Chinese prostate, breast cancer drugs maker Kintor’s IPO more than 500 times oversubscribed as Hong Kong biotech investment fever continues

Cancer drugs developer Kintor Pharmaceutical saw its HK$1.86 billion (US$240 million) initial public offering heavily oversubscribed as investors continued to bet on biotech start-ups hitting the jackpot with innovative, high-demand medicines, sources close to the deal said.

Kintor has attracted subscription commitments of more than 500 times the 9.2 million shares offered to retail investors, while 92.3 million shares offered to international investors were “heavily oversubscribed”.

It is the fifth consecutive Hong Kong biotech IPO since December to have recorded strong retail subscription rates of between 192 and 639 times.

The four previous firms that went public under Hong Kong’s biotech listing regime have seen their share prices gain between 63 and 125 per cent from their IPO price, based on Monday’s closing prices.

“While many other industries have yet to show signs of being able to recover sustainably from the economic slump caused by the coronavirus pandemic, health care is seen as a defensive sector,” said Kenny Tang Sing-hing, CEO of China Hong Kong Capital Asset.

“However, biotech is unfamiliar to many investors, and the prospects of each business segment and the efficacy of each drug candidate requires specialised knowledge to understand. With a lack of industry knowledge being the norm among retail investors, biotech investing can be prone to speculation.”

A new listing regime was adopted by Hong Kong’s stock exchange in April 2018 to allow drug and medical device developers that are yet to make a profit or earn revenue to float their stock. The idea was to tap the huge fundraising needs of hundreds of start-ups in the nascent but fast-growing industry.