Caixin
Jun 26, 2019 08:32 PM
BUSINESS & TECH

Reporter’s Notebook: How the Tale of the ‘Magical Swine Fever Drug’ Took Off

Government staff disinfect a pig breeding facility on Aug. 22 in East China’s Zhejiang province to prevent the spread of African swine fever. Photo: VCG
Government staff disinfect a pig breeding facility on Aug. 22 in East China’s Zhejiang province to prevent the spread of African swine fever. Photo: VCG

I was blindsided by a piece of news about two weeks ago. On June 12, official local news website Hinews.cn posted an article titled “Hainan successfully develops injectable African swine fever vaccine.”

The article said: “At 3 p.m. on June 12, the Hainan provincial agricultural office issued the following announcement: With support from this office, Hainan Nanyao Research Group has identified compounds from a variety of tropical plants that could prevent the spread of the African swine fever virus, and created a polysaccharide injection that can prevent African swine fever virus infection. Initial clinical trials have shown a certain degree of preventative effect.”

My first reaction was that this was fake news.

As a Caixin reporter, I’ve followed the African swine fever story for more than half a year. When writing one article on the hunt for a swine fever vaccine, we interviewed at least 10 top experts inside and outside of China. They all said that creating such a vaccine was extremely difficult, and that scientists from around the world had already spent dozens of years at this task without success ever since the virus was first discovered in 1921. Could it be possible that such a difficult scientific problem could be solved so quickly by some of our own amazing tropical plant scientists?

Just as I was between believing and doubting, another announcement came out from a publicly listed company that echoed the earlier headline.

Its main point was: A professor named Xu Qitai and his research team had successfully created and patented a “polysaccharide injection” that could prevent swine fever with an efficacy rate of no less than 92%. The company, Guangdong Highsun Group, said it had invested 900 million yuan ($131 million) in collaboration with the Hainan Nanyao Research Group, investing in the area of natural medicines to “support the work of preventing African swine fever.”

At the same time this was happening, yet another web article began to circulate titled “Hainan Provincial Agricultural Office’s Notice on Preparations to Manufacture a Polysaccharide Injection.”

The article said the Hainan provincial agricultural office had published a notice on May 27 stating: “This office has organized a group that has been conducting tests on the prevention of African swine fever at pig farms and slaughterhouses inside and outside China since May this year. The tests are now nearing an end, and results should be announced in the second half of June. To expedite utilization of the research’s success and protect the safety of existing pigs in Hainan, from the time of this notice, preparation will begin for the production of polysaccharide injections for 5 million to 6 million pigs annually. Vaccinations will begin in this year’s third and fourth quarters throughout the province with an aim of full coverage.”

The morning of the next day (June 13), the same Hainan agricultural office republished the earlier Hinews.cn notice on its official site. From this everyone was clear: The “polysaccharide injection” appeared to have the provincial agricultural office’s stamp of approval.

With that kind of apparent support, it didn’t matter what I believed. Shareholders believed everything.

Between June 11 and June 13, Highsun’s stock rose sharply for three consecutive days. On June 12 it rose by the maximum daily limit. It closed at 3.34 yuan on June 13, a high for the last year.

But as public discussion surged, doubts began to emerge about the polysaccharide injection. Finally the Shenzhen Stock Exchange got involved. On June 13 in the middle of the night, the exchange issued a notice requesting Highsun disclose information on its polysaccharide injection patents and provide documents proving the experimental agent could produce the efficacy rate of 92%. It also requested clarification on whether the company had received an administrative license to implement experimental activity with regard to African swine fever.

The Hainan agricultural department published its own announcement on its official website that evening, saying “reports of ‘the effectiveness of a so-called polysaccharide injection in preventing swine flu’ are lacking in scientific evidence,” and Hainan Nanyao Research Group and other relevant companies hadn’t applied to trial a new animal drug.   

On the morning of June 14, Highsun’s shares were suspended from trading. But that didn’t stop this absurd story.

On June 17, Highsun issued an announcement saying that while professor Xu Qitai and his team had designated their research into polysaccharide injections as for animal use all along, the description of the polysaccharide injection as being for “African swine fever vaccinations” in previous announcements was due to “worker carelessness.” It said “The company sincerely apologies to the many investors for this slip of the pen by careless workers.”

On June 22, Highsun issued a response to the Shenzhen Stock Exchange saying the efficacy rate of 92% or more for the polysaccharide injection was referencing a report from a researcher at a veterinary health monitoring center in Spain. It said that based on phased results from recovery tests using polysaccharide injections in areas of Hainan with African swine fever, agreed targets could be reached through a “cooperative contract.”

Put another way, Highsun had seen a piece of news (which was also carried on Caixin’s own website) that said “a new type of oral vaccination against African swine fever when used in wild boars could achieve a protection rate of 92%.” So Highsun dared to release its own report saying its polysaccharide injection could achieve an efficacy rate of no less than 92% for preventing African swine fever.

This absolutely shows how the circus called China’s stock market is a land where anything goes!  

Obviously, by this time the possibility of the “polysaccharide injection” getting to market was quite uncertain, and Highsun frankly said in its announcement that permission to produce and sell the polysaccharide injection for animals has yet to be received, and it is still unclear whether such permission can be received and how long it might take. It said there “there is major uncertainty whether the product can be industrialized.”  

On Tuesday, the Guangdong office of the China securities regulator said Highsun had illegally committed “seven sins,” and pointed out that Highsun’s behavior violated securities law No. 63 regarding the disclosure of information.

The regulator’s Guangdong office issued a notice clearly telling investors that this was a case of a listed company, during a time of a major outbreak, hyping the entire nation with its absurd story of a “magical swine fever drug” — for which it hadn’t even applied for permission to produce —to take advantage of national hardship. Even more absurd, this wave of hype actually succeeded from the perspective of financial returns, even though we don’t know who was behind it and how much they benefited.

On June 25, the agricultural ministry website issued a notice that said, “Resolutely prevent the submission of questionable and false news by securities-trading organizations.” I feel this lacks some respect for the work done by relevant departments at the Shenzhen Stock Exchange. To use the words of one of my colleagues, “This is affirmation of the stock exchange’s job of ‘seeking truth from facts’ and the stock exchange’s core work should be regulating the release of information, which is much better than the empty talk of many government departments.”

The agricultural ministry notice called African swine fever the “No. 1 killer” of the world’s pork industry, which poses a serious threat to China’s pig-raising industry. Right now China is at a critical moment in its work on and recovery from African swine fever prevention, and veterinarians and other regulators in all places need to realize the importance of such work and recovery, to strengthen their consciousness, and spare no effort at finding ways to implement central preventative measures.

It’s worth noting that the “critical moment” wording differs from the agricultural ministry’s previous stance that African swine fever “has already been effectively controlled.” If African swine fever is already “a spent arrow” as statistics all seem to show, how can capital markets still occasionally see this kind of explosive material emerge, even giving rise to this kind of “magical African swine fever drug”? Regardless of whether it’s exaggeration or something created from nothing, the emergence of this kind of “exaggerated African swine fever vaccine” is enough to make people both angry and worried. The “magical African swine fever drug” incident is a story of behind-the-scenes stock manipulation involving public interest organizations in a case that has yet to be investigated.

Contact translator Yang Ge (geyang@caixin.com)

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