Why are US biotech companies listing in Hong Kong before Wall Street?

Over the years, Chinese companies such as: alibaba and Baidu It headed to the US to list its shares, citing deeper capital markets and higher valuations. Now, one American biotech company is betting on the opposite.

Axiom Biosciences, a San Diego-based regenerative and genetic medicine developer, plans to go public in Hong Kong in 2027, followed by a secondary listing in the U.S. in 2029. The company says this “contrarian” move will open it up to sophisticated biotech-focused investors and bring it closer to clinical and commercial partners across Asia.

“Some of the most important science in the world is being built in the United States, but funding has not kept up,” said Remo Moomiai Kadjar, founder and CEO of Axiom.

Moomiay Kajal told CNBC that the Hong Kong exchange’s stricter listing criteria compared to the US shows the biotech ecosystem is maturing, noting that recent biopharmaceutical listings in Hong Kong have outperformed those on the Nasdaq.

He said public markets offer an alternative means of raising capital as biotech companies face a more challenging financing environment. As clinical trials progress, they become more expensive, but the pool of venture investors willing and able to write big checks becomes smaller, especially for companies that fail to secure large backers early on, he added.

Chinese biotech companies are flocking to the city’s stock exchange due to government pressure and the growing financial needs of innovative pharmaceutical companies. of Hang Seng Biotechnology Index Hong Kong’s stock index has risen more than 75% since its January 2025 low, outpacing the roughly 40% to 50% rise in the ICE Biotechnology Index and Nasdaq Biotechnology Index, which track U.S.-listed companies, over the same period, according to LSEG data.

“The United States remains the deepest and most institutionalized biotech capital pool in the world,” said Danny Shang, founding partner at life sciences-focused private equity firm Fontas Capital. “That depth is why the most well-funded and globally competitive assets are still raised and listed in the United States, and why it is unusual for purely American biotech companies to choose Hong Kong as their primary location,” he said.

What has changed, however, is that Hong Kong’s attractiveness as one of the world’s largest biotech funding hubs has increased, thanks to reforms introduced last year to streamline the IPO process, Xiang said. Since 2018, 86 companies have listed in Hong Kong, raising more than $17.8 billion, according to the Hong Kong Exchange and Clearing Board.

Global biotech companies are increasingly attracted to the city’s growing biopharmaceutical investor base and proximity to Chinese pharmaceutical partners, which can help speed up clinical trials and reduce costs.

Still, local investors tend to favor companies with clear ties to China and back assets where they see opportunities to co-develop, manufacture and sell products with Chinese partners, Xiang said.

George Wu, a partner at Hong Kong-based law firm DLA Piper, said the low valuation of Hong Kong’s biotech sector compared to the Nasdaq is also attracting more foreign investors looking for upside potential.

The U.S. is also seeing the strongest pace of biotech IPOs in years, with clinical-stage cancer drug developer Parabilis Medicines and obesity drug maker Cairera Therapeutics each raising more than $600 million, soaring about 60% since they went public earlier this year. SPDR S&P Biotech ETF (XBI) as of Tuesday, up 76% year over year.

Biotechnology is a long-term priority for the Chinese government, which has spent decades funding basic research, reforming drug regulations and bringing back to China experienced scientists and executives trained abroad, including in the United States.

Lower labor and manufacturing costs, an abundance of science graduates, access to large data sets, targeted use of AI in areas such as drug discovery, and China’s huge population, with many patients concentrated in large hospitals that can help recruit clinical trials, are contributing to China’s advances in biologics, genomics, and drug development, experts say.

However, a June study by Cure Innovation Index found that despite its lead in clinical development and supply chain, China still lags behind the United States in the quality, commercial reach, and cutting-edge strength of its biomedical sciences.

“While the United States has a ‘0-to-1’ lead in basic science and novel biological breakthroughs, China increasingly has a ‘1-to-100’ lead, which means rapid and capital-efficient implementation to reach patients,” Xiang said.

Axiom is collaborating with South Korea-based biopharmaceutical company Medino to develop a treatment for newborns with severe brain injuries associated with high mortality rates. The treatment has received two U.S. Federal Drug Administration designations for pediatric rare diseases, and a Phase 1 trial in nine newborns has been completed in South Korea.

Axiom also plans to study the therapy as a possible treatment for adults who have suffered a stroke.

“There are no regenerative therapies for these brain injuries, so it’s imperative that we move forward with clinical trials as soon as possible, and I think Asia is a good place to do that,” Moomiay Kajal told CNBC.

In December, a bipartisan U.S. legislative committee warned that China was beginning to outperform the United States in some areas of biopharmaceutical innovation, building on “advantages gained from non-market practices and brute force economics.” The term is used in some quarters in Washington to describe China’s state-led push in strategic industries.

The committee urged concerted action across the public and private sectors to maintain, and in some areas regain, U.S. biotechnology leadership.

On Tuesday, President Donald Trump said generic drugs imported into the United States would be subject to a 100% tariff starting in August 2028, and that rate would double to 200% a year later.

Moomiay Kajal said the move does not change the company’s intention to list in Hong Kong, as it is closely monitoring geopolitical developments but is focused on next-generation specialty products rather than generic drugs and seeks investors who understand the risks and development timelines involved.

Nasdaq and the New York Stock Exchange allow biotech companies to apply to go public before they turn a profit or begin human trials. Pre-earnings listings are also allowed in Hong Kong, but require at least 12 months of research and development and a core product that is past the concept stage.

“U.S. IPOs are generally faster for companies that meet the qualifications, but in Hong Kong, review times are getting longer due to the accumulation of applications,” Xiang said.

—CNBC’s Evelyn Cheng contributed to this report.