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IPO

IPO

Chinese cancer drugs developer BeiGene first to seek secondary flotation in Hong Kong after listing reform

US and Beijing-based company could raise between US$908 million and US$1.07 billion

PUBLISHED : Friday, 27 July, 2018, 10:40pm
UPDATED : Friday, 27 July, 2018, 10:40pm

Chinese cancer treatment research and development company BeiGene is set to become the first overseas listed biotechnology firm to seek a secondary listing in Hong Kong, under the city’s revised listing rules, potentially raising up to US$1 billion from a shares offer.

It will sell 65 million new ordinary shares, to be listed on Hong Kong’s main board, according to a filling with the New York Stock Exchange on Friday. The company listed on the Nasdaq in 2016.

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It expects to grant the deal’s arrangers a 30-day option to buy an additional 9.84 million shares to be offered to investors. It will sell the shares at HK$94.4 to HK$111.6 each, a source close to the deal told the South China Morning Post, allowing the company to potentially raise between US$908 million and US$1.07 billion if the option is fully exercised. Its shares traded 2.25 per cent lower at US$169.23 per American depository share at 10.18am in New York on Friday. Each ADS represents the right to receive 13 ordinary shares.

A listing rules revamp in April saw Hong Kong allow biotechnology companies without profit or even revenue to list for the first time. Eight companies have since applied to list under the revised rules.

Set up in 2010, the Beijing and US-based company focuses on “immuno-oncology” research, or treatments that use the body’s own immune system to fight cancer.

It has more than 1,300 staff members, including about 500 involved in research and development in China, the US, Australia and Switzerland, and more than 200 marketing staff, according to its preliminary listing prospectus, which was filed with the Hong Kong stock exchange on Tuesday.

BeiGene has six self developed drug candidates under clinical trials, including three in late stage trials. The company has also been licensed by another drug developer with the rights to bring three overseas approved blood and breast cancer drugs to China, and the rights to develop two drug candidates into marketable drugs in China and elsewhere in Asia.

Its core drug candidates include two that the company is aiming to seek regulatory approval for this year and next year, for treating three types of blood cancers.

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After raising US$182 million from its initial public offering at US$24 per ADS on the Nasdaq in February 2016, the company raised another US$1.16 billion from several follow-on share sales at between US$32 and US$101 per ADS.

These closed 1.7 per cent lower at US$173.12 on Thursday, after peaking at US$216.7 on June 8 this year. BeiGene posted a net loss of US$96 million with US$254.7 million in revenue last year, and a loss of US$104.6 million with US$32.5 million in revenue in the first three months of 2018.

It is forecast to see losses widen to more than US$400 million this year and the next, according to the average estimate of six analysts polled by Bloomberg. Four analysts forecast a loss of US$281 million in 2020.

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BeiGene is 65.5 per cent owned by public shareholders, 22.2 per cent by New York-based hedge fund Baker Bros Advisors, 10.1 per cent by Beijing and Hong Kong-based investment firm Hillhouse Capital Management and 4.2 per cent by directors and senior managers.

The Hong Kong listing and global shares offering is jointly sponsored by Morgan Stanley and Goldman Sachs.

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