Header photo source: Hong Kong Stock Exchange.
On July 25, Leads Biolabs made its official debut on the Hong Kong Stock Exchange. Its shares surged as much as 117% intraday before closing up more than 90%, giving the biotech firm a market capitalization of HKD 13 billion (USD 1.7 billion).
Founded in 2012, Leads Biolabs focuses on immuno-oncology therapies. Its IPO raised a modest HKD 1 billion (USD 127.4 million), yet investor enthusiasm was anything but restrained. The retail tranche was oversubscribed by more than 3,000 times, with total subscription demand reaching HKD 339.8 billion (USD 43.3 billion) by the end of the offer period on July 22. In gray market trading the day before the listing, the stock had already jumped over 90%, delivering a pre-fee profit of more than HKD 3,000 (USD 382.2) per board lot to successful applicants.
Leads is one of several companies that have filed for IPOs in Hong Kong this year. Of these, seven, including Leads, are innovative drug developers. In contrast to previous years, none of these IPOs debuted below issue price. Duality Biologics, which listed in April, also saw an opening day surge of more than 110%.
Just six months ago, the biotech sector was struggling to attract investor attention. Now, the influx of capital into novel drug developers marks a sharp turnaround. Could this be the beginning of a long-awaited bull market for Chinese biotech firms?
Market timing, investor confidence boost Leads’ debut
Among this year’s biotech IPOs, Leads’ listing stands out. Timing was a factor: Hong Kong’s biotech index had been trending upward, and no competing IPOs were scheduled at the same time. But positive sentiment alone doesn’t explain the scale of interest.
Leads came to market with a lineup of cornerstone investors, including Loyal Valley Capital, Perseverance Asset Management, and Tencent. Its business fundamentals further bolstered demand.
“They are sharp, decisive, willing to take risks, and open to investor advice,” said Deng Lingquan, a partner at Loyal Valley Capital. Deng had previously worked at Hankang Capital and participated in Leads’ Series C round in 2021, also serving as a board member. Even so, he said the level of oversubscription took him by surprise.
According to its prospectus, Leads has 14 drug candidates in development, six of which are in clinical trials. These include LBL-007, which targets LAG3, and LBL-024, a PD-L1 and 4-1BB bispecific antibody. Both fall under next-generation immuno-oncology. The company is also developing T-cell engagers (TCEs), antibody-drug conjugates (ADCs), and experimental TCE-ADC hybrids.
“All of these are antibody and protein-based modalities with overlapping technical foundations,” Deng said. “ADC adds a layer of small molecule chemistry, but you can build that over time. Given the state of the company back then, it made perfect sense to pursue these paths.”
LBL-024 exemplifies the company’s strategy. The 4-1BB receptor is a co-stimulatory protein on T-cells that has shown promise but also raised concerns due to liver toxicity. Both Bristol Myers Squibb and Pfizer have encountered setbacks in this area. Leads is addressing this by combining 4-1BB with PD-L1 in a bispecific format to activate T-cells while reducing liver damage without sacrificing antitumor potency.
Early clinical data is encouraging. At the 2024 American Society of Clinical Oncology (ASCO) annual meeting, Leads presented interim results from a Phase 1b and 2 trial testing LBL-024 with etoposide and platinum chemotherapy for extrapulmonary neuroendocrine carcinoma. The treatment group achieved an objective response rate (ORR) of 75% and a disease control rate (DCR) of 92.3%, compared to an ORR of 30–50% for chemotherapy alone.
Though rare compared to more prevalent cancers, extrapulmonary neuroendocrine carcinoma affected 17,000 people in China in 2024 and lacks a standard treatment. Leads is positioning the trial as a pivotal study to support a marketing application. Trials for broader indications such as small cell and non-small cell lung cancer are also underway.
“Investors are willing to pay a premium for a drug that could become best-in-class globally,” Deng said. “It’s not just about the initial indication, but also the potential to expand targets across multiple cancers.”
Leads is also advancing bispecific TCEs, including LBL-034, which targets GPRC5D, and LBL-033, aimed at MUC16. These programs are progressing in parallel with similar efforts by multinational firms.
These assets help position Leads as potentially the first Hong Kong-listed company to explore TCEs. “Labels like that matter, as they signal ambition and can help drive both fundraising and investor interest,” Deng added.
Profitless, but progressing
Leads Biolabs was founded by Lai Shoupeng and Kang Xiaoqiang, two medical scientists who met at the US National Cancer Institute and shared an interest in tumor immunology. They launched the company just as China’s biotech sector began to gain momentum. Early fundraising was relatively smooth. Before the IPO, Leads raised RMB 1.08 billion (USD 151.2 million) across eight rounds from investors including Ennovation Ventures, SCGC, Loyal Valley Capital, and KPC Pharmaceuticals.
These funds helped the company survive the recent biotech funding downturn.
Like many pre-commercial biotech firms, Leads has yet to bring a product to market. Between 2023 and the first quarter of 2025, it recorded cumulative losses nearing RMB 500 million (USD 70 million). Despite that, executive compensation remained high in 2024, with Lai earning over RMB 20 million (USD 2.8 million) and Kang over RMB 6.3 million (USD 882,000).
The company has relied heavily on business development (BD) deals for capital. In 2021, it licensed LBL-007 to BeOne Medicines (formerly BeiGene), although the agreement was later terminated when BeOne reprioritized its pipeline. More recently, Leads partnered with US-based Aditum Bio to spin off a company focused on autoimmune therapies using its LBL-051 asset. That deal included a USD 35 million upfront payment and up to USD 579 million in milestones, seemingly modest by local standards.
With fresh IPO funds, Leads is expected to advance more candidates into clinical trials and is reportedly seeking additional BD opportunities.
Of the seven innovative drugmakers that have listed in Hong Kong this year, only Hengrui Pharmaceuticals has achieved profitability. Duality Biologics, PegBio, and TransThera reported 2024 losses of RMB 1.05 billion (USD 147 million), RMB 283 million (USD 39.6 million), and RMB 275 million (USD 38.5 million), respectively. Together, the group has raised nearly HKD 14 billion (USD 1.8 billion).
For two years, critics have questioned the sustainability of China’s biotech sector, long reliant on monetizing legacy pipelines. Without new capital, some doubted whether the sector could endure.
Now, with public markets once again welcoming unprofitable biotech firms, there is renewed optimism. The reemergence of a functioning capital market could help reenergize the sector and offer a path to long-term growth.
Deng believes that momentum from large players like Hengrui could accelerate this shift. “The problem with Hong Kong’s market used to be that it was too retail-driven. Big institutional money didn’t pay attention,” he said. “But with large-cap companies starting to list, we’ll see more global investors take an interest, and that will benefit the whole sector.”
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Hu Xiangyun for 36Kr.