August 1, 2018 / 1:45 AM / a year ago

China's Ascletis closes flat on debut in HK's first float under new biotech rules

HONG KONG (Reuters) - Chinese biotech firm Ascletis Pharma Inc (1672.HK) saw its shares end their Hong Kong debut flat on Wednesday after rising as much as 6.4 percent, in the culmination of the city’s first listing under new rules designed to attract drug developers.

FILE PHOTO: The logo of Ascletis Pharma Inc. is seen at a news conference on the IPO of the company in Hong Kong, China July 19, 2018. REUTERS/Bobby Yip/File Photo

The listing comes as Hong Kong seeks to establish itself as a financing center for the growing number of Chinese biotechs by accepting applications from pre-profit, pre-revenue startups.

The rules, introduced in late April, are part of efforts to better compete with New York for listings. Currently, Nasdaq is the biggest center for biotech initial public offerings (IPOs), with $2.4 billion worth of such shares sold last year.

So far, more than 10 biotechs - mostly Chinese and including Innovent Biologics and Shanghai Henlius Biotech - plan to list in Hong Kong, and some have dropped U.S. IPO plans in favor of listing closer to home.

Last month, Ascletis sold 224 million new shares, or 20 percent of its enlarged share capital, in an IPO priced at the middle of a HK$12 to HK$16 range. That valued the firm at $2 billion.

On Wednesday, its shares rose as high as HK$14.9 in early trade before ending unchanged from their IPO price at HK$14. The benchmark Hang Seng Index .HSI closed down 0.85 percent.

Hangzhou-based Ascletis, founded in 2013, has two hepatitis C virus drug candidates at or near commercial stage and one HIV drug that has completed a phase IIa clinical trial. It also has a liver cancer drug candidate that has completed phase I and phase I extension clinical trials.

Responding to questions about China’s recent medical scandal, where a pharmaceutical company was found to have made and distributed poor quality vaccines, Ascletis founder Wu Jinzi said quality was “the lifeline” of his company.

“We are going to make the best quality, most effective and the safest drugs for patients in China and the world,” Wu said at Ascletis’ listing ceremony at the Hong Kong exchange.

China Merchants Securities, Goldman Sachs and Morgan Stanley led Ascletis’ IPO.

Under previous rules requiring certain levels of cash flow or profitability, Hong Kong’s biggest biotech IPOs were those of 3SBio Inc (1530.HK), which raised $818 million in 2015, and WuXi Biologics Cayman Inc (2269.HK), at $587 million last year.

Reporting by Julia Fioretti and Kane Wu; Additional reporting by Julie Zhu; Editing by Christopher Cushing and Stephen Coates

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