Sunho Biologics, the First Antibody-Cytokine Company in Hong Kong, Soars Over 10% on Debut

Today, Sunho Biologics-B (2898.HK), the first listed company specializing in antibody-cytokine fusion proteins, made its official debut on the Hong Kong Stock Exchange, with China International Capital Corporation (CICC) serving as the sole sponsor. According to the announcement, Sunho Biologics’ IPO plans for a global offering of 34.1518 million shares, priced at HK$13.50 per share. Of these, 90% were allocated to the international placing and 10% to the Hong Kong public offering, with no over-allotment option available.

After deducting the underwriting fees paid and payable for the global offering and other estimated expenses, the net proceeds from this IPO amounted to approximately HK$392 million. Of this amount, 28.2% will be allocated to fund the ongoing and planned clinical trials of IAH0968 in China; 35.8% will be used for the ongoing and planned clinical trials of IAP0971 in China; and 36.0% will be dedicated to funding the ongoing and planned clinical trials of IAE0972 in China.

According to Tiger Brokers, Sunho Biologics opened at HK$14.46 per share on its debut, representing a 7.11% premium over the offer price. Pre-market trading volume reached 1.042 million shares, with a turnover of HK$15.409 million. As of press time at 13:58, Sunho Biologics’ share price stood at HK$14.920, up 10.52%, lifting its total market capitalization to HK$2.337 billion.

Prior to this IPO, Sunho Biologics had completed two rounds of financing. On August 2, 2023, the company secured RMB 210 million in Series A funding from investors including Yifeng Ansheng and Yifeng Anhe, resulting in a post-money valuation of RMB 1.41 billion (approximately HKD 1.5 billion). In accordance with Chapter 18A of the Main Board Listing Rules of the Hong Kong Stock Exchange, a company must have a minimum market capitalization of HKD 1.5 billion at the time of listing, and its working capital must be sufficient to cover at least 125% of its anticipated expenses for the first 12 months following the publication of the listing document.

With the completion of this funding round, Sunho Biologics precisely met the financial criteria required for its IPO application. The day after securing its Series A financing, Sunho Biologics filed its prospectus with the Hong Kong Stock Exchange.

One month later, on September 27, 2023, Sunho Biologics secured an additional RMB 60.18 million in Series A+ financing, introducing Beijing Yuehe as an investor and bringing the company’s post-money valuation to RMB 1.47 billion. With several investment institutions taking equity stakes in succession, Sunho Biologics’ cash and cash equivalents increased from RMB 1.821 million at the end of 2022 to RMB 220 million, thereby resolving both its cash flow challenges and the valuation issues associated with its IPO application.

What are the key highlights of Sunho Biologics that enabled it to densely complete two rounds of financing and introduce renowned institutions on the eve of filing its prospectus, thereby successfully entering the capital market today?

According to the prospectus, Sunho Biologics, Inc. was founded in 2018 and is a clinical-stage biopharmaceutical company focused on the discovery, development, and commercialization of biologics for the treatment of cancer and autoimmune diseases.Its core business model encompasses the internal discovery, development, and commercialization of antibody-cytokine fusion proteins and other immunotherapies that modulate the immune microenvironment by directly regulating both the innate and adaptive immune systems, thereby addressing market demands in oncology and autoimmune diseases.

Sunho Biologics’ management team has an average of over 15 years of industry experience in biologics development and business administration, covering areas such as antibody discovery and engineering, process development, GMP manufacturing, clinical operations, and regulatory affairs.

Zhang Feng, Chairman of the Board and Executive Director, brings over 20 years of industry experience, with expertise in R&D, clinical development, product commercialization, and marketing. Notably, Mr. Zhang has successfully secured marketing approvals for nearly 20 drugs and manufacturing certificates for more than 30 drugs, and has participated in the development of over 50 clinical and preclinical products. According to the drug classification standards issued by the National Medical Products Administration (NMPA), 15 of these products are classified as Class 1 or Class 2 new drugs. In addition to holding leadership positions in the pharmaceutical industry, Mr. Zhang also serves in various capacities within academic institutions and industry organizations.

