Shanghai-based drug developer Hua Medicine has announced its plans to raise $400m through an initial public offering (IPO) in Hong Kong.

Reuters has reported that Goldman Sachs is leading the transaction, while the offshore platform of China’s Citic Securities CLSA is also working on the IPO, which is expected to take place in the second half of 2018.

The news comes in the midst of Hong Kong’s attempts to lure drug developers with a series of new, less demanding guidelines, which have led to an increasing number of biotech floats in the region.

Hua, which has a focus on diabetes treatments, opted for Hong Kong over New York, the usual favourite, due to this new listings regime, which is expected to come into force within a few months. Over the years New York has gained a reputation as the forerunner in pharma and biotech IPOs, though Hong Kong is now attempting to rival the US city in this rapidly expanding sector.

Exact details of the IPO are still scarce. For instance, questions on Hua’s valuation, the size of the stake to be sold and whether the company will sell existing or new shares are as of yet unanswered.

Hong Kong’s updated listing rules mark the biggest changes to the IPO regime in at least 20 years, and follow criticism that the existing rules were outdated. As part of the new guidelines, ‘pre-revenue’ biotechs will be allowed to list so long as they adhere to certain criteria. These include firms developing at least one core product beyond the concept stage and having a minimum market capitalisation of HK$1.5bn ($191.3m).

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Under the new rules, issuers primarily listed on the New York Stock Exchange, Nasdaq Stock Market or the Main Market of the London Stock Exchange will receive secondary listing, and additional requirements will be imposed on unconventional issuers to afford better protection for other investors.

Hong Kong Exchanges & Clearing will allow companies with ‘weighted voting rights’ structures to be listed on its main board. It will also accept biotech companies even if they haven’t turned a profit, allowing issuers to make a secondary listing in the city with more ease.

Though many Chinese biotechs are eager to float, they are often at an early stage and don’t have any sales. This is a major obstacle for floats as Hong Kong’s main listing rules require profits as well as sales, with Chinese security laws barring firms from going public on the mainland until they have demonstrated profitability.

Chinese immunotherapy company BeiGene, Shanghai-based Zai Lab and Hutchison China MediTech are all listed on Nasdaq, the preferred listing venue for as-yet unprofitable drug developers.

The new plans underway in Hong Kong hope to attract Chinese ‘new economy’ companies, reaching out to not only drug developers but also online retailers. Other biotechs that have expressed an interest in the city’s new guidelines include Shanghai Tasly Pharmaceutical, the biopharma unit of Tasly Pharmaceutical Group, Shanghai Henlius Biotec, a subsidiary of Fosun’s pharmaceutical unit and US-based cancer detection startup Grail.