Biotech IPO candidate

Cancer drug manufacturer gears up for HK IPO

Chinese precision medicine developer 3D Medicines wants to complete its Series A funding before it looks at an IPO in Hong Kong next year.

The race to develop medicines that target cancer has become more competitive, but it is one that has mostly been welcomed by the capital markets.

Chinese precision medicine developer 3D Medicines, also called 3DMed, is in the process of a $60 million Series A fundraising for its cancer drug research business.

In an exclusive interview with FinanceAsia, John Gong, chief executive of 3DMed, said that the company aims to complete another round of pre-IPO funding by the end of the year. And with around $150 million funding under its belt, it is looking to IPO in Hong Kong in the second or third quarter of next year. 

Thanks to govenrment support, Hong Kong has become the top choice for Chinese biotech companies that want to go public. At a HKEX Biotech event last week, Carrie Lam, chief executive of Hong Kong, said that the government would welcome more biotech companies that want to list, and has already opened up hospital data for research purposes. Charles Li, chief executive of HKEX, said that he expects a "further take off" as the board has accepted 10 biotech companies that want to list in the near future.

A group of Chinese biotech companies have already said that they are interested in listing in Hong Kong over the next two to three years, and 3DMed is one of them. 

3DMed has developed PD-L1, a popular immunotherapy for cancer. But unlike others, it offers a subcutaneous injection of the PD-L1 antibody, one of the first in the world to do so. PD-L1 therapy is usually completed by intravenous injection.

Apart from the research business, 3DMed also has an oncology diagnostics business that partners with around 200 Chinese hospitals. “We had revenues of Rmb200 million ($29 million) for the diagnosis business last year,” Gong said. “And we expect it to double this year.”

3DMed's diagnostics business wants to IPO on Shanghai's new technology innovation board in the future.

There are around 4 million new cancer cases in China each year, which has created a huge and urgent demand for cheap and accessible cancer treatment. Gong says that the company is making its drugs accessible by controlling the cost of manufacturing. By using subcutaneous injections on its PD-L1 product, 3DMed’s drug costs only one-third that of its rivals.

“China is still a price-sensitive market,” Gong said. “And this will put pressure on pharmaceutical companies.” He believes that 3DMed’s subcutaneous injections make cancer treatment possible even by patients themselves.

Around 70% of 3DMed’s research is focused on immune-oncology treatment, including PD-1 and PD-L1, two of the most popular targets in biopharmaceutical research. The company has three to five pipelines, and two of them have entered the clinical stage.

Cancer will gradually become a chronic disease, Gong says, with a higher survival rate after diagnosis. If one-eighth of cancer patients each year choose subcutaneous injections for their cancer treatment, it will be a market of 500,000 patients each year. “It is a very huge demand,” Gong added. “And we can easily be profitable.”

Gong isn't concerned that the stock priceof some Hong Kong-listed biotech companies are trading under water. “Biotech companies are valued for their product lines,” Gong said. “The current stock price can’t define a company.”

3DMed raised $96.9 million in 2017 with funding from state-backed Venture Capital and ChinaEquity Group. 

He is confident about 3DMed’s products too, as they have competitive differentiation and they have started to generate revenues for its diagnosis business domestically. In the near future, Gong hopes that his products will sell worldwide with a solid market share in China.


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