Yin Liusong, Executive Director, Chief Executive Officer, and Chief Scientific Officer, has over 16 years of experience in antibody and cytokine development and pipeline management. He has led more than 600 antibody drug discovery and optimization projects, with dozens advancing into clinical trials. Additionally, Jiang Xiaoling, Head of R&D at Sunho Biologics, brings over 15 years of experience in drug development (including biosimilars and antibody drugs), having led the development of approximately 20 innovative biologics and six biosimilars. Jiang Dongcheng, Head of Manufacturing, has 10 years of GMP manufacturing experience and has been directly involved in the GMP manufacturing, scale-up, and validation of more than ten drug candidates.

In addition to the management team’s extensive experience in R&D and commercialization, data from Frost & Sullivan indicates that Sunho Biologics is one of the global leaders in developing antibody-cytokine products and among the few pioneer companies with the most advanced clinical-stage candidates in this field. Notably, Sunho Biologics is the first company specializing in antibody-cytokine therapeutics to be listed on the Hong Kong Stock Exchange. This may well be a key reason for the capital market’s recognition of Sunho Biologics.

Sunho Biologics focuses on cytokines, a broad and loosely defined class of small-molecule proteins that play critical roles in cell signaling and are essential for regulating the immune system.In recent years, antibody-cytokine fusion proteins have become a popular approach for developing cytokine-based therapies, owing to their potent tumor-targeting capability, extended cytokine half-life, and synergistic antitumor effects across multiple targets.

According to Frost & Sullivan, the global market size of cytokine-antibody drugs increased from $57.9 billion in 2018 to $72.9 billion in 2022, representing a compound annual growth rate (CAGR) of 6.0%. The market is projected to reach $95.3 billion in 2026 and $119.6 billion in 2030, with CAGRs of 6.9% for the period from 2022 to 2026 and 5.8% for the period from 2026 to 2030, respectively.

From 2018 to 2022, the market size of cytokine-antibody drugs in China increased from RMB 2.6 billion to RMB 7.2 billion, with a compound annual growth rate (CAGR) of 28.4%. It is projected to reach RMB 24.8 billion in 2026 and RMB 74.1 billion in 2030, with CAGRs of 36.4% for 2022–2026 and 31.4% for 2026–2030, respectively.

Targeting this vast market, Sunho Biologics has rapidly established three major technology platforms as the foundation for industrialization: the AIC™ platform, a scalable platform primarily focused on the development of antibody-cytokine fusion proteins; the ADCC-Enhanced Antibody platform (AEA™ platform), featuring a FUT8-knockout cell line engineered to enhance antibody-dependent cellular cytotoxicity (ADCC); and the Augmented Innate Immunity Multispecific Antibody platform (AIM™ platform), dedicated to the development of bispecific/multispecific antibodies based on innate immune stimulants.

Sunho Biologics Strengthens Its AIC™ Antibody-Cytokine Platform. Image source: Sunho Biologics official website

① AIC™ Platform:It demonstrates prominent advantages in multiple aspects of antibody-cytokine development, including cytokine selection and optimization, antibody selection and engineering, structural design and engineering, and customized cell line production. As a comprehensive research engine, the platform features not only a complete library of immunoglobulin G (IgG) antibodies and cytokines but also functional antibody fragments and other types of immune system modulators, enabling the generation of diverse products ranging from antibody-cytokines to other bifunctional fusion proteins.

