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May 11, 2018

Ascletis Pharma becomes first firm to file for IPO under new rules in Hong Kong

New regime allows biotech firms without profit or revenue to list

Ascletis Pharma has become the first biotechnology firm to file for an IPO in Hong Kong following recent reforms that allow biotech firms without profit or revenue to list.

The Hangzhou-based company submitted a highly redacted application for a listing published on the Hong Kong Exchanges and Clearing website (HKEX). 

HKEX regulators will now scrutinize the listing in a process that could take up to three months to complete.

Biotech companies without profits or revenues are now allowed to apply for listings in Hong Kong under the new rules.

Various reports in the region have suggested as many as 10 companies – mostly Chinese and including Innovent Biologics and Shanghai Henlius Biotech – are planning Hong Kong listings as a result of the rule changes.

It is an area where there is great potential for growth, as only 3 percent of all Hong Kong-listed stocks come from tech and biotech – according to a report last year by HKEX. This compares with 60 percent for Nasdaq and 47 percent for the New York Stock Exchange.

The liberalization of the exchange’s rules potentially open up access to vast amounts of capital, but also raise fears of a potential investment bubble, akin to the tech bubble in the early 2000s.

To deal with and oversee the situation, the HKEX has assembled a 13-person biotech advisory panel, which includes regulators, academics, and representatives from the pharmaceutical industry.

The panel was established by the exchange ‘to assist in its review of listing applications from biotech firms applying under the new regime,’ the bourse says in a statement.

The ‘pre-revenue’ rule change is one of three new chapters the HKEX has added to its main board listing rules. One establishes a ‘new concessionary secondary listing route for Greater China and international companies’ seeking a secondary listing in Hong Kong, according to a statement from the exchange, while a more controversial change sees the approval of dual-class share structures. The move follows a four-year debate and marks what Charles Li, HKEX CEO, describes as the start of an ‘exciting new era’ for the exchange.