Biotech Firm Bio-Thera Files for a USD 290 Million IPO in STAR Market
Bio-Thera Solutions Ltd, a biotechnology company in Guangzhou, China, filed on Monday with the Shanghai Stock Exchange (SSE) to raise up to CNY 2 billion (USD 290 million) in an initial public offering.
Bio-Thera Solutions Ltd (hereafter referred to as Bio-Ther, 百奥泰), a biotech developing therapeutics for oncology, autoimmune and other serious medical conditions, filed on Monday with the Shanghai Stock Exchange (SSE) to raise up to CNY 2 billion (USD 290 million) in an initial public offering.
The Guangzhou, China-based company was founded in 2003. It is the second company that plans to list on the SSE STAR market under the fifth standard amid the biotech boom that is happening in Asia. The fifth standard allows companies valued more than CNY 4 billion (USD 581 million) with considerable performance and significant market potentials to be listed. Another biomedicine firm Suzhou Zelgen Biopharmaceuticals Co., Ltd. (泽璟制药) provided SSE with required documents on June 10.
Healthcare companies are asked to have at least one core products in Phase II clinical study under the standard. According to media reports, Bio-Thera filed for regulatory approval with the China National Medical Products Administration (NMPA), the European Medicines Agency (EMA) and the United States Food and Drug Administration (USFDA) for one candidate. In addition, the firm has four candidates currently being evaluated in Phase I clinical trials, one candidate in Phase II clinical trials, and four in Phase III clinical trials.
Its financials indicates that the company urges for funding to support full development and product registration of its medicine. The company reported CNY 2.7 million and CNY 2 million revenue in 2016 and 2017, respectively, generated from occasional technology transfer. The company also has shown three consecutive years of profit losses, with CNY 137 million, CNY 236 million and CNY 532 million from 2016 to 2018. Five out of 145 companies that initiated their relationships with the Shanghai bourse were unprofitable in 2018 as of July 10. Two of them are in the general equipment manufacturing sector, two are from biomedicine, and one is chipmaker. Profits are crucial to the growth of any company, however, it is biased to overlook the R&D expenses for biotech companies, which are especially attractive to risk-tolerant investors looking for explosive gains.
Bio-Thera posted CNY 541 million R&D expenses in 2018, representing 95% of total operational costs. That R&D expense ranks third among the 145 companies, following China Railway Signal & Communication (CRSC, 中国通号), and mobile phone maker Transsion (传音控股).
Comparing to how much its counterpart Suzhou Zelgen invested in the sector of biomedicine, Bio-Thera showed its ambitions on the potential upsides from the intellectual properties it can generate after it gets marketing authorization in the future. As of March 2019, the firm has 231 employees in its R&D department, accounting for 55% of total employees.