Behind The IPO Of NOK Cheng KIN WAH: Shigong Leading Fund Champion, The Risk Of Research And Development Of Innovative Drugs Still Exists.

In October 17th, the IPO prospectus of NOK Cheng Chien Hua was hung up at the Hong Kong stock exchange. It was co sponsored by Morgan Stanley and Goldman Sachs. It has become the twenty-first innovative drug company to submit IPO applications to the HKEx after following the business of ritual drugs and Chinese medicine.

Since last April, the Hong Kong Stock Exchange issued the new regulation of unprofitable Biopharmaceutical Enterprises. Despite the frequent occurrence of crunkings, trial crabs, especially innovative medicine companies, are still "walking in line". Hangzhou Arno biological medicine Polytron Technologies Inc chief financial officer Xiang Sheng told the twenty-first Century economic news reporter that the biggest problem facing Hong Kong stock market is whether financing can be sustainable, which is very important for pharmaceutical companies that are developing new drugs.

Public information shows that nuocheng Jianhua is a drug research and development provider for malignant tumors and autoimmune diseases. It mainly provides checkpoint inhibitors, restraining regulatory T cells and tumor associated macrophages (TAM) regulating agents for patients with autoimmune diseases and tumor diseases. It also applies to the treatment of autoimmune diseases such as solid tumors, gastric cancer, chronic lymphocytic leukemia, rheumatoid arthritis, systemic lupus erythematosus, and so on.

He is also a star company: Star medical expert Shi Yi Gong, star fund giant shareholder, star innovative medicine. However, there are still great uncertainties under the support of many "Star" factors.

All the big guys plus

According to Qixin Bao data, in January 2019, NOK Cheng Chien Hua received $160 million in B round investment, which was invested by Zheng Xin Gu, capital investment, San Zheng health, Yi Pu capital, Wei Wu capital and Shanghai Jianxin capital. Earlier, in early 2018, its A round investment was invested by Wei Wu capital, and Jianxin capital and so on, with a sum of $55 million.

Nuo Cheng Jian Hua was born with "golden soup spoon", and has been favored by scientists in the scientific research and investment circles.

The prospectus disclosed that its internal R & D capability was supported by Dr. Zhang Zemin, a world-renowned structural biologist and Dr, Dr, a cancer genomics expert. We have entered into an exclusive strategic cooperation agreement with Dr. Shi Yigong and Dr. Zhang Zemin respectively. Shi Yi Gong is not only a co-founder of Norway, but also a non-executive director of NOK Cheng Wah, taking part in decisions such as strategy and other important matters. He is also the chairman of the Scientific Advisory Committee of the company.

A researcher at a biomedical research and development department in Southern China said to the twenty-first Century economic report: "scientific researchers transform research results into products, which are very common in such areas as the United States and San Francisco Bay area. To a certain extent, it promotes innovation and landing, and gives rewards. However, innovative pharmaceutical companies, especially for early innovative pharmaceutical enterprises, are faced with the challenge of failure rate, whether they are famous scientists or not."

In addition to the star of the scientific research, the three shareholder of the company, Lin Li Jun, also founded the Huixin fund and served as the general manager for 10 years.

But according to the prospectus, it also can not escape the curse of huge losses of innovative drugs companies. The prospectus shows that NOK's products have not yet been approved for commercial sale and have yet to generate any revenue from product sales. Since the inception of the year, it has not made any profit and generated operating losses. The operating losses for the year ended December 31, 2017 and the year ended December 31, 2018 were 341 million 700 thousand yuan and 554 million yuan respectively, and the operating losses were 279 million 400 thousand yuan and 321 million 900 thousand yuan respectively in the six months ended 2018 and June 30, 2019.

In terms of commercial operation, according to the disclosure, the company is currently building a 50000 square meter production facility in Guangzhou for commercial large-scale production with an annual capacity of one billion tablets, and is expected to be completed and put into operation in the fourth quarter of 2020. The facility is designed to comply with the regulations of the United States, Europe, Japan and China on the production quality management standard (GMP).

Although the investment fever of innovative drugs has become a hot topic since the advent of the new deal of HKEx in 2018 and the emergence of the science and technology board, it can not be ignored that the development process of clinical drugs is long, costly and the results are full of uncertainties. The results of previous studies and experiments may not predict future test results.

In the fund-raising exercise, Nuo Chun Wah pointed out that clinical trials of orbinib for the treatment of B cell malignancies are being carried out and planned; clinical trials of the treatment of autoimmune diseases with orbinib; and the commercialization of the registration documents for the major indications, the introduction and the approval of the regulatory authorities. ICP-192 and ICP-105 are carrying out and planning clinical trials, preparing registration documents and potential commercial launches (including sales and marketing); providing funds for the development of six candidate drugs in the IND preparation stage, as well as the development and introduction of new drug candidates, and for the purpose of working capital and other general corporate purposes.

