Hong Kong Dangles More Biotech Bait But Investors Don’t Bite

Shares of biotech firm BeiGene Ltd. closed down 0.93% in their first Hong Kong trading day Wednesday to HK$107 ($13.63).

The stock has been below the initial public offering price (IPO) all day, dropping by as much as 4.6% in the morning session.

BeiGene is the second money-losing biotech firm to go public in Hong Kong after local listing rules eased in April to welcome such companies. The first firm, Ascletis Pharma Inc., closed flat on its first day of trading on Aug. 1 and has since tumbled below its IPO price of HK$14.

Jasper Chan, manager of Phillip Securities (Hong Kong) Ltd., told Caixin that the IPO teams behind the biotech firms have been too aggressive in pricing, as they have a thorough understanding of the industry while the market doesn’t.

Their share prices will rebound later, after they launch more products and when investors have a greater knowledge of the companies, Chan said.

Founded in 2010, BeiGene specializes in developing cancer treatments, and has launched three such products in the China market. It reported a loss of $105 million in the first quarter of the year, greater than the company’s annual loss of $93 million all of last year, and has 13 drugs in the pipeline.

Ascletis, a developer of hepatitis C, B and HIV medicines, has seven products in the pipeline and none available on the market. The China Food and Drug Administration started to review its application to launch a hepatitis C drug in China on Aug. 1.

Another unnamed investor, who is dedicated to pushing forward the listing of biotech firms in Hong Kong, told Caixin that many such firms may see their respective share prices drop below the offer prices because the market is skeptical of their research and development capabilities.

Following Ascletis and BeiGene, at least five other biotech startups have filed for an IPO with the Hong Kong bourse, including Hua Medicine and Innovent Biologics Inc.

BeiGene is the first biotech firm to be dually listed in Hong Kong and New York, where it first went public on the Nasdaq Stock Market in 2016.

Its Nasdaq-listed shares closed up 1.53% on Tuesday at $179.44, more than seven times the IPO price.

Contact reporter Coco Feng (renkefeng@caixin.com)