The biotech bourse

Keymed Biosciences Hong Kong retail tranche 429-times covered in hot IPO for start-up


New haven for biotech start-ups

As one of the most revealing documents that relates to a corporate entity, a listing candidate’s prospectus is expected to contain a comprehensive income statement.

Not for Chengdu-based Keymed Biosciences, mind you. In the review alongside its thinly-laid out financial tables, the five year-old biotech firm explains that it has yet to receive approval to sell any products, and therefore earns zero operating income. “We have no track record and limited experience in commercialisation of drugs,” it candidly added.

The lack of visibility over its financial prospects does not seem to have dampened investor interest in the start-up. The retail tranche of Keymed’s HK$2.94 billion ($380 million) Hong Kong IPO generated an order book that was 429 times its offering size, while institutional investors oversubscribed the deal by 21 times. The fanfare surrounding the company then saw its shares open 46% higher on their market debut on Thursday, giving Keymed a market capitalisation of HK$19 billion.

Keymed’s big draw is its two co-founders Chen Bo and Wang Changyu. Chen, a scientist and serial entrepreneur, was previously the boss of Shanghai Junshi, which listed respectively in Hong Kong in 2018 and Shanghai last year. At Junshi he led the development of China’s first domestically-developed PD-1 antibody drug known as Toripalimab to treat cancer. Wang, an expert in immuno-oncology, co-invented the world’s first-in-class PD-1 antibody therapy: Bristol Myers Squibb’s Nivolumab sold under the label Opdivo.

At Keymed the duo continue to target autoimmune diseases and oncological treatments. Among its nine drug candidates in the pipeline, CM310, a therapy targeting the IL-4Rα antibody, is highlighted as the company’s blockbuster-to-be. The first of its kind to gain approval for human testing in China, CM310 could potentially treat various type-2 inflammatory diseases such as eczema, allergic rhinosinusitis and some types of asthma. The company is planning to initiate CM310’s Phase III clinical trials against eczema in the second half of 2022.

Keymed’s IPO success followed the HK$4.17 billion June 30 listing of Hutchmed, a biopharmaceutical unit of CK Hutchison that specialises in immunotherapies. The Hong Kong-based company is currently selling two drugs in China, mostly Fruquintinib, the world’s first ‘third-line’ defence against metastatic colorectal cancer.

It is also seeking Chinese regulatory approval to launch Savolitinib, an oral inhibitor of an enzyme present in many types of solid tumours. The launch plan will see AstraZeneca paying Hutchmed a 30% royalty on all sales, development and commercial milestones, as well as manufacturing fees under a global licencing agreement signed in 2011.

Already traded in the US and London, Hutchmed’s shares jumped 50% on their first trading day in Hong Kong.

In the first half of this year there were 13 Chinese healthcare companies that raised IPO funds in Hong Kong that totalled HK$31.4 billion.

Of these, eight engage in cutting-edge biotechnology, including CARsgen Therapeutics, which focuses on CAR-T cell therapies for treating hematological malignancies and solid tumours.

This group has rapidly turned Hong Kong’s stock exchange into the world’s second largest fundraising hub for biotech companies, according to the new HKEx chief Nicolas Aguzin – a stunning turnaround given it was only in 2018 that the local bourse first allowed pre-profit biotechs to list (previously it required all listing candidates to have a track record of profitability).

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