A leading Chinese developer of novel drugs HENGRUI PHARMA shares surged 25% in Hong Kong grey market trading.

The Chinese pharmaceutical giant, founded in 1970 and specializing in oncology, metabolic, and cardiovascular diseases, plans to offer 224.5 million shares priced at HK$44.05 per share. The IPO has already garnered substantial interest from cornerstone investors, with Singapore's sovereign fund GIC leading a group of seven investors who have collectively subscribed to approximately $533 million worth of shares. 

The offering will be structured with 12.3 million shares allocated for Hong Kong retail investors and the remainder designated for international placement, with global financial giants Citigroup and Morgan Stanley serving as advisors on the deal. 

According to its prospectus, Jiangsu Hengrui plans to deploy the proceeds raised to advance its research and development initiatives. The company will allocate 75% of the funds to R&D efforts, helping to advance clinical trials for both existing candidates and new molecules. 

Jiangsu Hengrui has a robust portfolio consisting of 23 commercial products in China and more than 90 products under clinical development. According to a Frost & Sullivan pharma market report, commissioned by Jiangsu Hengrui, the company is the largest pharma company in China with revenues of 8-9 billion RMB ($1.11-1.25 billion) 

The potential IPO raised is broken down further, with HK$1.89 billion being allocated to develop new drugs – specifically first-in-class or best-in-class molecules, and monotherapies and combination therapies that offer better safety and efficacy to satisfy unmet medical need – and strengthening its internal technology platforms. HK$945.8 million will be used for acquisitions and collaborations. 

Approximately 15% of the total raised will be allocated to fund the construction of new production and R&D facilities in China and overseas, while HK$946 million will be used to provide funding for working capital and other general corporate purposes.