US biotech firm seeking larger valuations rush to Hong Kong

Sorrento Therapeutics is one such firm hoping to cash in on the trend.

Reuters reports that a slew of US biotech firms hoping to score bigger valuations in Hong Kong’s recently liberalised bourse are expected to rush to city.

Also read: Hong Kong bourse reform seeks to tap on Chinese drug stocks

Estimating about half a dozen biotech firms to list by year-end, Wendy Pan, a partner at law firm Sidley Austin LLP, said that early-stage biotech firms are valued higher in China than in the U.S. “A lot of general funds in China are now setting up dedicated healthcare teams and are willing to pay more just to get into the space,” she said.

US-based Sorrento Therapeutics, which develops CAR-T cancer drugs to relieve pain, is one such company shunning US bourses in favour of a second listing in the Hong Kong stock exchange to pursue greater profit margins.

“We strongly believe we are under-appreciated in the U.S. and our shareholders deserve more,” the company’s chief financial officer Shao told Reuters.

The move comes as Hong Kong earlier introduced sweeping reforms to its listing regime allowing biotech firms with no track record of profitability to list in the Main Board. 

The biotech sector was chosen as initial focus in widening market access as they make up a majority of companies in the pre-revenue stage seeking a Main Board listing and activities like clinical trials tend to be highly regulated under the current regime that sets external milestones on development progress, an earlier noted reported.

A slew of companies from Amazon-backed Grail to Shanghai-based Hua Medicine are already lining up or mulling a local listing, in a win for the Hong Kong bourse which seeks to compete against New York and Nasdaq in global IPO rankings.

Here’s more from Reuters: