Caixin
Jul 16, 2020 07:35 PM
BUSINESS & TECH

Drugmaker Junshi’s Shares Give Back Some Gains the Day After Meteoric Debut

Shares of closely-watched vaccine-maker Junshi shot up 170% on its STAR Market debut Wednesday, even as the company continues to lose money. Photo: IC Photo
Shares of closely-watched vaccine-maker Junshi shot up 170% on its STAR Market debut Wednesday, even as the company continues to lose money. Photo: IC Photo

Shares of Shanghai Junshi Biosciences Co. Ltd. on Thursday gave back some of their meteoric gains from its hometown debut the previous day, when positive sentiment toward the experimental drug sector helped the company raise nearly $700 million.

The novel drugmaker’s shares on the Nasdaq-style STAR Market closed down 16.36% at 126.30 yuan per share Thursday after leaping 172% from its Shanghai IPO price.

The company best known for cutting edge cancer therapies and new collaborative work on coronavirus treatments sold 87 million shares at 55.5 yuan per share in its Chinese mainland debut, as investors sought to buy into the third Chinese biotech firm to follow a Hong Kong listing with one on the mainland.

Because it is losing money, the company used a price-to-R&D-spending ratio to determine its offer price. This ratio was 51.1, and leapt to 140 after its first day of trading. That compares with peers Hong Kong-listed Innovent Biologics Suzhou Co. Ltd.’s 51.43, and BeiGene Ltd.’s 20.83.

Since it was founded in 2012, Junshi has continually increased its R&D investment, but its losses have blown out as big bets on breakthrough drugs have not yet paid off. It predicted it will lose as much as 681 million yuan in the first half of this year.

From 2017 to 2019, Junshi lost 318 million yuan, 723 million yuan and 748 million yuan in sequential years. At the same time it has poured money into research, spending 270 million, 530 million and 940 million yuan each year for the same period.

In the first half of this year alone it expects to lose between 681 million yuan and 563 million yuan. Research expenses hit 210 million yuan for the first quarter of 2020.

According to its prospectus, Junshi had 21 medicines in the pipeline as of May 17, of which 13 were independently developed and eight were joint efforts. Only one has so far been approved in China, though nine have been approved for clinical trials and 12 are still in the preclinical research stage.

Junshi’s torpalimab, a monoclonal antibody, was approved by China’s National Medical Products Administration in December 2018 for the treatment of advanced melanoma, and hit the market in February 2019. It was approved to treat advanced bladder cancer in May.

In June, Junshi made headlines when it began the world’s first human trials of neutralizing antibodies, a kind of immune therapy, for the treatment of Covid-19. This week it announced a partnership with Switzerland’s Lonza Group AG to commercialize the treatment, which is still undergoing testing.

Contact reporter Flynn Murphy (flynnmurphy@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)

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