Singapore sovereign wealth fund GIC to invest US$75 million in Chinese drug maker Ascletis’ Hong Kong IPO

Ascletis Pharma, the first biotechnology firm to file for an IPO in Hong Kong following recent listing reforms, has secured commitment from Singapore sovereign wealth manager GIC to become a cornerstone investor.

GIC will buy a fifth or US$75 million worth of Ascletis shares as the Hangzhou-based company seeks to raise between US$343 million and US$457 million from the initial public offering, according to the terms.

The company is offering 224.1 million shares at HK$12 to HK$16 each, potentially valuing the entire firm at up to US$2.32 billion. The shares are expected to start trading on August 1.

GIC will also be prohibited from selling its holding in the hepatitis C drug developer for six months from the listing date.

If demand substantially exceeds the base offering, up to 15 per cent more shares could be sold increasing the offer size to between US$394 million and US$526 million.

The company and GIC would not comment.

The retail offer for 10 per cent of the shares begins on Friday, and the price will be fixed next Wednesday.

Some 30 per cent of the listing proceeds has been earmarked for research and development of its pipeline of new drugs, while 25 per cent will be used to commercialise its Danoprevir and Ravidasvir drugs.

Danoprevir was exclusively licensed to Ascletis from Swiss pharmaceutical giant Roche five years ago, to develop, produce and commercialise the drug in the mainland, Hong Kong and Taiwan.

Ravidasvir was licensed from San Francisco-based Presidio Pharmaceuticals in 2014 for commercialisation in Greater China.

Ascletis expects to launch Danoprevir, the first hepatitis C cure developed by a Chinese firm by September 30, it said in a preliminary listing prospectus.

It has “demonstrated a far higher cure rate of 97 per cent, a shorter treatment duration of 12 weeks and a superior safety and tolerability profile”, the document said, adding that current drugs such as pegylated interferon and ribavirin have a success rate of about 60 per cent that takes between 48 and 72 weeks to treat.

Ascletis has completed phase three clinical trials and applied to regulators for the drug to be launched.

When combined with Ravidasvir, the cure rate rises to 99 per cent, it added.

Another 15 per cent of the proceeds will be deployed on licensing additional new drug candidates from other developers for further development and potential commercialisation.

The remaining 30 per cent will be used to fund clinical trials for another hepatitis C drug candidate ASC21 licensed from Swedish biotech firm Medivir a year ago, in-house drugs development for hepatitis B and fatty liver disease, and working capital.

Morgan Stanley, Goldman Sachs and China Merchants Securities are the deal’s joint sponsors.