Biotech stocks flop as CK Life Sciences is cleared for float

PUBLISHED : Thursday, 20 June, 2002, 12:00am
UPDATED : Thursday, 20 June, 2002, 12:00am

Biotechnology-concept stocks continued to slump yesterday, providing a damper on the announcement that CK Life Sciences International (Holdings) had its listing application cleared by Hong Kong Exchanges and Clearing.

Analysts said news of CK Life Sciences' flotation plan on the Growth Enterprise Market had been discounted by the market and there was 'no excitement any more'.

Shares of GEM-listed Tianjin TEDA Biomedical Engineering dropped another 6.67 per cent to 56 HK cents, bringing an accumulated 45.44 per cent drop since its debut on Tuesday.

Another GEM-listed biotech stock, Kinetana International Biotech Pharma, fell to a new low of 24.5 HK cents before rebounding to end at 25 HK cents, down 12.28 per cent. The counter has accumulated a 27.21 per cent decline over two days.

Shares in Cheung Kong (Holdings), which has a 60 per cent stake in CK Life Sciences, lost HK$1.75 to close at HK$66.50.

CK Life Sciences reportedly plans to raise HK$2 billion to HK$2.5 billion by issuing 1.2 billion new shares as early as next month. For the year to December 31 last year, the company recorded a net loss of about HK$50 million. Its staff expenses reached HK$33 million against turnover of just HK$148,000.

CK Life Sciences is a 60-40 per cent venture between Cheung Kong (Holdings) and the family of its chairman, Li Ka-shing.

An analyst who asked not to be named said retail investors should be cautious, as volatile trading patterns showed just how risky the sector was.

He said a number of companies had leveraged the biotech concept to inflate their valuations and boost share prices.

Historical background, the technology under development and its product potential should be assessed when subscribing to new shares of biotech firms, the analyst said. 'A new drug is hardly going to be developed within one or two years,' he said.

Last week, CK Life Sciences said it had received notices of allowance from the US Patent Office for two of its fertiliser products. The company said it had developed 10 fertiliser products, all at different stages of patent application.

Only a few of the 30 listed biotech concept stocks were involved in research and development of cell-based products, an analyst said.