? Innovent Biologics Inc. completed its Hong Kong IPO Oct. 31 raising about US$421 million in proceeds.

? The Suzhou, China-based biotechnology company plans to use the proceeds for launching it lead candidate sintilimab in 2019.

? Innovent is the fourth company to list in Hong Kong under the recently changed rules for biotech companies. The other three are Ascletis Pharma Inc., BeiGene Ltd. and Hua Medicine (Shanghai) Ltd.

Innovent CEO and founder Michael Yu has nearly 20 years of experience in biotech research and development. Before starting Innovent, Yu was chief scientist at California-based biotech company Cell Genesys Inc. and also oversaw drug development at Calydon Inc. — another California-based biotech specializing in cancer therapies. Yu was also founding CEO of Chengdu Kanghong Biotechnology Co. Ltd., a subsidiary of Chengdu Kanghong Pharmaceuticals Group Co. Ltd, which developed Conbercept — a therapy for age-related macular degeneration that was approved by the Chinese regulatory authority in 2013.

Yu spoke to S&P Global Market Intelligence about the company's pricing strategy and preparation for the 2019 launch of its cancer immunotherapy sintilimab. The treatment acts as an immune checkpoint inhibitor, boosting the body's ability to target tumor cells by blocking interaction of PD-1 and PD-L1 proteins — cell surface proteins found on immune cells and cancer cells, respectively. Innovent has signed agreements with Eli Lilly and Co. to co-develop and commercialize sintilimab. It also has a collaboration in place with U.S.-based drug discovery company Adimab LLC for developing antibodies and bispecifics.

Below is an edited transcript of the interview.

Michael Yu, Innovent CEO and founder. Source: Innovent

S&P Global Market Intelligence: Did you consider listing in other exchanges? How is the IPO process in Hong Kong?

We had actually planned to list on the Nasdaq as that's a more mature market and has sophisticated investors who understand the industry very well. But we decided to list in Hong Kong after rules for biotech companies were eased in April. Hong Kong is right for Innovent because it is just as good a capital market as Nasdaq and investors here may know Chinese companies better. They also don't have a time difference with us.

We are very happy with the listing process in Hong Kong. The exchange makes the process very easy to follow, and they are very efficient. Investors also showed high level of interest in our business, that's one of the reasons we had a very good IPO. The number of investors and the dollar amount they put on the table to support us is extremely positive. I anticipate that if we continue to develop our fundamental business, the capital market will support us.

What's your take on China's immunotherapy market in view of the competition between imported and domestic products?

I think domestic products will make up most of the PD-1 and PD-L1 therapies in China within the next three to five years, because the quality of the domestic drugs is comparable to imported ones and the price will be lower.

How do you plan to tackle pricing challenges for sintilimab?

When Merck & Co. Inc.'s Keytruda, Bristol-Myers Squibb Co. Opdivo and other PD-1 and PD-L1 drugs entered China, they were priced 53%-54% below the U.S. prices. We will price our drug much lower than Keytruda and Opdivo, but we will need to take into consideration domestic drug prices to determine how low it can be. Merck and Bristol-Myers also have a patient assistant program to reduce costs for certain groups of patients, we will do the same thing.

To make the low price possible, we will increase our production volume. Two years ago, we started building a second facility that will include six 3,000-liter bioreactors. Once that facility starts operations, the cost will dramatically decrease. To help you understand what that means, a 1,000-liter bioreactor can produce 20 batches of the treatment each year.

What are some key areas you plan to spend money on?

We don't expect the company to turn profitable in the next couple of years. For now, we will focus on clinical studies and maximizing the value of our drugs. We will conduct late-stage clinical trials for additional indications for sintilimab which is being developed as a treatment for classical Hodgkin's lymphoma. We are conducting trials for sintilimab as a treatment for lung cancer and other cancers, such as melanoma, esophagus cancer, gastric cancer, which have a significant patient population in China.

We also have a growing pipeline of 17 molecules as we don't want to spend all the money on just one or two products. Some of the money from the IPO will be spent on developing those candidates, so we will have many clinical studies happening in parallel. It's also expensive to build up distribution channels and hire people for commercializing drugs. So, that's another area where we will be spending money.

Are you looking for any M&A opportunities?

Becoming a publicly listed company has increased the possibility and feasibility for M&A. We don't have any specific target yet, but that's definitely an option for us to boost our growth.