Sunho Biologics’ ADCC-Enhanced Antibody Platform AEA™, image source: Sunho Biologics official website

② AEA™ Platform:It is a bioengineered CHO cell line in which the FUT8 gene has been knocked out to produce antibodies with enhanced ADCC and higher anti-tumor activity. The AEA™ platform is expected to generate afucosylated antibodies, thereby rapidly, stably, and thoroughly enhancing antibody-dependent cellular cytotoxicity (ADCC) while simplifying product quality control. Consequently, the AEA™ platform enables the design of any biologic antibody or antibody fragment containing an Fc region into an ADCC-enhanced product to boost immune effector cell activity.

Sunho Biologics Strengthens Its Antibody-Cytokine Platform, AIM™ | Image source: Sunho Biologics official website

③ AIM™ Platform:Focuses on designing multifunctional therapeutic products for cancer immunotherapy by leveraging the innate immune system. It selects tumor-associated antigen antibodies for cancer targeting, receptor agonist antibodies for natural effector activation, and cytokines along with other tumor immune microenvironment factors for immunomodulation to design multispecific antibody fusion proteins, and evaluates these proteins in terms of expression, target binding, in vivo and in vitro biological activity, and druggability.

Based on its three major technology platforms, Sunho Biologics currently has nine products in its R&D pipeline, six of which have entered clinical stages.Among them, the three core pipeline candidates IAH0968, IAP0971, and IAE0972 are allThe antibody-cytokine with the fastest clinical progress in treating cancer patients in China.

Pipeline under development, source: Sunho Biologics prospectus

Among them,Core Product IAH0968It is an ADCC-enhanced anti-HER2 antibody and the first clinical-stage anti-HER2 antibody with 100% defucosylation independently developed by Sunho Biologics. According to Frost & Sullivan, there are three anti-HER2 antibodies for cancer treatment in clinical development globally, while China currently has four anti-HER2 antibodies in clinical development, with the most advanced product being in Phase II/III trials.IAH0968 is the only afucosylated, ADCC-enhanced anti-HER2 antibody with the fastest clinical progress in China and globally, currently in Phase II/III clinical trials.

Phase I clinical trials have demonstrated that IAH0968 exhibits favorable tolerability and antitumor activity in patients with advanced HER2-positive malignant solid tumors (including breast cancer, gastric cancer, colorectal cancer [CRC], and biliary tract cancer [BTC]) who are resistant to trastuzumab, pertuzumab, cetuximab, docetaxel, oxaliplatin, capecitabine, irinotecan, albumin-bound paclitaxel, and apatinib or anti-PD-1 monoclonal antibodies. Sunho Biologics initiated Phase IIb/III clinical trials for CRC in January 2024, expects to complete the Phase IIb trial for CRC in the fourth quarter of 2024, and anticipates completing the Phase II clinical trial for BTC in the third quarter of 2025.

Second Core Product: IAP0971is a self-developed anti-PD-1 antibody–IL-15/IL-15Rα heterodimeric fusion protein by Sunho Biologics. According to Frost & Sullivan data, there are currently 14 IL-15-based immunotherapies in clinical development worldwide, and no IL-15-based immunotherapy has yet been approved for the treatment of cancer.In China, there are currently seven IL-15-based immunotherapies in clinical development, and IAP0971 is the IL-15-based antibody-cytokine with the most advanced clinical progress in China.

Sunho Biologics, Inc. received Investigational New Drug (IND) approvals from the National Medical Products Administration (NMPA) and the U.S. Food and Drug Administration (FDA) in January 2022 and December 2021, respectively, to conduct Phase I and Phase II clinical trials in patients with advanced malignant tumors. The Company completed its Phase I clinical trial in July 2023 and plans to initiate the Phase II clinical trial of IAP0971 in China in the second quarter of 2024. Phase I clinical data demonstrated that IAP0971 exhibited a favorable safety profile at doses up to 200 μg/kg in patients with advanced malignant tumors, with no dose-limiting toxicity (“DLT”) or maximum tolerated dose (“MTD”) observed.

