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InnoCare (诺诚健华) IPO - Momentum matters but mind the limited upside

InnoCare launched book building to raise up to USD 288 million to list in Hong Kong.

In our previous notes, we have covered the company’s key pipeline products, orelabrutinib (ICP-022, BTK), ICP-192 (pan-FGFR), and ICP-105 (FGFR4). We think orelabrutinib is promising in terms of both efficacy and safety profile, compared to its reference drug ibrutinib, but competition will be intense for the indication. In addition, BTK inhibitors haven’t achieved success outside lymphoma indications and hence the autoimmune indications have not been de-risked. Meanwhile, ICP-192 and ICP-105 are still years from commercial launches. In addition, the success of FGFR4 inhibitors in liver cancer has not been well tested. We have valued the company’s assets at USD 730 million, of which nearly 40% is its cash position.

In this note, we will discuss the valuation range of the deal. We think the valuation implies a hefty premium to the valuation of its drug assets. The deal is backed by a decent line-up of cornerstone investors but it is not the best that we have seen. We will participate at strike.