Venture-backed Chinese drugmaker Hinova raises $167m in STAR Market IPO

Hinova Pharmaceuticals, a Chinese drugmaker that focuses on the treatment of cancer and metabolic disorders, has completed a 1.063-billion-yuan ($166.9 billion) initial public offering (IPO) on Shanghai’s Nasdaq-style STAR Market on Tuesday.

Hinova, which first unveiled its application for a public listing in May 2021, sold a total of almost 24.8 million shares at a price of 42.9 yuan ($6.7) apiece in the public share sale. Its shares are listed under the symbol “688302.” CITIC Securities served as the lead underwriter of the deal.

The company intends to use part of the IPO proceeds for the innovation of new drugs, and the construction of its international R&D centre, GMP production facilities, and headquarters building in southwestern China’s Chengdu City, Sichuan Province. In total, it plans to invest about 1 billion yuan ($157.1 million) in the construction project in Chengdu, according to its prospectus.

Led by founder, CEO and chairman Chen Yuanwei, previously the vice president of contract research organisation (CRO) ChemPartner, Hinova leverages deuterium and PROTAC-targeted protein degradation technologies to develop drugs for major clinical needs. With a focus on the R&D of innovative drugs for the treatment of tumours and metabolic diseases, it has built platforms for deuterated drug R&D, PROTAC targeted protein degradation technology, targeted drug discovery and verification, and compound optimisation screening.

Hinova’s move to debut on the STAR Market helped it enhance its capital position, as the loss-making pharmaceutical company has yet to commercialise its core drug candidates that are currently at the clinical phase.

The Chinese pre-revenue drug maker booked a net loss of about 148.1 million yuan ($23.3 million) in the first six months of 2021. For the whole year of 2020, its net loss reached nearly 489.9 million yuan ($77 million).

In the prospectus, Hinova warned that the company “expects to invest large amounts of capital in clinical development, drug approval, market promotion, and many other aspects before it turns a profit.”

“Before the successful introduction of any products, the company will be reliant on external financing to replenish operating capital. If our operation and development expenditures exceed the accessible capital in the market, the company will be under pressure financially,” it said.

In its latest venture round in September 2020, Hinova secured nearly 1 billion yuan in a Series C round from investors including state-owned Shenzhen Investment Holdings, Beijing-based Huarong Rongde Asset Management, and healthcare-focused private equity fund Sinopharm-CICC.

In July 2019, it closed a Series B round at $40 million from lead investors Fosun Pharma and Hermed Capital, with participation from Lang Sheng Investment, Prosper Capital, and others. That deal was followed by the completion of its Series B+ round in January 2020.