China's Innovent prices HK IPO near top end, raises $421 million - sources

HONG KONG (Reuters) - Innovent Biologics Inc has priced its Hong Kong initial public offering (IPO) near the top of its marketing range to raise $421 million, two people familiar with the matter said, indicating renewed enthusiasm in a sector blighted by falling stocks.

The Chinese biotech - backed by mutual fund giant Fidelity and Singapore state investor Temasek Holdings (Private) Ltd - sold about 236 million new shares, or 21 percent of enlarged share capital, at HK$13.98 ($1.78) each, the people said, declining to be identified as the information was private.

That was near the top end of a price range of HK$12.5 to HK$14.00, and made the biotech IPO Hong Kong's biggest this year.

Innovent did not respond to a request for comment.

The float is the fourth under new rules in Hong Kong aimed at wooing early-stage drug developers. However, the first three biotechs to list have seen their shares drop below listing prices. Several bankers and analysts said relatively high pricing contributed to the stocks' decline.

The share sale also comes at a time when some IPO candidates such as Tencent Music Entertainment have postponed listing plans due to a global market rout.

Chief Financial Officer Ronald Ede last week said Innovent decided to proceed with its IPO mainly due to investor support.

"The market certainly has its own mechanism ... but we think that with reasonable pricing, our investors will continue to support us, support the company's long-term value," he said.

BIOTECH DECLINE

Hong Kong's new rules implemented since April 30 permit listings from biotechs with no revenue or profit, and are aimed at winning new-economy firms away from centres such as New York.

There are currently nine listing candidates including Ascentage Pharma and WuXi AppTec Co Ltd, with at least two more planning to follow suit, bankers said.

Innovent's IPO comes after share sales from Ascletis Pharma Inc, Hua Medicine and Nasdaq-listed BeiGene Ltd. However, Ascletis' stock has since dropped 55 percent from its IPO price, and Hua Medicine is down 9 percent. BeiGene has lost 35 percent since its dual-primary listing.

CORNERSTONES

Shanghai- and Suzhou-based Innovent develops products for treating cancer, autoimmune disorders and other diseases. It was founded in 2011 by Michael Yu, who held senior roles at U.S. biotechs including Cell Genesys before returning to China.

It has built a pipeline of 17 antibody drug candidates, led by four core products in late-stage clinical development. Among them are sintilimab, which treats Hodgkin's lymphoma, and IBI-305, a biosimilar product to Avastin, also known as bevacizumab, which treats colon, lung and other cancers.

The firm secured 10 cornerstone investors including Sequoia Capital China, Value Partners Hong Kong and Prime Capital Funds for a total of $245 million, Innovent said in a regulatory filing on Thursday.

It had revenue of 4.4 million yuan ($636,030) in the first half of this year and 18.5 million yuan in 2017 from a licence granted to a Chinese biopharmaceutical firm.

Innovent plans to use the IPO proceeds to fund ongoing and planned clinical trials, prepare for registration filings, and for commercial launches of drugs including sintilimab.

Its shares will begin trading on Oct. 31.

($1 = 7.8391 Hong Kong dollars)

(Reporting by Julie Zhu; Editing by Editing by Christopher Cushing and Edwina Gibbs)

By Julie Zhu