Hong Kong watchdog investigates Cloudbreak Pharma for ‘rigged’ IPO, suspends its shares

Hong Kong's Securities and Futures Commission (SFC) has reportedly directed the stock exchange to suspend trading of Cloudbreak Pharma, a US-based biotech firm, pending an investigation into its US$78 million initial public offering (IPO) last year. According to the SFC, it has serious concerns that Cloudbreak's IPO might have been manipulated to generate an artificial impression of demand for its shares.

The suspension, according to the regulator, was deemed necessary to maintain an orderly and fair market and to protect the interests of investors. Cloudbreak, which specializes in eye disease treatments, raised HK$611.88 million (US$78.45 million) during its IPO in late June 2025. While the retail portion of the IPO was oversubscribed by 77 times, attracting 29,007 investors, the international offering was less popular, with only 168 subscribers, which was equivalent to 89% of its offering, as per the company's announcement at the time of listing.

Cloudbreak's share price plummeted by 39% on the first day of trading and has since lost over 90% of its IPO price of HK$10.10, trading at HK$1.19 as of Wednesday. The shares were suspended at 9am on Thursday, prior to the market's opening. Cloudbreak's founder and CEO, Ni Jinsong, established the company in California in 2015 following a 20-year stint at pharmaceutical giants Pfizer and Allergan.

The company's Hong Kong listing was governed by Chapter 18A rules, designed for pre-revenue biotech companies. These rules, introduced in 2018, have contributed to Hong Kong becoming one of the world's leading fundraising hubs for biotech firms. Under Hong Kong securities regulations, the SFC has the authority to instruct the stock exchange to suspend trading of a listed company's shares when the regulator suspects materially false or misleading information from the company or if a suspension is deemed necessary to maintain orderly and fair trading and to protect investors.