Week In Review: CStone's Hong Kong IPO To Raise $304 Million At $1.5 Billion Valuation Next Week

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Includes: SRRXY
by: ChinaBio Today
Summary

CStone Pharma, a Suzhou oncology company, plans to raise $304 million in its Hong Kong IPO at a valuation of $1.5 billion.

3SBio of Shenyang invested $15 million into Boston's Verseau Therapeutics and will partner with Verseau to develop its macrophage checkpoint modulators (MCMs) in Greater China for various cancers.

China will reduce the Value Added Tax on 21 rare disease treatments to 3%, starting March 1.

Deals and Financings

CStone Pharma, a Suzhou oncology company, plans to raise $304 million in its Hong Kong IPO at a valuation of $1.5 billion (see story). Even though CStone is just two and one-half years old, it has 14 oncology programs underway, including nine in clinical or IND stages. CStone plans to file a China NDA on its lead candidate, a PD-L1 immunotherapy, later this year. CStone has reduced the IPO price 23% from the original range, though its valuation remains a 50% increase over the last venture funding. The IPO will be priced next week and begin trading on February 26, one week later.

Shanghai HaiHe Biopharma announced a $146.6 million funding to support its portfolio of innovative cancer drugs. HaiHe has partnered with Shanghai Institute of Materia Medica, Chinese Academy of Science to develop novel cancer drugs for global markets. The company is testing 10 candidates in clinical trials and five more in preclinical studies. Last year, HaiHe merged with RMX (Shanghai) Pharmaceutical Technology. The financing was led by Huagai Capital, a private equity investor.

Burning Rock Biotech, a Guangzhou diagnostics company, closed a $126 million Series C financing led by GIC (the Sovereign Wealth Fund of Singapore). Burning Rock specializes in oncology diagnostics for precision medicine based on Next-Gen Sequencing. So far, the company has developed 32 products for different cancer types and clinical applications. It will use the proceeds of the funding to develop tests for early detection of cancer and to expand sales and marketing for its companion diagnostics business. Burning Rock also offers CRO services.

Ascletis Pharma (HK:1672) of Hangzhou in-licensed China rights to a novel non-alcoholic steatohepatitis (NASH) candidate from San Francisco's 3-V Biosciences and led an $18 Series E financing in 3-V. The NASH candidate is a Phase II-ready fatty acid synthase inhibitor. Ascletis, a viral, cancer and fatty liver diseases company that currently markets two treatments for hepatitis C, will have rights to the candidate in Greater China. The 3-V investment syndicate agreed to contribute an additional $7 million to the Series E in the future.

3SBio (OTC:SRRXY) (HK:1530) of Shenyang invested $15 million into Boston's Verseau Therapeutics and will partner with Verseau to develop its macrophage checkpoint modulators (MCMs) in Greater China for various cancers (see story). 3SBio will be responsible for antibody development, GMP manufacturing and commercialization in China, Taiwan, Hong Kong and Macau, while Verseau will supply the targets. 3SBio and Verseau will each be eligible to receive milestone payments and sales-based royalties, though details of the agreement were not disclosed.

Nanjing Bioheng Biotech completed a $15 million Series A financing, with all of the funds invested by Decheng Capital. Bioheng, which focuses on cell therapy products, is developing a universal CAR-T product that it expects will lower the cost of CAR-T therapies and solve the problem of graft v. host rejection. Founded in 2017, the company says it will use the proceeds to hire additional personnel, build GMP manufacturing facilities and develop its "off the shelf" universal immunotherapy products.

Guangzhou Magpie Pharmaceuticals completed a $15 million B funding from Sangel Capital. Magpie is an innovative company that is developing drugs based on modernized formulations of proven TCM drugs. It aims to discover drugs that are either best-in-class or first-in-class. Its most advanced candidate is a nitrone triazine (TBN) treatment for ischemic stroke, currently in a China Phase I trial. The company said it hopes to have between four and six candidates in clinical trials within three years.

China's C-Bridge Capital in-licensed China rights to three biosimilar candidates from Korea's Samsung Bioepis Co.. C-Bridge will form a new company, AffaMed Therapeutics, which will be in charge of clinical development, regulatory registration and commercialization. The agreement includes third-wave biosimilar candidates to macular degeneration treatment Lucentis® (ranibizumab), rare disease treatment Soliris® (eculizumab), and breast cancer drug Herceptin® (trastuzumab). Terms of the agreement were not disclosed.

Government and Regulatory

China will reduce the Value Added Tax on 21 rare disease treatments to 3%, starting March 1 (see story). The State Council ordered the cuts on Monday, and said it was also directing drug regulators to speed the approval process for cancer drugs and foreign drugs that address unmet needs. The regulatory move mirrors a VAT reduction last year on cancer drugs from 16% to 3%. The changes reinforce China's official resolve to provide the best drugs at the lowest prices, no matter whether the drugs were developed in China or overseas.

Disclosure: None

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