Week In Review: China Green Lights Nasdaq-Style Exchange For Young Companies

|
Includes: AITB, BABA, CSSPF, KANG, MKGAF, TCON
by: ChinaBio Today
Summary

China has given the green light to a new registration-based Shanghai stock exchange aimed at high tech companies that, apparently, will be less regulated than other China exchanges.

iKang Healthcare, a private China healthcare chain, completed a $1.4 billion privatization backed by an Alibaba investment arm and Yunfeng Capital.

Circassia Pharmaceutical, an Oxford UK respiratory disease company, entered a $32.7 million agreement to acquire US and China marketing rights for AirNOvent.

Government and Regulatory

China has given the green light to a new registration-based Shanghai stock exchange aimed at high tech companies that, apparently, will be less regulated than other China exchanges. The new exchange is described as resembling NASDAQ with its dealer-to-dealer pricing mechanism. Presumably, the new exchange will allow pre-profit high-tech China companies to raise capital, taking some of the listings from Hong Kong's new IPO rules for young companies. Hong Kong requires pre-profit biopharmas to have products in late-stage development. So far, China has not specified the requirements for companies seeking to IPO on the new Shanghai exchange.

Deals and Financings

iKang Healthcare (NASDAQ:KANG), a private China healthcare chain, completed a $1.4 billion privatization backed by an Alibaba (NYSE:BABA) investment arm and Yunfeng Capital, a private equity firm co-founded by Alibaba's Jack Ma and David Yu. The company, which seems likely to become part of Alibaba Health, offers check-ups and disease screening. The privatization was completed at a price of $20.60 per ADS. iKang staged a $153 million IPO in 2014 and proposed a privatization 16 months later. It has taken three and a half years to complete the transaction.

Circassia Pharmaceutical (OTC:CSSPF), an Oxford UK respiratory disease company, entered a $32.7 million agreement to acquire US and China marketing rights for AirNOvent, a nitric oxide product developed by US-based AIT Therapeutics (OTCQB:AITB). AirNOvent is a ventilator compatible nitric oxide product that is administered for respiratory failure associated with persistent pulmonary hypertension of newborns (PPHN). AIT, which also intends to seeks a second indication for AirNOvent, expects to apply for US approval of the product in Q2 2019, with market launch in 2020.

Immunochina Pharma of Beijing has closed a $20.4 million Series C financing to advance its CAR-T candidates. The company will expand its GMP-grade manufacturing capabilities and continue clinical trials of its lead IM19 molecule, a CD19 CAR-T immunotherapy, in patients with B-Cell Acute Lymphoblastic Leukemia (B-ALL) and Non Hodgkin's Lymphoma. Immunochina increased the size of the C financing after it presented strong results for its lead CAR-T molecule at the ASH conference in December.

Trials and Approvals

Shanghai's I-Mab Biopharma announced that its novel CD73 antibody (TJD5), an immunotherapy, was cleared to start Phase I trials in the US. TJD5, the second I-Mab candidate to begin US clinical trials, will be tested in patients with advanced solid tumors. The IND application was filed by I-Mab's US partner, Tracon Pharma (NASDAQ:TCON) of San Diego. In November 2018, the two companies agreed to share US development costs of I-Mab's TJD5 and up to five unspecified bi-specific candidates.

Industry Insight

"Right now, there is no Chinese company among the top 50 in the biopharmaceutical industry, but I'm absolutely certain that this is going to change," said German Merck's (OTCPK:MKGAF) Chair and CEO, Stefan Oschmann, PhD. Dr. Oschmann was speaking to CNBC reporters at the Davos Conference. He also believes that China, like the US and Israel, has a working ecosystem for biopharma innovation - a strong collaboration between the military, academic centers, and private/public drug companies. Europe does not have this ecosystem, he added.

Disclosure: None

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors