17 companies have been welcomed during the year! The number of 18A listed companies in Hong Kong sets another record as the biotech wave rises

In 2018, the HKEx reformed its IPO regime and began to allow unprofitable biotechnology companies to list in Hong Kong, making Hong Kong a popular listing location for global biotechnology and pharmaceutical and health companies to raise capital.

Driven by the “normalisation” of the epidemic, coupled with the fact that many well-known biotechnology and healthcare investment institutions have taken heavy positions in biopharmaceutical stocks, the biopharmaceutical sector has become a highly sought-after industry sector for “new” investors. Accordingly, IPOs in the biotechnology and healthcare sectors in Hong Kong have been one after another.

However, the major capital markets have also gone through different phases of adjustment since this year, with only three IPOs listed in the Hong Kong market in October just gone, but there is still a steady stream of new IPO applications, and the enthusiasm for IPOs from companies in the healthcare sector, in particular, is still high.

The Hong Kong IPO circuit was revitalized in November, with three new IPOs in the biotechnology sector listed in the first week, namely Shanghai MicroPort MedBot(Group)Co.,Ltd. on 2 November, and Clover Biopharmaceuticals,Ltd.and Beijing Airdoc Techonlogy Co.,Ltd. on 5 November.

A record 17 18A channel-listed companies in 1 year, raising over HK$35 billion in total

So far this year, 17 unprofitable biotechnology companies have been successfully listed on the Hong Kong Main Board, in order of listing date: Heart one Medical-B, Beacon Medical-B, Novelty Health-B, Zhaoke Ophthalmology-B, Keji Pharmaceuticals-B, Guichuang Tongqiao-B, Kangnuoa-B, Teng Sheng Bo Pharmaceutical-B, Xin Wei Medical-B, Centrum Medical-B, Koon Bo Medical-B, Trunsun Group-B, Hoyo-B, Microtek Medical-B, Microtronics Robotics-B, as well as Clover Bio-B and Eagle Pupil Technology-B. B, Microtek Medical — B, Microtronics Robotics — B, and Clover Bio — B and Eagle Pupil Technology — B.

As shown in the table above, the official data tracked and compiled by Biotech’s Investment Banking Division shows that as of November 5, the total amount of funds raised by 17 IPOs of unprofitable biotech companies through the 18A channel special listing this year has exceeded HK$35 billion, and the average amount of funds raised per IPO of unprofitable biotech companies has exceeded HK$2 billion in the current quiet market conditions. This shows that the capital market still has confidence in the industry and is fully supportive.

Looking back at the short history of the 18A listing route for Hong Kong stocks, the vision of Hong Kong as a global biotechnology capital raising hub is becoming a reality step by step.

Since the implementation of the new listing rules for Hong Kong stocks in 2018, the HKEx has officially opened its doors to unprofitable biotechnology companies, attracting many high-potential biotech companies to list in Hong Kong. In 2018, 2019 and 2020, the Hong Kong market has welcomed 5, 9 and 14 eligible companies to successfully list through the 18A route respectively, and as of 5 November this year, there have been 17 unprofitable This year, as of 5 November, 17 unprofitable biotechnology companies have been listed on the Hong Kong stock market under the 18A route, surpassing the number of previous years and setting a new record, which means that the number of companies listed under the 18A route has shown a positive incremental trend in the four years since the Hong Kong stock market opened the floodgates to unprofitable biotechnology companies.

Hong Kong capital market — vying to be the world’s largest biotech capital-raising centre

The implementation of the new Hong Kong listing rules in 2018 marked the official opening of a new era of financing and capitalisation for biopharmaceutical companies, which have increasingly become the mainstay of the IPO circuit in domestic science and technology board, Hong Kong and US capital markets in recent years.

In August 2020, the Hang Seng Composite Sector Index (HSCI) will allow the inclusion of eligible Chapter 18A listed companies; in November 2020, the Southbound Hong Kong Stock Connect will allow the inclusion of eligible Chapter 18A listed companies.

In February 2021, HKEx released the first edition of the Stock Exchange and Biotechnology Alert for 2021, which showed that the overall performance of HKEx’s healthcare sector was excellent. And for the full year of 2020, the Hang Seng Hong Kong Listed Biotechnology Index (49.5%) also outperformed the Hang Seng Index (-3.7%).

Looking back at the past four years, the team of biotechnology companies listed in Hong Kong through the 18A channel has gradually grown. In recent years, it can be said that companies in the biopharmaceutical industry are increasingly becoming the mainstay supporting the flourishing development of the Hong Kong capital market, and the Hong Kong stock market is also committed to building a top global capital market in the biotechnology sector by actively introducing biotechnology companies with potential through this listing system reform.

Now that Hong Kong has become the largest biotechnology capital-raising centre in Asia and the second largest in the world, more and more companies in the biotechnology industry are looking to tap into the international platform of the Hong Kong capital market to gain wider access to financing and development opportunities. As a result, unprofitable listings of companies in the biotechnology and pharmaceutical industries are becoming the norm.

Emerging biotech companies take off in a whirlwind; where is the next biotech unicorn?

After the listing of three biotechnology companies in the first week of November, the Hong Kong IPO “reserve” team is still growing, and there are still several companies in the biopharmaceutical sector that have formally filed their forms and are waiting for their meetings to be completed, so the Hong Kong IPO market is still full of attractions in the last two months of 2021.

Of course, in addition to the aforementioned biotechnology companies that have already reached the IPO stage and are gradually moving towards the main stage of the capital market, there are also a large number of emerging biotechnology and new drug creation fields that are expected to take over the baton and move towards the broad capital market in the future, and perhaps the next unicorn in the biotechnology field will come out from these newcomers.

Recently, many biotechnology companies in the relatively early stage of development have also launched their financing activities, such as Hong Kong drug Lysoma, which has developed the biomolecule drug delivery vector YB1, is carrying out its Pre-A round of financing to accelerate their respective R&D landing process, and is expected to enter the Hong Kong capital market as soon as possible in the future to usher in a new stage of development in a larger arena.

It is reported that HKNK focused on two research directions, namely cancer immunotherapy and thrombolytic therapy for antithrombotic diseases is currently focusing on the development of lyso-bacterial therapy and thrombolytic bacterial therapy through its core technology product, YB1, a biomolecular drug delivery vehicle, and has laid out a corresponding innovative product pipeline.

Overall, the Hong Kong market, as an important bridge linking the Mainland and international capital, is relatively active in its own right and has an enduring appeal to global investors. It is indeed a good choice for Mainland biotechnology companies to list and raise capital, and we look forward to more emerging reserves to continue to support the Hong Kong stock market’s façade and create more surprises for the global capital market in the future.