Biopharma fundraising activities remain hot in HK

Biopharma novartis

Sino Biopharmaceutical issued its first €750 million (US$854.5 million) zero coupon convertible bonds due 2025 on the Hong Kong Stock Exchange (HKEx) in February with legal experts talking up the prospects for the sector.

“Clinical trials usually take a particularly long time to finish and the costs can be significantly high,” Zhen Yueneng, a partner at Tian Yuan Law Firm who advised on the deal, told China Business Law Journal. “The issuance reaffirms Hong Kong’s status as a major fundraising centre for biopharma companies globally.”

Since HKEx introduced the Chapter 18A regime, which allows the listing of pre-revenue biotech companies, in 2018, eight companies have accomplished their IPOs in Hong Kong and raised HK$23.5 billion (US$3.02 billion) by September 2019, according to a HKEx report.

Ivy Wong, the Asia-Pacific chair of Baker McKenzie’s capital markets practice, told China Business Law Journal: “We have also seen an increase in startups and innovative tech initiatives in the region in this sector in recent years, and this is likely to continue to grow, given the increase in global awareness of human health and wellbeing.”

Biopharma is one of 10 key sectors highlighted for development under the “Made in China 2025” industrial initiative. A report from Baker McKenzie titled, the Future of Capital Raising in Biotech and Pharma, says large levels of investment mean that China will be able to grow at a more rapid and innovative pace than many other jurisdictions.

“We anticipate that with the development of the [Star Market] and the deepened reform of stock issuance registration system, [the Star Market] is going to be another ideal listing destination for certain biopharma companies,” said Zhen.

King & Wood Mallesons advised Sino Biopharmaceutical on Hong Kong, English and PRC laws, while Conyers Dill & Pearman advised on Cayman Islands law. Tian Yuan Law Firm acted as PRC counsel, and Linklaters as Hong Kong and British counsel to the underwriters. The capital raised in this issuance will be used for R&D and other expenses.