SciClone and Joinn Laboratories set to joining frenzy for biotech IPOs in HK as fundraising jumps to highest in two years

24-Feb-2021 Intellasia | South China Morning Post | 6:56 AM Print This Post

Hong Kong has seen the most number of health care and pharmaceutical companies raising funds via initial public offering (IPO) in the first two months of 2021, the most since listing rules were amended in 2018 to allow pre-revenue biotech firms to raise capital.

Five health care and pharmaceutical firms have raised $1.28 billion as of February, data from Refinitiv showed. This week, SciClone Pharmaceuticals and Joinn Laboratories (China) are wrapping up their Hong Kong public offerings, adding to the increased level of activity.

These two deals, which could raise over $1 billion combined, followed the frenzied rush earlier this month by retail investors, who oversubscribed the shares of the cancer screening firm New Horizon Health by a record 4,130 times. The overwhelming response has prompted the city’s exchange to investigate whether investors have flouted rules by submitting multiple subscriptions to increase their chance of getting IPOs.

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Still, fundraising momentum is likely to continue this year in the biotech industry, helping the Hong Kong stock exchange to close in on Nasdaq as the world’s leading centre for pharmaceutical firms, developers of medical devices and other health care-related companies to raise capital.

SciClone, based in Shanghai, has set the range of its IPO at between HK$17.2 and HK$18.8 per share. It is selling 116 million shares, or 17 per cent of its enlarged share capital, to investors. Based on the top-end of the price range, the firm could raise up to $281 million. There is an overallotment option, known as the greenshoe, to sell another 17.4 million shares to meet additional demand.

The Hong Kong retail tranche, which started last Friday, will close on Wednesday. Trading on the main board is scheduled on March 3. Joint sponsors for the deal include Morgan Stanley, CICC, and Credit Suisse.

Sciclone’s net profit rose 42 per cent in the nine months ended September to 689.8 million yuan, according to its prospectus. The firm plans to use the net proceeds to repay existing debt, develop and commercialise clinical stage products, and to seek new drugs acquisition opportunities.

A total of 11 cornerstone investors have committed to invest $134 million in the IPO. These include a unit under Shanghai Pharmaceuticals, which is also listed in Hong Kong and Shanghai; venture capital firm IDG Capital; and China Taiping Insurance’s unit Taiping Assets Management.

Joinn Laboratories has priced its secondary listing in Hong Kong at HK$151 per share, the top-end of the range marketed to investors, enabling the company to raise $844 million, according to a term sheet seen by the Post.

Joinn’s shares have already been listed on the Shanghai Stock Exchange since August 2017, rising 11-fold since its IPO to 147.35 yuan (US$22.80) in recent trading, valuing the company at 33.4 billion yuan, or 150 times earnings.

The Beijing-based firm claims to be the largest contract research organisation in non-clinical drug safety assessment in China by revenue. After-tax profit for the nine months ended September rose 65 per cent to 141.9 million yuan.

Trading on the main board is scheduled for February 26. It plans to use the proceeds raised on expanding its service capabilities, and strengthen its US operations. Citic Securities is the sole sponsor for the deal; while Bank of America and CICC were joint global coordinators and joint book runners.


Category: Hong Kong

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