DOMESTIC biotech company BeiGene Ltd. plunged on its Shanghai trading debut yesterday after raising 14.8 billion yuan (US$3.5 billion) in the biggest STAR Market listing this year.

BeiGene, which posted consecutive years of losses, tumbled more than 16 percent, after opening 8.1 percent lower than its offer price of 192.6 yuan.

The offering is the biggest float of a health care company in China in at least two decades, according to Refinitiv data.

“The money was raised at a very high valuation compared with Nasdaq and Hong Kong,” said Brad Loncar, whose Loncar Investments runs an ETF for Chinese drug firms.

“STAR IPOs generally come with long holding periods, which is a sign of confidence in the long term by the institutions that bought into it.”

BeiGene also lists shares in Hong Kong and the United States.

BeiGene’s poor debut performance in Shanghai means its underwriters will likely start buying shares in the secondary market to help stabilize prices under the so-called greenshoe option mechanism.

Proceeds from BeiGene’s Shanghai share sales of 22.16 billion yuan will be mainly used to fund clinical trials for potential treatments and to replenish capital, the firm said in its prospectus.

Investors that have subscribed to BeiGene’s Shanghai share sale include China’s national social security fund and Abu Dhabi Investment Authority.

Backed by existing shareholders such as Amgen and Hillhouse-linked HHLR Fund, BeiGene is among China’s most active innovative biotech firms whose self-developed products obtained out-license deals from global pharmaceutical giants.

(SD-Agencies)