Chinese biotechnology companies could find a much cooler welcome than expected from investors when they launch initial public offerings in Hong Kong in the future, according to Reuters.
Ascletis Pharma Inc became the first China biotech firm to list on the Hong Kong exchange on August 1, but its share price has plummeted 44% in the weeks following its IPO.
Hong Kong recently changed its rules to make it easier for Chinese biotech companies—which are often not yet profitable—to go public in the city, and at least 10 such companies have announced plans to take advantage of the rule change.
However, many of these companies are going to have to significantly lower their expected valuations after the Ascletis flop, according to Reuters.