Shanghai's first biotech IPO brought a lot of zeroes

Yesterday, Shanghai’s newfangled STAR Market hosted its first biotech IPO, and it brought about some extraordinary numbers. Shenzhen Chipscreen Biosciences opened up more than 500%, according to BioCentury, reaching a $5.5 billion valuation by the close.

That’s good for Chipscreen’s private backers, who are looking at an exponential return on their investment. But it’s arguably bad for the Shanghai exchange. All the handwringing about biotech coming to markets in China stemmed from an assumption, perhaps unfair, that bankers, analysts, and investors there didn’t have the expertise needed to sort good ideas from bad and thus settle on rational valuations.

Chipscreen’s five-fold jump suggests that either the bankers didn’t know enough about the company to price the shares correctly or the investors didn’t know enough to not overpay for them. Either way, it doesn’t exactly bode well for the development of a stable marketplace.