China’s Junshi Biosciences may follow in compatriot Innovent Biologics’ footsteps as it tees up to raise $414 million in its Hong Kong, S.A.R., China IPO, Reuters reported. It’s the latest company looking to list on the Hong Kong, S.A.R., China Stock Exchange after it relaxed its rules for early-stage biotechs.

Junshi is selling 158.9 million shares at a range of HK$19.38 to HK$ 20.38 ($2.48 to $2.61), according to a term sheet seen by Reuters. The company has 13 biologic drug assets in development, including those for immuno-oncology, inflammation and autoimmune disease, Reuters reported.

While the HKEX’s new rules are certainly more inviting to prerevenue biotechs, listing in Hong Kong, S.A.R., China Special Administrative Region of China does not guarantee success. While Innovent made out with a $421 million deal—and has only gained since it started trading—others have not been so lucky.

Hua Medicine and BeiGene, which closed a $903 million secondary listing in Hong Kong, S.A.R., China Special Administrative Region of China in August, have both dropped since they began trading. And how could we forget Ascletis, the first biotech to list in Hong Kong, S.A.R., China Special Administrative Region of China under the new rules and whose shares dropped 44% after just a month on the HKEX?

Ascletis’ experience may serve as a wake-up call for other preprofit biotechs that want to go public. At the time, investors and bankers spoke of bubbles bursting and said to expect lower valuations for future IPOs in Hong Kong, S.A.R., China Special Administrative Region of China.

"With a surge in China’s biotech industry in recent years, everyone has been a bit overexcited," said Kevin Xie, who co-founded and heads the healthcare division at the investment bank China Renaissance, Reuters reported at the time.

"As market conditions have become more challenging than a year ago and investor sentiment has cooled, many biotech firms will have to adjust valuations in both primary and secondary markets," Xie said.

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