The Third Core Product: IAE0972It is a bifunctional fusion protein consisting of an anti-EGFR antibody and an IL-10 homodimer. According to data from Teshaliwen, no IL-10-based immunotherapy has been approved for cancer treatment to date. Globally and in China, there are currently three IL-10-based immunotherapies in clinical development, two of which are from Sunho Biologics.As of now, IAE0972 is in Phase II clinical trials, making it the most advanced IL-10-based antibody-cytokine in clinical development in China.

Sunho Biologics, Inc. obtained approval from the U.S. Food and Drug Administration (FDA) in December 2021 and from the National Medical Products Administration (NMPA) in January 2022 to conduct Phase I and Phase II clinical trials in patients with advanced solid tumors, and completed its Phase I clinical trial in July 2023. In the Phase I clinical trial of IAE0972 for the treatment of advanced solid tumors, Sunho Biologics enrolled 14 patients with advanced esophageal squamous cell carcinoma, rectal cancer, gastric cancer, pancreatic cancer, small cell lung cancer (“SCLC”), or non-small cell lung cancer (NSCLC), all of whom had experienced disease progression after receiving at least one prior therapy. The dose-escalation study was completed, with only one Grade 3 adverse event observed. No dose-limiting toxicities (DLTs) occurred, and the maximum tolerated dose (MTD) was not reached.

In addition to the three core products mentioned above, Sunho Biologics has three other products—1BB0979, IBC0966, and IBD0333—in clinical development, all of which remain focused on cancer immunotherapy.

Accelerating the rapid industrialization of the aforementioned pipeline inevitably requires substantial financial support. According to data disclosed in the prospectus, Sunho Biologics’ net loss for the year increased significantly from RMB 52 million in 2022 to RMB 132.7 million in 2023. In terms of research and development (R&D) expenses attributable to its core products, Sunho Biologics incurred RMB 10.7 million and RMB 17.4 million in 2022 and 2023, respectively, accounting for 20.1% and 40.4% of the total R&D expenses for the corresponding years.

Currently, Sunho Biologics has no products approved for commercial sale and has not generated any revenue from product sales, with its path to profitability remaining uncertain. While this IPO has provided Sunho Biologics with a much-needed cash infusion, the company is expected to maintain substantial expenditures for a considerable period ahead. However, in its prospectus, Sunho Biologics also signaled another development:

“We will actively seek opportunities to collaborate with leading international pharmaceutical companies and advance the overseas clinical studies of our products through out-licensing arrangements. We will also expand our international regulatory affairs team to ensure the execution of our global clinical development and registration plans, and strengthen our flagship products, particularly our antibody-cytokine pipeline candidates, including IAP0971, IAE0972, and IBB0979.”

“In addition to continuously striving to enhance our international influence, collaborating with world-renowned pharmaceutical companies will further demonstrate our R&D capabilities, thereby increasing our visibility in the pharmaceutical industry. Our existing assets have attracted the attention of several multinational corporations, and we will actively engage with them to explore potential collaborations.”

These insights suggest that Sunho Biologics may increasingly rely on business development (BD) partnerships to achieve profitability in the future. Indeed, numerous companies have recently attained rapid profitability through substantial BD deals. The path to profitability for enterprises such as Henlius, Zai Lab, Akeso, BeiGene, Innovent Biologics, and Harbour BioMed has been significantly supported by major BD transactions.

In the high-stakes biopharmaceutical industry, and within the 18A chapter characterized by both bubbles and blossoms, Sunho Biologics is expected to bring differentiated strategies to the sector by establishing high-value-added technology platforms, accelerating pipeline progress, pursuing an IPO, and engaging in business development (BD), thereby achieving healthy and positive growth amidst the pharmaceutical tide.

References:

1. Sunho Biologics Passes Hearing: No Sales Revenue Yet, Raised RMB 200 Million in “Urgent” Financing Before Filing

2. Immunotherapy “Dark Horse” Sunho Biologics Lists on Chapter 18A: Three Products Show Fastest Clinical Progress Globally—Next Target for MNC Acquisitions?