Thu, Aug 9, 2018
HKEX Goes High (Bio) Tech with Ascletis IPO
Duff & Phelps congratulates biotech firm Ascletis Pharma Inc. (1672.HK) on its initial public offering (IPO) on the Hong Kong Stock Exchange on August 1.
Ascletis is the first pre-revenue biotech firm to launch in the wake of recent listing rule reforms that eased the threshold for such companies. Previous rules set by the Hong Kong Exchanges and Clearing (HKEX) required companies to possess minimum levels of either profitability or cashflow, excluding most pre-revenue biotech companies.
Rule changes effective from April 301 relax those requirements, instead requiring pre-revenue biotech companies to reach a minimum HK$1.5 billion market valuation. (Ascletis reported a market valuation of about HK$2.2 billion in 2015.)2
About 10 other biotech companies have followed in Ascletis’ wake, which dropped plans to list in the U.S.3 in favor of listing closer to home.
A Chinese Biotech with Many Firsts
Ascletis specializes in the development of anti-viral, cancer and fatty-liver-disease drugs. Wu Jinzi Ph.D., Ascletis' founder, President and CEO, started the company in 2011, sensing an opportunity to meet the healthcare needs of China’s growing middle class.4
Prior to starting Ascletis, Dr. Wu served as Vice President, Global HIV Drug Discovery for GlaxoSmithKline. His founding of Ascletis marks the pinnacle of an 18-year career in drug discovery and development, serving senior positions at Immunex/Amgen, Novartis and Aventis.5
Ascletis is the first domestic Chinese company to develop a cure for the Hepatitis C virus (HCV), and the company received approval this year for its two HCV drugs: Ganovo and Ravidasvir.6 Ascletis has two drugs in the clinical trial phase – HIV drug ASC09 has completed its phase IIa clinical trials, and liver cancer therapy drug HASC06 has completed phase I and phase I extension clinical trials. Funds raised in the IPO will be spent on R&D and commercialization of these core products.
Ascletis’ Landmark IPO
Prior to the IPO, two previous rounds of financing raised a collective US$155 million for Ascletis. The company hopes to raise an additional US$343- 457 million through the IPO, selling 224 million shares (or 20 percent of its enlarged share capital).
At an assumed price range of HK$12 to HK$16 per IPO share, Ascletis’ market value is estimated to fall between $1.7 billion and $2.3 billion.7
Ascletis’s share value rose by 6.4 percent to HK$14.9 before falling back to its IPO price of HK$14 after its first hour of trading. As of the end of trading on August 3, Ascletis maintained a market cap of HK$15.69 billion.8
Duff & Phelps was engaged as a professional independent valuer for the Ascletis IPO.
Sources:
1 Hong Kong’s Listing Regime Enters New Era, Featuring Emerging and Innovative Firms. (2018, April 24). Retrieved May 2, 2018, from https://www.hkex.com.hk/News/News-Release/2018/180424news?sc_lang=en
2 Ng, E. (2018, July 03). Chinese biotech company Ascletis eyes up to US$100m in funding. Retrieved August 3, 2018, from https://www.scmp.com/business/china-business/article/2127760/chinese-biotech-company-ascletis-seeks-third-round-funding
3Zhu, J. (2018, April 26). Two China biotechs drop U.S. IPO plans for $800 million Hong Kong... Retrieved August 3, 2018, from https://www.reuters.com/article/us-hongkong-ipo/two-china-biotechs-drop-u-s-ipo-plans-for-800-million-hong-kong-floats-sources-idUSKBN1HX0HY
4Dolan, K. A. (2011, August 11). Chinese Billionaire Backs New U.S.-China Drug Development Company. Retrieved August 3, 2018, from https://www.forbes.com/sites/kerryadolan/2011/04/06/chinese-billionaire-backs-new-u-s-china-drug-development-company/#764f775c22e5
5Jinzi J. Wu, Phd. (n.d.). Retrieved from https://biography.omicsonline.org/china/ascletis/jinzi-j-wu-phd-253383
6Ascletis' NDA for Its All-oral HCV Treatment Accepted by CFDA. (n.d.). Retrieved from http://www.prnewswire.com/news-releases/ascletis-nda-for-its-all-oral-hcv-treatment-accepted-by-cfda-300690036.html
7Tse, C. (2018, July 17). Ascletis Draws GIC to First Pre-Profit Biotech IPO in Hong Kong. Retrieved August 3, 2018, from https://www.bloomberg.com/news/articles/2018-07-17/ascletis-draws-gic-to-first-pre-profit-biotech-ipo-in-hong-kong
8Ascletis Pharma Listing (HK 1672), MarketWatch. (n.d.). Retrieved August 3, 2018, from https://www.marketwatch.com/investing/stock/1672?countrycode=hk
Valuation Advisory Services
Our valuation experts provide valuation services for financial reporting, tax, investment and risk management purposes.
Mergers and Acquisitions (M&A) Advisory
Kroll’s investment banking practice has extensive experience in M&A deal strategy and structuring, capital raising, transaction advisory services and financial sponsor coverage.
Transaction Advisory Services
Kroll’s Transaction Advisory Services platform offers corporate and financial investors with deep accounting and technical expertise, commercial knowledge, industry insight and seamless analytical services throughout the deal continuum.
