Money-Losing Cancer Drugmaker Looks for Funding With Hong Kong IPO

Money-losing drugmaker Cstone Pharmaceuticals has filed to make an initial public offering (IPO) in Hong Kong, becoming the latest such firm to take advantage of rules relaxed earlier this year that allowed firms from the hot biotech sector to make such listings.

The company develops cancer treatment drugs that take advantage of biological processes to tackle the disease, an approach that is often more effective and has less side effects than treatments using older drugs. It has 14 drugs in its pipeline, ranging from pre-clinical stages to late-stage clinical programs, according to its prospectus filed on Sunday in Hong Kong.

Cstone reported a loss of 742 million yuan ($107 million) in the first six months of this year, up sharply from its 133 million yuan loss a year earlier. It did not provide a timetable for the offer, which would follow similar listings earlier this year by names like Ascletis Pharma Inc. and BeiGene Ltd. One of the latest of those saw Innovent Biologics Inc. make an IPO late last month, with its share price rising nearly 30% since then.

“Founded in 2015, we have built a rich oncology pipeline with significant mono- and combination-therapy potential and synergies,” Cstone said in its prospectus. “Led by seasoned industry executives, we have established a robust business model designed to develop high quality, innovative drugs at high speed.”

Cstone’s IPO would become the latest from a new generation of money-losing biotech firms that have sprung up in China over the last few years, aiming to tap the nation’s growing demand for drugs that are biologically developed. Many of those are still losing money because many of their drugs are still in trial phases, though they could quickly become profitable if the products ultimately receive regulatory approval.

The largest firm to make such a listing, BeiGene Ltd., raised $900 million in August, though the stock has lost about a third of its value since then as investors grow more skeptical about the group.

Contact reporter Yang Ge (geyang@caixin.com)