with outstanding IPO applications at the end of the first half of the year, 19 were pre-revenue biotech businesses.
According to AVCJ Research, 14 private equity-backed healthcare companies raised $7.7 billion through Hong Kong IPOs in 2020. The sector accounted for approximately two-thirds of all activity on the exchange involving companies with financial sponsors, in terms of number of offerings and aggregate proceeds. This compares to 39% and 26% in 2019, and 25% and 16% in 2018.
Last year, for the first time, healthcare was the largest source of IPO proceeds in Hong Kong. However, JD Health, the online-to-offline healthcare business of e-commerce giant JD.com, was responsible for $3.48 billion on its own.
Adlai Nortye is a cancer specialist with four clinical-stage drugs under development. Two have received fast-track approval from the US Food & Drug Administration. The Series D was led by a fund launched by China Merchants Group and the government-controlled State Development & Investment Corporation (SDIC), and Hong Kong-listed contract research organization Tigermed.
Total funding stands at nearly $220 million, with WuXi Biologics, Matrix Partners China, Yuanming Prudence, Yingke Private Equity, and Legend Star among the other investors.
Mabworks focuses on the development of antibodies that can be used to treat cancer and autoimmune diseases. Its portfolio of 12 drugs includes six currently in clinical trials. The company has received more than $230 million in funding from the likes of GTJA Investment, Harvest Fund Management, Mefund Capital, CICC Capital, Lyzz Capital, CITIC Securities, and SDIC.
Recbio produces a range of vaccines for HPV and has a COVID-19 candidate in stage-one clinical trials in New Zealand. Its backers include Lake Bleu Capital, Temasek Holdings, Legend Capital and Sequoia Capital, Lyfe Capital, Oriental Fortune Capital, CMB International, and Vertex Ventures, with approximately $525 million raised to date.
Sirnaomics, which has bases in China and the US, focuses on RNA therapeutics that suppress or enhance gene expression to combat disease. It achieves this by targeting messenger RNA (mRNA) –instructing the intermediaries between DNA and relevant proteins to take actions that trigger immune responses – and through RNAi therapeutics, which silences genes that contribute to disease.
Investors include Yuexiu Industrial Investment Fund, Sangel Capital, Tsinghua Holdings Capital, Qianhai Shenghui Investment, CR-CP Life Science Fund, Rich Yield Capital, Rotating Boulder Fund, Legend Sky Investment, Oriza Holdings, and Value Measure Investment. It has received around $250 million in total.
Edda develops robots used in precision surgery, but it still qualifies to list under Hong Kong’s pre-revenue biotech exemption. It has raised more than $200 million from the likes of Orbimed, Softbank Vision Fund 2, Matrix Partners China, SBCVC, DFJ DragonFund, and China Renaissance.
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