F-1/A: Ascentage Pharma Eyes Nasdaq Listing with 7.325 Million ADS Offering

Ascentage Pharma is set to launch its initial public offering in the U.S., offering 7,325,000 American Depositary Shares (ADS) while already listed on the Hong Kong Stock Exchange.

Summary

• Ascentage Pharma, a global biopharmaceutical company, is planning an initial public offering (IPO) in the United States, offering 7,325,000 American Depositary Shares (ADS).
• The company's ordinary shares are already listed on the Hong Kong Stock Exchange (HKEx) since October 28, 2019.
• Each ADS represents four ordinary shares.
• The IPO price will be determined through negotiations between Ascentage Pharma and the underwriters, considering the trading price of ordinary shares on the HKEx and prevailing market conditions.
• Ascentage Pharma has applied to list the ADSs on the Nasdaq Global Market under the symbol AAPG.
• The company's operations in the PRC are primarily conducted through its PRC subsidiaries, and the holding company structure involves unique risks to investors.
• Ascentage Pharma is subject to regulatory oversight by the PRC government, which could influence its operations and the value of its securities.
• The company is required to fulfill filing procedures with the CSRC, and completion of this procedure is a condition for the offering and listing.
• Ascentage Pharma's ability to pay dividends depends partially on dividends paid by its PRC subsidiaries, which are subject to PRC law restrictions.
• The company is an emerging growth company and a foreign private issuer, allowing it to comply with certain reduced reporting requirements.
• Ascentage Pharma intends to use the net proceeds from this offering to fund the research and development of olverembatinib and lisaftoclax, as well as other product candidates, and for working capital and general corporate purposes.
• The company has granted the underwriters an option to purchase up to an additional 1,098,750 ADSs within 30 days.
• The company faces risks related to its financial position, clinical development, regulatory approval, commercialization, intellectual property, and reliance on third parties.
• The company has incurred significant net losses in the past and expects to continue to incur substantial and increasing losses for the foreseeable future.
• The company's revenue for the nine months ended September 30, 2024 was RMB876.8 million (US$124.9 million), compared to RMB175.5 million for the nine months ended September 30, 2023.
• The company's loss for the nine months ended September 30, 2024 was RMB160.0 million (US$22.8 million), compared to RMB683.6 million for the nine months ended September 30, 2023.
• As of September 30, 2024, the company had cash and bank balances of RMB1,479.3 million (US$210.8 million).

Sentiment

Score: 7

Explanation: The document presents a balanced view, highlighting both the company's potential and the risks associated with its business. The positive aspects include the company's innovative pipeline, collaborations, and regulatory approvals in China. The negative aspects include the company's history of net losses, reliance on third parties, and regulatory risks in China.

Positives

• Olverembatinib is the first and only BCR-ABL1 inhibitor approved in China for specific CML indications.
• Lisaftoclax's NDA was accepted with Priority Review designation by the CDE.
• The company has a diversified portfolio of clinical and commercial-stage small molecule drug assets.
• The company has collaborations with leading biotechnology and pharmaceutical companies and research institutions.
• The company's revenue for the nine months ended September 30, 2024 increased significantly compared to the same period in 2023.
• The company's loss for the nine months ended September 30, 2024 decreased significantly compared to the same period in 2023.

Negatives

• Ascentage Pharma has incurred significant net losses in the past and expects to continue to incur substantial and increasing losses for the foreseeable future.
• The company's operations in the PRC are subject to regulatory oversight by the PRC government, which could influence its operations and the value of its securities.
• The company's ability to pay dividends depends partially on dividends paid by its PRC subsidiaries, which are subject to PRC law restrictions.
• The company has identified a material weakness in its internal control over financial reporting.

Risks

• The company may not be able to achieve or sustain profitability in the future.
• The company will need to obtain additional financing to fund its operations.
• Clinical development of drug candidates is inherently uncertain.
• The regulatory approval processes of the FDA, NMPA and other comparable regulatory authorities are lengthy, time consuming and inherently unpredictable.
• The company is substantially dependent on the commercial success of olverembatinib.
• The company may be restricted from transferring its scientific data abroad.
• The dual listing of the company's ordinary shares and the ADSs may adversely affect the liquidity and value of the ADSs and ordinary shares.
• The trading prices of the ADSs are likely to be volatile, which could result in substantial losses to investors.
• The PRC government has significant authority to exert influence on the ability of a company with operations in the PRC to conduct its business.

Future Outlook

Ascentage Pharma intends to use the net proceeds from this offering to fund the research and development of olverembatinib and lisaftoclax, as well as other product candidates, and for working capital and general corporate purposes.

Industry Context

Ascentage Pharma is operating in the competitive biopharmaceutical industry, specifically targeting hematological malignancies. The company faces competition from major pharmaceutical and biotechnology companies, academic institutions, governmental agencies and public and private research institutions, among others.

Comparison to Industry Standards

• The document mentions competitors such as AbbVie, Astex, Boehringer Ingelheim, Fulcrum, Kartos, Novartis, Oric and Takeda, but does not provide a detailed comparison of Ascentage Pharma's results to these companies.
• The document mentions that Ascentage Pharma is the only company in the world with active clinical programs targeting all three known classes of key apoptosis regulators, according to the F&S Report.

Related Party Transactions

• In December 2016, Ascentage Jiangsu acquired all equity interests in Healthquest Pharma from Dr. Zhai, our Chief Medical Officer, and Ms. Ren.
• Dr. Yang, Dr. Wang, Dr. Guo, and Dr. Zhai are parties to the Concert Party Confirmation Deed, agreeing to cooperate and vote unanimously on major company affairs.

Stakeholder Impact

• Shareholders will experience dilution from the issuance of new shares in the IPO.
• Employees may benefit from the company's growth and success, as well as from equity incentive plans.
• Patients may benefit from the development and commercialization of new therapies for hematological malignancies.
• The company's suppliers and collaborators may benefit from increased business opportunities.

Next Steps

• Complete ongoing registrational trials to pursue FDA and other international approval of olverembatinib.
• Launch in China in 2025, if approved, and pursue regulatory approval of lisaftoclax in multiple countries.
• Progress other clinical stage assets.
• Continue building operations strategically for global markets.
• Opportunistically pursue strategic partnerships and collaborations to maximize the potential of the portfolio.

Key Dates

Keywords

Ascentage Pharma, ADS, IPO, Olverembatinib, Lisaftoclax, Clinical trials, Regulatory approval, Biopharmaceutical, Hematological malignancies, China, FDA, NMPA, CSRC, Financial results