Can the new listing rules of Hong Kong inject new vitality into China's biomedical industry?

Source: at the end of 2018-02-09, the stock exchange of Hong Kong conducted a comprehensive review on the listing system of Hong Kong, especially in terms of attracting emerging industries and innovative enterprises The restrictions on the listing threshold weakened the overall competitiveness of Hong Kong compared with other major listing places in the world For this reason, the listing system of Hong Kong stock has made major reforms and broadened the listing conditions One of the reforms is to allow non income biotechnology enterprises to be listed in Hong Kong, with the expected minimum market value of HK $1.5 billion This is the most significant listing reform in the Hong Kong market in more than 20 years For China's new and cutting-edge innovative drug R & D enterprises, it is undoubtedly a good news The market value threshold of HK $1.5 billion is not high The domestic biotech enterprises entering round B financing are all valued at more than US $200 million (about HK $1.56 billion) In this regard, China's start-up biotechnology companies will not have to go to the United States, and more excellent biotechnology companies can give priority to listing in Hong Kong China's new drug start-ups listed in the United States, such as Baiji Shenzhou, Hehuang pharmaceutical, zaiding pharmaceutical, etc., are all outstanding Baiji Shenzhou is rated as one of the three hottest biomedical stocks on NASDAQ Since its listing, the stock price of Hehuang pharmaceutical has soared more than 170%, and the market value of zaiding pharmaceutical will exceed 10 billion in March For start-up new drug enterprises, sustainable financing ability is the key to their growth Such enterprises often have valuable product pipelines and powerful R & D teams In the future, it is very likely that they will be listed as "heavy bombs" to make the latecomers occupy the top, or even perform the leading role Therefore, landing on NASDAQ is favored and sought after by the U.S capital market The US capital market provides strong policy support for biotechnology enterprises, one of which is crucial In April 2012, Obama, then president of the United States, hoped to support start-ups and small and medium-sized enterprises through financial innovation, and issued the jobs act The bill strongly supports start-ups and innovative SMEs, making them more convenient to finance and list As soon as the jobs act is promulgated, the policy effect can be described as immediate, especially for biotechnology enterprises, the issuance of new shares is very active Before 2012, no biotech company in the United States is still in phase I clinical or preclinical stage In just three years after the enactment of jobs act, 22 companies are still in phase I clinical or preclinical stage In the first half of 2017, 69 IPOs have been completed in the United States In terms of industry sectors, there are 14 IPOs in the medical and health sector dominated by biotechnology companies, ranking first in all sectors From the perspective of the NASDAQ Biotechnology Index, after 2012, the growth rate of the NASDAQ Biotechnology Index (NBI) far exceeded that of the standard & Poor's 500 index in the same period, which shows that biotechnology stocks have a good momentum of change since the enactment of the act, as shown in the figure below Jobs act has also become an important exit channel for venture capital start-up Biopharmaceutical Enterprises The most typical is the venture capital of Wuxi apptec, whose main investment target in the American market is the early innovative drug development and the start-up of biotechnology enterprises Within six years since its establishment, Wuxi apptec fund has invested in 29 companies, five of which have been successfully withdrawn, four of which are listed in the United States, and three of which have been merged and acquired In addition, jobs act indirectly created a new way for local pharmaceutical companies to get products in the United States With the growing difficulty of new drug research and development, local pharmaceutical companies may use equity investment in exchange for the rights and interests of new products in the Chinese market, that is, equity investment in early US biotech enterprises to obtain product patents and commercial development rights in the Chinese market This way of taking products can realize the double income of "product income + equity income" In the future, if the invested biotechnology enterprise can IPO, it can also bring rich investment returns The reform of the listing system of the Hong Kong stock exchange can be regarded as the Hong Kong version of "jobs act", which creates a good financing environment for the start-up unprofitable Biopharmaceutical Enterprises Six months after the listing in Hong Kong, the listed issuer can carry out new share financing, and the refinancing after the listing of the listed company is extremely convenient This is bound to bring biomedical capital feast, and is expected to set off the wave of IPO of biotechnology enterprises But it is undeniable that the stock price fluctuation of such enterprises will be normal in the future Because the products are in the research stage, there is still a long way to go from concept to commercial production, and the change of stock price is greatly affected by the progress of clinical trials After the acceptance of the clinical trial of Nanjing legendary car-t, a subsidiary of Kingsley, a Hong Kong listed company, the share price soared all the way In contrast, NASDAQ listed axovant's shares fell 74% on the day after a clinical trial of an Alzheimer's drug failed to meet expectations In addition, the reform is expected to reshape the valuation system of R & D innovative pharmaceutical enterprises For a long time, the R & D innovative pharmaceutical companies in Hong Kong stock market have been underestimated Take Hengrui pharmaceutical, A-share innovation leader, and China biopharmaceutical, a Hong Kong Share innovation leader, for example, they have similar innovation R & D strength At the beginning of the year, the valuation of Hengrui pharmaceutical increased from 35 times to 70 times of PE, with a market value of more than 200 billion, while that of China's biopharmaceutical increased from 22 times to 41 times, with a market value of just more than 100 billion In this reform, the Hong Kong Stock Exchange has released a signal that it attaches importance to the evaluation system of innovative drugs In the future, many biotechnology enterprises will not have income and profit when they are listed, so it is difficult to use the price earnings ratio of mature enterprises to measure The evaluation of Hong Kong stock biomedical enterprises will be introduced into the discounted evaluation of the pipeline under research For enterprises with innovative varieties under research, the evaluation will be further improved, but the product research will The expectation and progress of the company will also have a great impact on the stock price.