Baiji Shenzhou is about to become the first biotech company to be listed on the Nasdaq, Hong Kong Stock Exchange and Shanghai Stock Exchange in the U.S. The company released its "Prospectus for Initial Public Offering of Shares and Listing on Science and Technology Innovation Board (STB)" on Tuesday night, Nov. 23, Beijing time, and made public the inquiry arrangement.
Baiji Shenzhou's proposed issuance of 115 million shares on the STEM board has an expected issuance date of Dec. 2, with preliminary inquiries on Nov. 29
The announcement said the expected issuance date of the shares on the STEM board is Dec. 2, 2021, and the preliminary inquiries will be made on Nov. 29, the company said.
The proposed public offering of 115 million shares in the IPO on the A-share Science and Innovation Board (SITB), before the exercise of the over-allotment option, is 8.62 percent of the sum of the total number of shares outstanding as of Oct. 31 this year and the proposed offering, and the listing on the SITB will be a public offering of new shares in its entirety, with no transfers of old shares involved, and the SITB shares are not convertible into Hong Kong and U.S. common shares.
The company's sponsors for the listing on the board are CICC and Goldman Sachs & Co. Securities, and the co-lead underwriters are J.P. Morgan Securities Ltd, CITIC Securities and Guotai Junan Securities. CICC has a 30-day over-allotment option for up to 17.258 million shares, which if exercised in full would expand the total number of shares in the offering to 132 million, or 9.79 percent of the total number of ordinary shares in issue.
Meanwhile, the number of shares issued under the initial strategic placement in the offering was 34,516,600 shares, representing 30% of the number of shares issued and approximately 26.09% of the total number of shares issued if the over-allotment option is exercised in full. The difference between the final number of strategic placements and the initial number of strategic placements will be reallocated in accordance with the principles of the reallocation mechanism of the Offering. Before the activation of the callback mechanism and after the activation of the over-allotment, the number of shares to be issued online will be 33,365,500 shares, representing approximately 34.12% of the total number of shares to be issued in the Offering after deduction of the number of shares to be issued in the Initial Strategic Allotment upon the full exercise of the Greenshoe Option.
The Sci-Tech IPO intends to raise 20 billion yuan, mainly for clinical research and development and supplemental liquidity, with Amgen, High Tide and Temasek as shareholders
Last Tuesday, November 16, the China Securities Regulatory Commission (CSRC) agreed to the registration of an initial public offering of shares by Baizi Divine on the Sci-Tech board. The company had filed a prospectus with the KTC earlier this year, planning to raise 20 billion yuan in the IPO.
Of this amount, 13.246 billion yuan will be used for drug clinical trial research and development projects, 468 million yuan for research and development center construction projects, 150 million yuan for production base research and development and industrialization projects, 136 million yuan for marketing network construction projects, and 6 billion yuan to supplement working capital.
Publicly available information shows that Baizi Shenzhou, which was founded in 2010, focuses on the development and commercialization of innovative molecularly-targeted and tumor-immunity drugs for the treatment of cancer, with three self-developed medicines currently available. Among them, BTK inhibitor Baiyueze became the first Chinese self-developed anti-cancer drug approved by the U.S. Food and Drug Administration in 2019.
The company has more than 50 ongoing preclinical programs, including multiple studies with "first-in-class" potential, and 11 self-developed drugs in the clinical or commercialization stage driven by its internal team, with coverage of indications expanding from cancer to inflammation/immunology, etc.
The company has also launched a series of new drugs, such as the BTK inhibitor PYROZEN.
Baiji Shenzhou had raised $182 million in its US IPO in 2016, becoming the first China-based biotech company to list on Nasdaq in the US, and then landed on Hong Kong stock market in 2018 with an IPO raising $902 million.
As of the end of the second quarter of this year, Amgen, a leading U.S. biotech stock, held 20.27 percent of the company's shares, and Gao Tiles, through HHLR, held 12.21 percent of the company's shares, making it a major and well-known shareholder. Singapore's Temasek had also bought a significant amount of Baizi Shenzhou's U.S. ADSs in the third quarter of this year.
Fast five-year cumulative loss of 30 billion yuan, the loss or in the near future to further expand, but U.S. and Hong Kong stocks accumulated more than 30% during the year
Analysis pointed out that the biggest difficulty faced by Baizi Shenzhou is the inability to make a profit.
The company's net profit from 2017 to the first half of this year was -982 million yuan, -4.747 billion yuan, -6.915 billion yuan, -11.384 billion yuan, -2.493 billion yuan, and a further loss of 3 billion yuan in the third quarter of this year, which is equal to a cumulative loss of 30 billion yuan in almost five years.
Its prospectus had said there was a risk of continued losses in the future, and of losses widening further in the near future, as it continued to develop drug candidates and seek regulatory approval, expand production, and so on. However, losses narrowed nearly 27 percent in the first three quarters of this year from the same period last year.
Baiji Shenzhou also warned in its latest prospectus that the issuer, a not-yet-profitable biotech company, faces the risk that its drugs and drug candidates may not be successfully commercialized or gain market acceptance, that clinical-stage drug development may fail, that the approval of drugs conditionally or accelerated to market will be withdrawn, that it will not be able to pay cash dividends for a foreseeable period and may be subject to delisting procedures by the Shanghai Stock Exchange, and that if it fails to obtain approval in future, it will be unable to pay cash dividends for a foreseeable period and may be subject to delisting procedures. delisting process in the foreseeable period, and the possibility of not being able to complete the development and commercialization of the drugs under development if additional financing is not available in the future, among other risks.
From January to June 2018, 2019, 2020 and 2021, the Company's net cash flow from operating activities will be -4.2 billion yuan, -5.546 billion yuan, -5.180 billion yuan and -1.947 billion yuan, respectively. The Company's liquidity and financial condition may be materially and adversely affected by negative net cash flows from operating activities, and the Company cannot assure that it will be able to obtain sufficient cash from other sources for working capital.
In addition, Baizi announced today that it has completed the acquisition of the Princeton West Innovation Campus site in Hopewell, N.J., U.S.A., for the construction of a 42-acre manufacturing site and clinical research and development center. The manufacturing site and clinical development center will be built to accommodate up to 400,000 square feet of commercial-stage biologics manufacturing, including up to 16,000 liters of biologics capacity. The site will also provide space for clinical development and offices.
Baiji Shenzhou's U.S. shares were down 3.2 percent at one point before midday Tuesday, on the verge of a five-day losing streak and a one-and-a-half-month low since Oct. 6, the company said. The stock had set an all-time intraday high of $426.56 on Sept. 17, after its drug Baiyuzhe received a positive recommendation from the Committee for Medicinal Products for Human Use under the European Medicines Agency.
His Hong Kong shares closed down 2.72 percent on Tuesday, after Baijizhe's U.S. and Hong Kong shares have both racked up more than 33 percent so far this year.
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This article is from the Wall Street Journal, written by Du Yu and published by 36 Krypton with permission.