Reward and risk: the two faces of Hong Kong’s new listing rules for biotech firms
Allowing biotech firms to list in the city before they generate revenue is a bonus for the firms, but investors need to be aware of the pitfalls
Hong Kong’s impending move to allow biotechnology firms to list on the city’s stock market before they generate any revenue is a bonus for companies, but for investors new to the sector a healthy dose of risk awareness is needed, according to industry executives.
Bao Jun, the chief business officer and acting chief financial officer of Beijing Shenogen Pharma Group, which had considered listing on the Nasdaq market in the US, now plans to list in Hong Kong as soon as this year, followed by a listing on a mainland China bourse when it meets requirements there.
“Hong Kong can provide a unique opportunity the mainland won’t be able to provide [for some time],” Bao said on the sidelines of a biotech summit organised by exchange operator Hong Kong Exchanges and Clearing (HKEX) last week.
“We have a few projects that we want to license to US partners and build global branding,” Bao said. “Compared to the US, Hong Kong has no time zone difference for communication with investors, yet it also provides good connections with potential partners in the West.”
Greater access to international investors’ funds, the lack of currency flow controls and the fact that the Hong Kong dollar is tied to the US dollar are advantages sought by some mainland firms to facilitate investment deals with overseas investors and partners, he noted.
Mainland China stock exchange officials have held initial talks with major investors and with management of some of China’s top biotech firms about possibly letting some of them list by exempting them from current profit track record requirements, in a move seen to be aimed at stemming the flow of domestic firms seeking listings abroad.