The Hong Kong Exchanges and Clearing Ltd (HKEX) has released its annual report for 2022, highlighting a significant downturn in initial public offering (IPO) activity within the city. Overall, the number of new public listings fell by 29.6% year-on-year (YOY) to just 69 IPOs. In terms of capital raised, IPO funds totaled HKD 87.77 billion (USD 11.24 billion), reflecting a substantial 73.5% decrease YOY. This decline has been attributed to a challenging global macroeconomic and geopolitical environment, which has fostered “weak sentiment and softness in the global IPO market.”
On a global scale, HKEX ranked as the fourth most popular venue for IPOs in 2022, trailing behind Shanghai, which secured the top position with IPOs exceeding USD 50 billion. Shenzhen followed closely with cumulative listing values just under USD 30 billion. According to a report from Ernst & Young, the total number of IPOs worldwide plummeted by 45% to 1,333, with total values decreasing by 61% to USD 179.5 billion. The US public listing market faced an even sharper decline, with IPO activity dropping by over 90%, placing the Nasdaq and New York Stock Exchange at the 9th and 11th spots, respectively, in global rankings.
Focusing on HKEX’s biotech sector, the situation was even more pronounced. The exchange hosted only 7 companies that utilized Chapter 18A rules to list as pre-profit biotech firms, a decrease of approximately 60% YOY from 20 IPOs in 2021.
In total, HKEX’s biotech listings raised HKD 3.4 billion (USD 440 million) during 2022, with Lepu Biopharma leading the way through an IPO of just under HKD 1 billion in October. The Shanghai-based biopharma company received its first indication approval for the PD-1 inhibitor pucotenlimab in September, while its pipeline includes a variety of clinical-stage antibody-drug conjugates (ADCs) and oncolytic viruses. Following Lepu, Jiangsu Recbio Technology secured the second position, with a pipeline featuring a protein-engineered recombinant COVID-19 vaccine. Biocytogen Pharmaceuticals came in third, raising over HKD 600 million in August, bolstered by recent clinical trial approvals for its PD-1 x CD40 bispecific antibody (BsAb) YH008 in the US.
Notably, there was a modest uptick in biotech IPO volumes during the latter half of the year, with three companies listing in December. Analysts anticipate that the recent reopening of China’s borders will stimulate IPO activity and lead to a rebound in 2023. However, some speculate that the easing of delisting threats for Chinese firms on US exchanges may prompt more China-based companies to explore listings on the Nasdaq next year. This follows an agreement in August between US and Chinese securities regulators, allowing audit inspections by the US Public Company Accounting Oversight Board (PCAOB), which was followed by successful inspections and complete access to accounting records announced last month.-Fineline Info & Tech
HKEX Biotech Listings, 2022
| Stock Code | Company Name at Time of Listing | Date of Prospectus (dd/mm/yy) | Date of Listing (dd/mm/yy) | Funds Raised (HK$) |
|---|---|---|---|---|
| 02157 | Lepu Biopharma | 10/02/22 | 23/02/22 | $911,035,750 |
| 02179 | Jiangsu Recbio Technology | 21/03/22 | 31/03/22 | $860,882,400 |
| 02315 | Biocytogen Pharmaceuticals (Beijing) | 19/08/22 | 01/09/22 | $617,095,570 |
| 01244 | 3D Medicines Inc | 29/11/22 | 15/12/22 | $408,423,000 |
| 09877 | Jenscare Scientific | 23/09/22 | 10/10/22 | $224,523,920 |
| 06955 | Shandong Boan Biotechnology | 19/12/22 | 30/12/22 | $211,757,040 |
| 06922 | Cryofocus Medtech (Shanghai) | 16/12/22 | 30/12/22 | $209,979,000 |
