Biotech Firms on STAR Market Rise to 21: A Six-Dimensional Insight into Their IPO Filings

Since the launch of IPO applications on the STAR Market, the biotechnology sector has ushered in a springtime of growth.

In recent years, driven by supportive policies for innovative drugs, investment in innovative drug projects within the primary market has surged, a trend that was particularly pronounced in 2018. The establishment of the STAR Market will streamline and diversify exit channels for primary market capital, thereby stimulating investor enthusiasm for innovative pharmaceuticals and medical devices and further fostering the robust development of medical innovation.

As of April 23, among the 90 companies that have filed for listing on the STAR Market, 21 are biotechnology-related enterprises. Of these, five have had their applications accepted, and 16 are under inquiry, covering sub-sectors such as medical devices, innovative drugs, and CROs.

Among the biotechnology enterprises surveyed, there are 10 biopharmaceutical companies, namely Medicilon, NKD PHARM CO., LTD., Keqian Biology, Amoytop Biotech, Chipscreen Biosciences, SHENLIAN BIOMEDICAL, Easton Bio Pharmaceuticals, Hotgen, Bloomage Biotech, and Borui Biological Technology; and 6 medical device companies, namely Anhan Optoelectronic Technology, BASDA, SINOMED, Haier Biomedical, MicroPort MedTech, and MicroPort Endovastec.

Which province has the highest number of biotech enterprises?

(Data source: Shanghai Stock Exchange, compiled by Health界)

Currently, among the 16 companies on the STAR Market that have received inquiry letters, Shanghai has the highest number with three companies based there. Beijing, Guangdong, Hubei, Shandong, and Jiangsu each have two companies. In addition to these provinces, Fujian, Sichuan, and Tianjin each have one company.

Which Listing Standard to Choose?

The Shanghai Stock Exchange has specified five sets of listing criteria for the STAR Market in the Rules Governing the Listing of Stocks on the STAR Market of the Shanghai Stock Exchange. In addition, it has established listing criteria for red-chip enterprises and companies with weighted voting rights arrangements.

As of now, 14 biotechnology companies under inquiry have selected Listing Standard I, with one company each selecting Listing Standard II and Listing Standard IV.

Which Sponsor Is the Most Popular?

Currently, 13 sponsoring institutions are involved in the biotechnology companies that have received inquiries. Typically, each company has only one sponsoring institution; however, MicroPort Endovastec selected both Huajing Securities and Guotai Junan Securities as its sponsoring institutions. CITIC Securities, China Merchants Securities, and Guotai Junan Securities each sponsor two companies, tying for first place. A total of 11 sponsoring institutions participated in only one case.

What is the proposed amount of funds to be raised in the IPO?

(Data source: Shanghai Stock Exchange; compiled by Health界)

Among the 16 biotech companies currently under inquiry, seven plan to raise less than RMB 500 million, five aim for RMB 500–100 million, and four seek more than RMB 1 billion. Bloomage Biotech has the highest fundraising target at RMB 3.154 billion, while SINOMED has the lowest at only RMB 267 million.

How is the revenue performance?

(Data Source: Shanghai Stock Exchange, compiled by Health界)

Most of the biotech companies currently under inquiry have annual revenues below RMB 500 million. Among them, 11 companies reported revenues of less than RMB 500 million, four companies had revenues between RMB 500 million and RMB 1 billion, and only one company exceeded RMB 1 billion in revenue.

Bloomage Biotech recorded the highest revenue among biotechnology enterprises, with an operating income of RMB 1.263 billion in 2018; MicroPort Medicine followed with RMB 922 million; Chipscreen Biosciences reported the lowest operating income, amounting to RMB 148 million in 2018.

Who Has the Highest R&D Investment?

(Data source: Shanghai Stock Exchange, compiled by Health界)

For science and technology innovation enterprises, R&D investment and a reserve of R&D talent are indispensable for establishing core technological advantages. Among the biotechnology companies whose applications have been accepted, the average ratio of R&D investment to operating revenue in 2018 was 15.79%. Nine companies had an R&D investment-to-revenue ratio of less than 10%, two fell within the 10%–20% range, and five exceeded 20%. Notably, Chipscreen Biosciences recorded the highest ratio at 55.85%, while Bloomage Biotech had the lowest at 4.19%.

The core of the STAR Market lies in market capitalization, with the primary challenges for listed companies and investment banks focusing on valuation and issuance pricing. Sponsor institutions and listed companies stand on the same front, assuming greater responsibilities. This dynamic not only compels sponsor institutions to raise their selection criteria for enterprises but also tests investment banks’ capabilities in pricing enterprise issuances.

In this context, will the rush to list on the STAR Market be a smooth journey? Will the STAR Market become a new haven for biotechnology enterprises? What challenges are brought by the new market mechanisms? As the STAR Market advances rapidly, more tests are emerging one after another.

Trending Discussions:Do you think the STAR Market will produce giants on the scale of Tencent and Alibaba?