Chinese vaccine maker to raise $141.3m from STAR Market

CanSino Biologics Inc, the Chinese mainland's first vaccine maker listed in Hong Kong, plans to file for a listing on Shanghai's tech-focused STAR Market, or the sci-tech innovation board, in the hope of raising about 1 billion yuan ($141.33 million).

The biotech company announced on Monday that it planned to issue up to 24.8 million shares in the Shanghai offering, and the money raised would be used for constructing its production base, boosting vaccine research and development, cold chain logistics, and information system construction, among others.

Following the announcement, the company's share price soared by 14.57 percent during trading before closing 8.14 percent higher on Monday at HK$37.85 ($4.83).

The stock extended its surge on Tuesday by settling 3.04 percent up at HK$39, its best finish since April 29 when it also ended at the same level.

Shi Lichen, founder of medical consultancy Beijing Dingchen Consultancy, said an initial public offering on the STAR Market will give the company a new and effective channel to raise money, which is important to its growth because it would help it focus on the research and development of new vaccines, a sector that requires a large amount of investment for product research and development.

"Manufacturing a vaccine product does not need much investment or technology, but it is a completely different story in new vaccine research and development," Shi said, adding it is common to invest a large amount of money continuously for a long time before having any outcome in new drug research and development.

Founded in 2009 in Tianjin, the biotech firm rose to fame in 2017 when its vaccine won the first approval from Chinese authorities to treat Ebola, a rare and deadly disease that killed many people in West Africa from 2013 to 2016.

The company went public on the Hong Kong market in March this year, with its share price rising nearly 60 percent on the first day of trading.

The launch of the STAR Market, which allows high-tech companies, even unprofitable ones, to go public, as long as they meet certain criteria, is helpful for local innovative drug companies, as it boosts investor confidence in the companies seeking to raise such funds, Shi said.

Such fundraising opportunities are especially precious for local vaccine developers such as CanSino Biologics because developing high-quality new vaccines means a company must use the first-generation strain of a virus. Many Chinese vaccine makers have failed to do this due to restraints in capital and technologies, he added.

At this time, CanSino Biologics has not reported any revenue. But it has 15 vaccine candidates in the pipeline for 12 diseases. The company has three near-commercial vaccines, including one for the Ebola virus, for example, according to its interim report released last month.