Chinese language biotech firm BeiGene plunges on Shanghai debut By Reuters
© Reuters. FILE PHOTO: People enter a building of the biotechnology company BeiGene Ltd in Suzhou Industrial Park in Suzhou, Jiangsu Province, China, Nov 22, 2019. REUTERS / Stringer
BEIJING (Reuters) – Chinese biotech company BeiGene (NASDAQ 🙂 Ltd slumped on its Shanghai debut Wednesday after rising $ 3.5 billion in STAR’s largest market listing this year.
BeiGene, which posted consecutive years of losses, slumped more than 15% in early trading after opening 8.1% below the offering price of 192.6 yuan.
The offer, which Refinitiv data says is the largest public health company public offering in China in at least two decades, comes amid growing concerns that some Chinese companies may be asked to delist from the US stock market.
BeiGene’s Nasdaq-listed shares are down nearly 20% so far this month as U.S. securities regulators passed rules to kick non-compliant Chinese companies off American stock exchanges in three years – a risk that BeiGene has in its Shares prospectus in Shanghai pointed out.
“The money was valued very highly compared to Nasdaq and Hong Kong,” said Brad Loncar, whose Loncar Investments operates an ETF for Chinese pharmaceutical companies.
“STAR-IPOs are usually associated with long holding periods, which is a long-term vote of confidence from the institutes involved.”
BeiGene’s Hong Kong-traded shares fell over 4% on Wednesday, after also falling a fifth this month.
BeiGene’s poor debut performance in Shanghai means that underwriters will likely begin buying stocks in the secondary market to stabilize prices under what is known as the greenshoe option mechanism.
The proceeds from BeiGene’s Shanghai stock sale of 22.16 billion yuan ($ 3.5 billion) will be used primarily to fund clinical trials for potential treatments and to raise capital, the company said in its prospectus.
Investors who subscribed to BeiGene’s Shanghai share sale include China’s National Social Security Fund and the Abu Dhabi Investment Authority. Supported by existing shareholders such as Amgen (NASDAQ 🙂 and the Hillhouse-linked HHLR Fund, BeiGene is one of China’s most active innovative biotech companies, whose self-developed products have been out-licensed by global pharmaceutical giants.
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