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BeiGene to Offer 65.6 Million Shares in Hong Kong; Stock Drops 4% in New York

The stock of the Chinese biotech company was trading down more than 4 percent Friday after it announced it was seeking to raise up to $932.8 million in a Hong Kong IPO.

Anna Vodopyanova
    Jul 27, 2018 11:53 AM  PT
BeiGene to Offer 65.6 Million Shares in Hong Kong; Stock Drops 4% in New York

The stock of BeiGene Ltd. (Nasdaq: BGNE) dropped more than 4 percent on Friday afternoon after the biopharma company announced that it would seek to raise as much as $932.8 million by selling 65.6 million of its ordinary shares in an initial public offering in Hong Kong and to various global investors.

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(Source: BeiGene's prospectus filed July 27)

In a statement today, the Beijing-based company, which develops drugs for treating cancer, said stockholders in Hong Kong would have an option to acquire 5.9 million of its shares, while the rest, 59.7 million shares, would be offered globally. Global coordinators would have an option to acquire an additional 9.8 million of BeiGene's shares in an over-allotment.

In response to the news, the stock of the company on Nasdaq in New York slid $7.09 mid-day to $166.03 per American depositary share. Each ADS represents 13 ordinary shares.

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The stock of BeiGene was trading at $166.03 per share intraday Friday, down more than 4 percent.

(Source: Thomson Reuters Eikon)

In its prospectus filed today, BeiGene said it expected the Hong Kong pricing of shares to be in the range of $12.03 to $14.22 per share, or the equivalent of $156.39 to $184.86 per ADS.

The company also said it expected to receive approximately $825.1 million from this stock sale after deductions for underwriting and other offering expenses, calculated based on the midpoint price of $13.12 per share.

The proceeds would fund BeiGene's clinical trials for launch and commercialization of several drugs, including specifically, zanubrutinib, tislelizumab, and pamiparib. In addition, the company plans to use the money for the expansion of its product portfolio in cancer and other and "potentially other therapeutic areas." The rest would be used for working capital and internal capabilities, the company said.

According to Frost & Sullivan, a consultancy firm, China's drug market is the second-largest in the world based on revenue, while the oncology sector has risen at a compound annual growth rate (CAGR) of 14 percent from 2013 to 2017.

The biotech company said several international investors have committed to acquire a total of 19.8 million of its Hong Kong shares. Among them were New York-based Baker Bros. Advisors LLC, a major Asian hedge fund Hillhouse Capital Management Ltd., Singapore firm GIC Private Ltd., and Hong Kong-based Ally Bridge LB Healthcare Master Fund Ltd.

Morgan Stanley & Co. International plc, Goldman Sachs (Asia) LLC, Credit Suisse (Hong Kong) Ltd., and CLSA Ltd. are acting as joint global coordinators on BeiGene's IPO.

The company, founded in 2010, has been trading on Nasdaq since February 2016 when it sold 6.6 million shares at $24 per share.

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