Chinese biotech company BeiGene plunged on its Shanghai debut on Wednesday after raising $3.5 billion in the biggest STAR Market listing this year.
BeiGene, which has posted consecutive years of losses, tumbled more than 15% in early trading, after opening 8.1% lower than its offer price of 192.6 yuan.
Founded in 2010, BeiGene is a global biotechnology company that develops and commercialises immune-oncology and molecularly-targeted cancer treatment drugs.
Its offering, the biggest float of a healthcare company in China in at least two decades, comes amid growing concerns some Chinese companies could be ordered to delist from the US stock market.
Nasdaq-Listed Shares Tumble
BeiGene’s Nasdaq-listed shares have tumbled nearly 20% so far this month, as securities regulators finalised rules to kick non-compliant Chinese companies off US exchanges in three years.
“The money was raised at a very high valuation compared to Nasdaq and Hong Kong,” Brad Loncar, whose Loncar Investments runs an ETF for Chinese drug firms, said.
“STAR IPOs generally come with long holding periods, which is a sign of confidence in the long term by the institutions that bought into it.”
BeiGene’s Hong Kong-traded shares lost more than 4% on Wednesday. Its poor debut in Shanghai means its underwriters are likely to buy shares in the secondary market to help stabilise prices.
Proceeds from BeiGene’s Shanghai share sales of 22.16 billion yuan ($3.5 billion) will be mainly used to fund clinical trials for potential treatments and to replenish capital, the firm said in its prospectus.
First Dual-Listed Company
In August 2018, BeiGene became the first dual-listed company on the Hong Kong stock exchange, with a historic US$903 million IPO.
“For BeiGene, the Hong Kong listing helped broaden our shareholder base, raise awareness of our company and the biotechnology sector among key stakeholders in Asia,” chief financial officer Howard Liang said.
“We’ve since brought two of our internally discovered products to the market, formed key collaborations with companies including Amgen and Novartis, built out key manufacturing capabilities, and successfully established our leadership in oncology.”
BeiGene was founded in Beijing, but Liang said it had always had global ambitions and that Hong Kong was the perfect springboard.
“The capital raised in Hong Kong has enabled BeiGene to build unique and hard-to-replicate expertise, including China-inclusive global clinical development, science-based commercial operation, and rapidly expanding manufacturing capabilities in both biologics and small molecules,” he said.
“With the growth we’ve had since our IPO in Hong Kong, more Asia-based investors became aware of our work and the biotechnology sector.”
Investors that have subscribed to BeiGene’s Shanghai share sale include China’s national social security fund and Abu Dhabi Investment Authority.
- Reuters, with George Russell
SEE MORE:
Former Kangmei Pharmaceutical Boss Ma Xingtian Sent To Jail
China Power Crisis May Hit Indian Pharma Sector: BS
Chart of the Day: Didi Crackdown Bodes Ill for its US-listed Compatriots
