Cancer treatment company BeiGene fell 16.4% on its Shanghai debut on Wednesday after raising $3.5 billion, owing to concerns about its valuation in the wake of possible US sanctions against Chinese biotech firms.

BeiGene, which is already listed in Hong Kong and the United States, became the first company to list on the STAR Market this year, taking advantage of Nasdaq-style rules that allow for loss-making companies.

File:BeiGene logo (2020).png - Wikimedia Commons

BeiGene's stock finished 16.4 % lower than its offer price of 192.6 yuan ($30.26) in Shanghai, with the company planning to spend the majority of the money to support clinical trials and having suffered at least three consecutive yearly losses.

BeiGene's Hong Kong-listed shares dropped 7.6%.

"The money was raised at a very high valuation compared to Nasdaq and Hong Kong," Brad Loncar, whose Loncar Investments runs an ETF for Chinese drug companies, said.

According to data from accountancy firm EY, the deal is the 10th largest public float internationally this year and the largest by a healthcare company in China in at least two decades. It comes amid growing concerns that Chinese corporations may face increased pressure in the United States.

BeiGene's Nasdaq-listed shares have dropped nearly 20% this month as US securities authorities finalized rules that will remove non-compliant Chinese corporations off US exchanges in three years, a risk that BeiGene warned about in its Shanghai prospectus.

The drops occurred as the Financial Times reported that the US Commerce Department is planning to put more than two dozen Chinese companies, including several in biotech, on an "entity list" that will prevent US companies from exporting to them.

This escalated a sell-off in Chinese healthcare stocks in afternoon trade, with a mainland index tracking the sector down 3.2 % against a 0.87 % decline in the broader index.

This escalated a sell-off in Chinese healthcare stocks in afternoon trade, with a mainland index tracking the sector down 3.2 % against a 0.87 % decline in the broader index.

Because of BeiGene's poor performance in Shanghai, its underwriters are likely to begin buying shares on the secondary market to assist stabilize prices using a so-called greenshoe option.

China's national social security fund and the Abu Dhabi Investment Authority are among the investors that have subscribed to BeiGene's Shanghai share offering. BeiGene is one of China's most active innovative biotech startups, with current owners including Amgen and the Hillhouse-linked HHLR Fund. Its self-developed drugs have received out-license deals from worldwide pharmaceutical giants.