Will an up to US$500 million IPO by this Suzhou cancer drug developer be the harbinger of more to come to Hong Kong?

PUBLISHED : Thursday, 03 May, 2018, 12:27pm
UPDATED : Thursday, 03 May, 2018, 10:52pm

Chinese drug developer Innovent Biologics has set a goal to cut cancer drug costs by halving the development time to five years, an ambition that could be funded by a listing in Hong Kong, which this week welcomed pre-revenue biotechnology companies to take part in capital raising activities for the first time.  

The Suzhou, Jiangsu province-based company, is seeking to raise US$300 million to US$500 million from a Hong Kong initial public offering, according to Reuters.

The company is among dozens seeking to tap the city’s nascent equity capital raising channel to fund drugs and medical device research and commercialisation. 

Innovent has raised almost US$600 million through five rounds of private share sales since its inception seven years ago, which co-founder and chairman Michael Yu Dechao said was the largest private equity fundraising among its Chinese peers. 

He declined to comment on its listing plan, saying only that the company is monitoring the development of Hong Kong as a biotech listing venue.  

The company’s investors include Eight Roads and F Prime – two proprietary investment units associated with Fidelity, Eli Lilly-backed Lilly Asia Ventures, Legend Holdings’ Legend Capital, Singapore’s sovereign fund manager Temasek, US investment firm Capital Group, state-backed SDIC Fund Management and units of insurers China Life and Ping An.

“When we founded Innovent seven years ago, we aimed to develop high quality drugs that are affordable to ordinary people,” Yu said.

Innovent is seeking to slash the cost of a new class of “PD-1 inhibitors” drugs that help restore the ability of the immune system to attack malignant cells in cancer patients.

Anti-PD-1 treatments by US-based Merck and Bristol-Myers Squibb were approved by the US Food and Drug Administration in 2014, but their costs are prohibitively high for the vast majority of Chinese patients. 

“Current approved anti PD-1 products cost US$150,000 to US$170,000 per patient per year,” Yu said. “How we aim to make them affordable is by accelerating the development process.” 

“In the US, it takes on average 10 years and costs US$1 billion to US$2 billion to bring a new drug from research and development to the market … we aim to cut the development time of alternatives to the new drugs to five years which will drastically cut the cost to patients.” 

Shorter development time and cost savings can be derived from lower clinical trial costs in China.

Innovent has 16 drugs under research, of which seven are in clinical development – including four in phase-three trials. 

Its most mature product, Sintilimab, has completed a registration clinical trial on Hodgkin lymphoma patients who either did not respond to initial treatment or had relapsed. The drug is now pending regulatory approval for commercialisation. 

Clinical data has shown that it is effective for patients with cancer of the lymphatic system, Yu said.

The China Food and Drug Administration has agreed to give Sintilimab “priority review” to accelerate its approval process, he said.

Innovent aims for the product to become a “best in class” drug, which has certain advantages over rival products, he added.    

Innovent’s three other drugs in phase three trials are “biosimilar drugs”, which must achieve the same or similar safety and efficacy levels compared to the original biological drugs.

They can only be commercialised after the patent on the original drug expires, and pending approval by regulators.   

In 2015, Eli Lilly and Innovent entered into several drug licensing and collaboration agreements on three antibody drug candidates in China.

Besides upfront payment of US$56 million from Lilly, Innovent was entitled to receive payments of more than US$1.4 billion if its oncology products reached certain development, regulatory and sales milestones.

“It not only validated our innovation capacity, it also helped Innovent develop a quality assurance system compatible with global standards for our production facilities,” Yu said.

He said the PD-1 product on which Innovent has licensed its technology to Lilly is under clinical development in the US.     

At the time, the licensing deal was the largest upfront payment by an international pharmaceutical giant to a Chinese drug developer, which was surpassed by Janssen Biotech’s US$350 million payment in December to Nanjing-ased Genscript Biotech.