Chipscreen became the first biopharma to price its
IPO on Shanghai’s STAR market Tuesday, raising RMB1 billion ($148.2
million) in an upsized offering that signals that the investor
exuberance that drove big gains for the first companies to list will
likely extend to biotechs in the queue.
Shenzhen Chipscreen Biosciences Ltd.
(Shanghai:688321) sold 50 million shares at RMB20.43 in a deal that
values the company at RMB8.4 billion ($1.2 billion). The company, which
develops small molecules for cancer, diabetes and endocrine and
autoimmune diseases, expected to raise RMB803.5 million. Its first day
of trading could come as early as Aug. 12, Chairman and CEO Xianping Lu
Lu said the company’s China-focused strategy was the primary reason to seek a listing on the Shanghai Stock Exchange’s new science and technology innovation board. An investor base that includes a state-owned enterprise also made it the most expedient choice. The presence of CapitalBio, which holds about 11% of Chipscreen’s equity, would have extended the company’s approval process on NASDAQ or Hong Kong stock exchange, according to Lu.
The first group of 25 companies soared out of the
gate when trading began on the exchange on July 22, posting average
gains of 140% in their first day. Lu attributed the gains to investor
confidence stemming from the transparency of the STAR board's
application process. The results of multiple rounds of reviews by the
exchange’s experts in finance, technology, accounting and legal issues,
were made immediately available to the public.
"You never saw such transparency in this capital
system before, so for that reason the companies seem to have better
quality in terms of the fundamentals," he said.
Many Chinese biotech executives are watching from
the sidelines to see how the first companies fare before deciding
whether to pursue a listing on the new board or in Hong Kong, Chinese
biotech executives and investors have told BioCentury.
While Lu conceded that there was uncertainty because
the new board was untested, he said that the government was highly
motivated to make the exchange a success after capital market reforms a
decade ago fell short and also understood the need to support innovative
companies focused on R&D which are not yet profitable. The board
has evolved rapidly since it was proposed by Chinese President Xi
Jinping in November (see "Shanghai’s New Chapter").
Lu said that regulators are still adapting to the
new system. Although Chipscreen was among the first three companies
approved by the Shanghai exchange, it was the twenty-eighth to receive
final registration by the China Securities Regulatory Commission (CSRC).
The registration took more than a month, he said, because as the first
biopharma, CSRC was seeking to set a stringent standard (see "Chipscreen Set to Test Shanghai’s New Innovation Board").
Chipscreen's next step, Lu said, will be to explore
ways to expand the company’s global footprint through licensing,
collaboration or marketing of its drugs outside of China. In the longer
term, the company is considering listings in Hong Kong and the U.S.,
where he believes the company's focus on innovation would attract
Chipscreen markets HDAC inhibitor Epidaza chidamide
for non-Hodgkin and peripheral T cell lymphomas in China and has seven
other candidates in its pipeline for various cancers, Type II diabetes,
non-alcoholic steatohepatitis (NASH) and autoimmune diseases, including
rheumatoid arthritis, with the most advanced in registration or Phase