Raft Of Chinese Pharmas Join Active Financing Market
This article was originally published in PharmAsia News
Executive Summary
December has been a busy financing month for the pharmaceutical industry in China, the key takeaways from the hectic activity being a series of major fundraisings and a trend for pharma companies from mainland China to tap into the active Hong Kong stock market through IPOs.
SHANGHAI - A phase of active financing seems to be kicking off in China, as domestic pharmaceutical companies seek partnerships and investment, lining up the resources they need to maximize their opportunities by seeking additional funding from institutional investors or stock markets.
The most recent funding round was led by Beijing-based Pharmaron Beijing Ltd. Co., a Sino-US contract research organization (CRO) for preclinical research.
Under a definitive agreement just announced this week, CITIC M&A Fund and Legend Capital agreed to lead an investor consortium that will pour $280m in Pharmaron. The company told PharmAsia News that the fundraising was held to further strengthen its core R&D service platforms, adopt cutting-edge technology, and “to allow certain shareholders to realize significant gains on their earlier investments.”
The money will be used to expand existing R&D capabilities and capacity, including CMC and GMP-standard large-scale manufacturing, and possibly for M&A “to strengthen our core business” and to strengthen the firm’s domestic and international foot print.
Pharmaron, founded in 2003 with operations in both the US and China, has established a broad spectrum of drug research and development service capabilities, ranging from synthetic and medicinal chemistry, drug metabolism and pharmacokinetic (DMPK), biology, pharmacology and toxicology to chemical and pharmaceutical development.
The company also provides international investigational new drug and new drug application filings services with multiple regulatory agencies, particularly with the US FDA.
Its safety assessment facility and toxicology facility in Beijing have received good laboratory practice certification from the China FDA, in 2015 and 2014, respectively.
Rising Demand Seen
“External innovation and partnering with CROs are becoming a strategic component for multinational pharmaceutical R&D organizations,” Pharmaron told PharmAsia News. “With increased investment into biotech start-ups and innovation, and new technologies developed by life science communities, we believe that CROs will be even more integral to the discovery and development of new medicines.”
In 2012, Pharmaron signed a drug discovery partnership with AstraZeneca PLC, under which Pharmaron provides the UK-based multinational with chemistry, DMPK and efficacy screening services at its Beijing site.
Another strategic partnership with Merck Serono SA was established in 2011. In the framework of this partnership, Pharmaron’s campus in Beijing served as home to Merck Serono’s China R&D Laboratory. The focus of this laboratory is on clinical bioanalysis and biomarker characterization, allowing for the identification of gene mutations in the Chinese population, early detection of disease processes, and development of personalized medicines for cancer and neurodegenerative diseases.
As one of Pharmaron’s first institutional investors, the CITIC M&A Fund is managed by GoldStone Investment, focusing on making direct equity investments with the potential of going public.
Ascletis, Others Raise New Funds
In other recent funding rounds in China, Chinese biologics developer Ascletis Inc. completed a $55m financing earlier in December. Goldman Sachs put a $20m investment in the company, while a $35m tranche was led by US C-Bridge Capital, Tasly Pharmaceutical Co. Ltd. and Pavilion Capital.
Proceeds from the financing will be used to strengthen Ascletis’ R&D capacity, broaden the scope of its pipeline, and enhance GMP commercial manufacturing.
The company has four products in the clinical phase with proprietary intellectual property rights, including ASC08, a hepatitis C virus (HCV) NS3/4A protease inhibitor licensed from Roche; ASC16, an HCV NS5A protease inhibitor licensed from Presidio Pharmaceuticals Inc.; ASC06, a first-in-class RNAi therapeutic for the treatment of liver cancer licensed from Alnylam Pharmaceuticals Inc.; and ASC09, a next-generation HIV protease inhibitor licensed from Janssen Pharmaceuticals Inc.
WuXi Healthcare Ventures has also just announced the closing of its $290m WuXi Healthcare Ventures II, exceeding its initial target of $200m.
The venture now has more than $350m under management to execute its “find in the US and build in China” investment strategy. It has positioned itself as a leading early-stage venture capital firm focused on cross-border opportunities in the life sciences.
New Wave Of Hong Kong IPOs
The China Securities Regulatory Commission lifted a ban on mainland initial public offerings (IPOs) on the Shanghai and Shenzhen stock exchanges last month; 42 life science and healthcare firms had been awaiting IPOs at the time of the ban.
It has also been a busy time for companies seeking to go public in Hong Kong, and Chinese top 20 pharma giant Jiangsu Hansoh Pharmaceutical is reportedly planning to list on the Hong Kong Stock Exchange in the first half of next year.
Hansoh’s IPO is projected at a size of around $1.5bn, according to IFR, and the company is still in the process of pitching banks and underwriters.
In November, Hong Kong-listed Uni-Bio Science Group announced that it will acquire exclusive global rights to manufacture and commercialize mitiglinide, an oral antidiabetic agent, from Hansoh, which will continue to provide the active pharmaceutical ingredient to Uni-Bio.
Founded in 1995, Hansoh has developed into an integrated pharmaceutical company specialized in pharmaceutical intermediates, raw materials synthesis, formulation manufacturing and distribution of both chemical and biological drugs. Some of its APIs and finished products are recognized by the US FDA and have been exported to over ten countries and regions in Europe, America, Asia and Africa.
China’s Yichang HEC Changjiang Pharmaceutical has also just opened book building for a plannned Hong Kong IPO, which could be valued at HKD1.23bn ($159m) to HKD1.67bn. It has already secured a total $62m (HKD483.6m) worth of commitments from three out of its four cornerstone investors, and book building is expected to close on Dec. 18, with Dec. 29 as the target listing date.
The cornerstone investors include Saxi Electric, Pinpoint Asset Management, Ally Bridge and China Southern Dragon Dynamic Fund.
Yichang conducts research, development and manufacturing of active ingredients and finished products in Asia, Europe and the US, in lines with international GMP standards. The company plans to expand its product portfolio and use the proceeds from the IPO to construct two new production plants, as well as promotion and marketing.
Ahead of Yichang, Chuangmei Pharmaceutical, the third largest privately owned drug distributor in southern China, began trading on the main board of the Hong Kong Stock Exchange on Dec. 14. A total of approximately 8.02 million shares changed hands, with an aggregate turnover of approximately HKD64m.
The firm expects to add 800 kinds of medicine to its present distribution list, and will also promote its online-to- offline platform to cater to middle-end customers and update its logistic and information systems with the net proceeds.
Guangzhou Baiyunshan Pharmaceutical is Chuangmei’s cornerstone investor, and Xiangxue Pharmaceutical’s Hong Kong unit also invested HKD31m in Chuangmei’s stock offering.