Innovation of pharmaceutical enterprises in Hong Kong

Since the introduction of the new regulations of pharmaceutical companies to Hong Kong since the introduction of the new regulations, a group of investors who invest in innovative drugs have brought the opportunity to "go ashore", but on the other hand, the market has also brutally cracked the "education" of investors in the field of biomedicine.

The Hongkong Stock Exchange issued the new IPO regulation in April 24, 2018, allowing dual equity structure companies and unprofitable biotechnology companies to list in Hong Kong. The new listing rules came into effect in April 30th and formally accepted relevant listing applications.

After 4 years of deliberation, the reform of the Hong Kong stock listing system, which is of great significance in the past 24 years, has officially come into being. But in April, the opening of the main board of the Hong Kong Stock Exchange allowed the unprofitable biotechnology companies to go public. On the first day of listing, the company rose to HK $14.9 per share, and then dropped to HK $13.66 per share. The opening day of Baiji Shenzhou fell to HK $103 / share, and China listed pharmaceutical company fell below the issue price of HK $8.28 / share.

Nie Liya, deputy general manager of North Rand, told reporters in twenty-first Century that there are still some limitations in listing in Hong Kong. As listed companies in Hongkong, the polarization phenomenon is also more prominent. On the one hand, good companies have been sought after and many, but poor, almost no volume of enterprises are also many. Unlike the A share market, once listed, there is no lack of transaction activity.

The highly risky genes inherent in biomedicine enterprises have become the focus of attention for investors in the two tier market of Hong Kong stock.

According to statistics from BIO and other agencies, the proportion of registered drugs coming into clinical trials worldwide is only about 10%. The proportion of drugs that complete the first phase of clinical trials can reach about 15%. In the European and American markets, innovative medicines that successfully meet the clinical needs of patients are rewarded. Statistics show that some new drugs can achieve annual sales of up to 6 billion yuan to 10 billion yuan after five years of listing.

Returning to the Chinese market, the return of innovative drugs is not optimistic. The average sales of new drugs in China in the past five years are only 50 million ~1.5 billion yuan, and the economic returns of new drug R & D are even negative. The weakness of payment and circulation leads to slow growth in sales of new drugs after listing, and the mechanism of new drug innovation is not enough.

Just last month, Li Xiaojia, chief executive of the Hong Kong stock exchange, also responded positively to the outbreak in the field of biomedicine.

"Where to go, you have to make up your mind. My advice is to look at historical data and see bosom friends. If the US market is very intimate to you, you can choose to go there. If you want to establish a long-term financing sector, it must be in Hongkong; if you just want to make a profit, you will not have to consider the issue of listing. Biotechnology is a relatively easy industry to generate insider trading, and many of them are caused by asymmetric information. Information asymmetry has also caused stock prices to go up and down. Once the stock price is down, everyone will question the rat position, which will eventually lead to the market's credibility. As a result, the HKEx is also letting everyone continue to take risks and risks and let everyone know the boundaries of risks. " Li Xiaojia said.

In Li Xiaojia's view, the Hongkong market as an international market has no difference from the nature of the US market. The US market is a highly developed market, and a market that can be monopolized by more than ten analysts, but that monopoly is a market monopoly rather than an illegal monopoly. Moreover, they have strong self-discipline, familiar with the logic of market language rules, and have a complete set of logic for market judgement. But Hongkong market has not yet formed such an environment, which requires concerted efforts, three to five years, or five to eight years.

Since 2017, Hong Kong stocks and A shares have opened the door to unprofitable biopharmaceutical companies. After that, there are many discussions on how to assess the value of biomedical enterprises and the one or two tier market valuation. A very important reason is that the bio pharmaceutical enterprises listed in Hong Kong have concentrated on breakage.

Biopharmaceutical Enterprises have long investment cycle, large cost of R & D investment, high risk and high risk accompanied by high return. For biomedicine enterprises, there is a great demand for capital in the stage of innovation and development, but no products are listed, and most of them are in a state of non-profit. Once the capital market is loosened in policy, lowering the listing standards is of great interest to companies that need financing and investors eager to quit.

"Looking at some large international pharmaceutical companies, it is also a way to reduce their huge R & D investment by acquiring R & D enterprises to some extent, which has become a challenging and charming thing in the field of biomedicine." Southern China biomedical research and development staff said.

Tang Aijin, chief analyst of the Hang Seng pharmaceutical industry, told reporters: "in the past, there are three main factors that restrict the innovation of China's pharmaceutical industry. One is that the system of using drugs to support doctors leads to the elimination of bad money from good money, and that the sense of enterprise's innovation is not strong. Two, the past examination and approval regulatory body guidance has caused too long approval time for new drugs in China, and the surplus patent period is too short. Three, the effect of money making of innovative drugs in the past few years is not obvious."