Zhejiang-born Fang Jianmin has only one idol: Bob Langer, the prolific chemical engineer who owns more than 1,000 patents, and has spawned nearly 40 companies in the medical field through his lab at the Massachusetts Institute of Technology. Nasdaq-listed Moderna, which saw its market capitalisation surge to $39 billion following news that its Covid-19 vaccine is 95% effective, is one of Langer’s triumphant projects.
Fang is an entrepreneurial scientist too – as well as a haigui (‘sea turtle’, meaning a Chinese coming back from a period studying or working overseas). He returned from Canada in 2008 and like Langer is being handsomely rewarded by the capital market.
Early this month RemeGen, the biotech start-up he founded in Shandong’s Yantai to provide novel biologic remedies to autoimmune disorders, cancers and eye diseases, raised $515 million in an initial public offering in Hong Kong.
The deal is one of the world’s largest ever IPOs for a pre-profit biotech company, second only to Moderna’s offering of $604 million two years ago. RemeGen follows 20 other Chinese biotech firms that have already gone public this year, according to Dealogic, meaning that there is no shortage of alternative counters for investors to choose from.
As of Wednesday, RemeGen’s stock had traded 46% higher since its listing on November 9, giving the 12 year-old company a market value of HK$36.5 billion ($4.7 billion).
The enthusiasm was drummed up by RemeGen’s roster of investors. Some of its long-term backers include Eli Lilly’s venture capital arm, private equity firm PAG and the healthcare-focused funds Lake Bleu and OrbiMed.
Fidelity and Sino Biopharmaceutical were among 19 cornerstone investors that together snapped up nearly 45% of RemeGen’s offering (prior to an over-allotment option being exercised). Fidelity even doubled down on the day of the company’s trading debut, upping its stake to 6.29%.
RemeGen appeared promising to investors because two of its 10 drug candidates have already been granted priority review by the National Medical Products Administration in China while undergoing phase III trials.
The first is Telitacicept, which is designed to treat autoimmune diseases through targeting two key cell-signalling molecules. Of the seven cancer varieties it is being tested for, the most promising results are in countering systemic lupus erythematosus (SLE), a disorder where the immune system attacks healthy tissue, causing inflammation and other damage in the affected organs.
If approved, most likely by the end of this year, Telitacicept would be the first new SLE biologic drug in almost a decade. Telitacicept is also under clinical trials to treat six other autoimmune diseases including rheumatoid arthritis and multiple sclerosis, making it a prime candidate to tap a market poised to reach $16.6 billion in 2030.
The second drug is Disitamab Vedotin, which is under trial for its ability to cure cancer using antibody-drug conjugates (ADCs). Unlike traditional chemotherapy, which cannot distinguish between healthy and tumour cells, ADCs are capable of delivering cytotoxic drugs to targeted cancer cells through linking monoclonal antibodies and small-molecule drugs. RemeGen expects Disitamab Vedotin to be approved for treating gastric cancer by June 2021, before being deployed against five other cancers including urothelial cancer and breast cancer.
Both Telitacicept and Disitamab Vedotin have already gained approvals from the US Food and Drug Administration to start clinical trials in America.
Fang told Bloomberg that it will take a few years for the company to become profitable – it made a net loss of $430 million last year and $249 million in the first half of 2020 – addding that it will depend on the level of resources allocated to research and development. It will need to spend at least $120 million, or 25% of the IPO funds, on building a new manufacturing facility. The plant is slated for completion in 2025, which will help lift RemeGen’s production capacity fivefold to house 68,000 litres of bioreactors.
According to the IPO prospectus RemeGen’s founder Fang held a stake of 13.7%, valued at $643 million – a net worth of around half that of his idol Langer.
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