The biggest provider of biologic drugs services in China, Wuxi Biologics, intends to spin off its international division, Wuxi XDC, through a Hong Kong IPO.
The biggest provider of biologic drugs services in China, Wuxi Biologics, intends to spin off its international division, Wuxi XDC, through a Hong Kong IPO.
According to a filing made with the stock exchange on Sunday, Wuxi Biologics currently owns a 60% controlling interest in Wuxi XDC, which will continue to be a subsidiary of the company after the spin-off. The amount the company hopes to raise was not made public.
To “strengthen our in-house discovery and development capabilities and manufacturing capacity,” Wuxi said in the filing, it intends to broaden its product line beyond so-called antibody-drug conjugates (ADCs). As a targeted therapy for the treatment of cancer, ADCs are biopharmaceutical medications.
According to the exchange filing, funds raised from the IPO will be used to finance the construction of new manufacturing facilities in Singapore, an increase in the capacity of the company’s Chinese manufacturing facilities, strategic investments, and acquisitions, as well as working capital and other general corporate purposes.
In comparison to the same period the previous year, Wuxi XDC’s net profit increased by 16.5% to 80.7 million yuan (US$11.16 million) in the first quarter of this year.
The IPO has named Morgan Stanley, Goldman Sachs, and JPMorgan as joint advisers.
In the first hour of trading on Monday, shares of parent company Wuxi Biologics, which went public in Hong Kong in 2017, increased by as much as 3%.
The announcement is made as numerous biotech firms submit applications to list their shares in Hong Kong. Sources claim that the city-based Insilico Medicine has set its sights on a US$200 million IPO, and that Sichuan Kelun-Biotech Pharmaceutical is preparing to list on Tuesday with a US$208.6 million target.
Since the introduction of legislation known as Chapter 18A, which permits pre-revenue biotech companies to list in the city, Hong Kong’s biotechnology ecosystem has expanded significantly, according to Louis Lau, a partner at KPMG China.
For IPO applicants working in specialised technologies, the city has grown to be a very appealing option, according to Lau.
He claimed that this is also due to Hong Kong’s function as a “connector” between the People’s Republic of China and other countries and markets.
After the Nasdaq, Hong Kong is the largest fundraising hub for biotechnology in the world and Asia.
According to Lau, Hong Kong has an advantage over the US market due to the uncertainty caused by the US and Chinese trade tensions.