October 31, 2018 / 2:03 AM / 9 months ago

UPDATE 3-China's Innovent Biologics surges in Hong Kong debut

* Shares close 18.6 percent higher

* Other China biotechs have seen shares slide post-listing

* Market volatility clouding prospects for other IPOs (Adds closing price, analyst comment)

By Julia Fioretti

HONG KONG, Oct 31 (Reuters) - Innovent Biologics leapt almost 20 percent in a Hong Kong debut that was being closely watched as a test of investor appetite for Chinese biotechs after three rivals had seen their shares slide post-listing.

The Chinese biotech - backed by mutual fund giant Fidelity and Singapore state investor Temasek Holdings - closed at HK$16.58 on Wednesday, 18.6 percent above its IPO price of HK$13.98.

But analysts cautioned against reading too much into the upbeat performance.

“The strong debut is seen to be a one-off, thanks to a rebound in the broader market,” said Steven Leung, a director at broker UOB Kay Hian. “It doesn’t suggest a return of interest to the IPO market yet.”

The benchmark Hang Seng Index closed 1.6 percent higher on Wednesday.

Innovent’s listing was the fourth under new rules in Hong Kong aimed at wooing early-stage drug developers.

The Shanghai and Suzhou-based company raised $421 million, making it the largest Hong Kong biotech offering this year.

Hong Kong implemented new rules allowing biotech firms with no revenue or profit to list in the city in April, hoping to woo new-economy firms away from centres such as New York.

Ascletis Pharma, the first biotech company to go public under the new rules, has dropped nearly 60 percent since its shares started trading on Aug. 1, while Hua Medicine is down 17 percent since its Sept. 14 debut.

BeiGene Ltd, which was already listed on Nasdaq, has lost 37 percent since its debut on Aug. 8. The Hang Seng Index has lost 13 percent since August.

Nine other biotechs including Ascentage Pharma and WuXi AppTech Co Ltd have filed for Hong Kong listings but the poor performance of deals so far and wider market jitters have clouded those prospects, bankers and analysts said.

Innovent was founded in 2011 by Michael Yu, who held senior roles at U.S. biotechs including Cell Genesys before returning to China.

It has built a pipeline of 17 antibody drug candidates, led by four core products in late-stage clinical development. Among them are sintilimab, which treats Hodgkin’s lymphoma, and IBI-305, a biosimilar to Roche’s Avastin, which treats colon, lung and other cancers.

Reporting by Julia Fioretti; Additional reporting by Donny Kwok, Jennifer Hughes and Kane Wu; Editing by Edwina Gibbs and Christopher Cushing

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