TMTPOST--QuantumPharm's shares surged on their debut in Hong Kong, as investors snapped up the stock even before the artificial intelligence (AI) drug researcher posted any profit.
Trading under the stock code 2228, QuantumPharm's shares closed their first day at HK$5.80, representing a 10% increase to the IPO price of HK$5.28, after briefly soaring by as much as 24.6%. The company had priced its stock at the lower end of its range earlier this week.
Tencent-backed QuantumPharm raised HK$989.3 million (US$126.7 million) through its IPO, making it third-largest listing of the year in Hong Kong. Public investors oversubscribed the offer by 103 times, activating a clawback mechanism under the listing rules. This increased the shares available for retail investors to 37.48 million, or 20% of the total offering, while reducing the international tranche to 80%.
Founded in 2015 by three quantum physicists trained at the Massachusetts Institute of Technology (MIT), QuantumPharm leverages quantum physics, artificial intelligence (AI), cloud computing, and robotics to deliver R&D services and products for the pharmaceuticals, biotechnology, renewable energy, and advanced materials industries.
QuantumPharm plans to allocate the majority of its IPO proceeds towards enhancing its research and development capabilities and providing innovative solutions.
Despite suffering a year-on-year loss increase of 19% to 522 million yuan (US$72 million) in 2023 from a loss of 437 million yuan in 2022 and remaining unprofitable in years since its inception, the company's successful fundraising has valued it at HK$19.8 billion.
QuantumPharm is the first firm to go public in Hong Kong under Chapter 18C, a regime introduced over a year ago for pre-revenue specialist technology companies. This chapter allows companies with a minimum valuation of HK$10 billion to list their shares even if they have not yet generated any revenue.
Typically, companies aiming to list must have achieved at least HK$80 million in combined profits over the three years leading up to their IPO.
Tencent owns 12.91% of QuantumPharm after the IPO. The pharmaceutical's list of shareholders include HongShan, Google and SoftBank Group.
Going forward, QuantumPharm plans to scale its AI-enabled automated chemistry lab platform globally, including a large automated robotics lab in Somerville, Massachusetts. The company aims to extend its successful AI and robotics R&D platform from biopharma to high-value industries such as agriculture, new chemicals, energy, and cosmetics, and has signed benchmark agreements with several institutions, including the Institute of Biology and Medicine.
Wen Shuhao, the co-founder and chairman of QuantumPharm, said the company's ambition to balance societal and commercial value, utilizing AI and robotics to build the future infrastructure of various industries.