Shares of Hong Kong-listed Genscript Biotech plunge 25 per cent after firm says chairman has been placed under ‘residential surveillance’ by Beijing
- Zhang Fangliang under residential surveillance and four other employees detained by Customs Anti-Smuggling Department, company says in exchange filing
- Stock of Nasdaq-listed subsidiary Legend Biotech also declines
The shares of Hong Kong-listed Chinese gene and cell therapy company Genscript Biotech fell by as much as 25 per cent on Tuesday after it reported that its chairman had been placed under “residential surveillance” by Chinese customs.
Zhang Fangliang was placed “under ‘residential surveillance’ and four other employees of the company were detained for questioning” in connection with an investigation by the Customs Anti-Smuggling Department into suspected breaches of import and export regulations, the company said in a filing to the Hong Kong stock exchange on Monday.
The investigation was related to the special inspections of the management of human genetic sources by China’s ministry of science and technology along with related authorities, mainland Chinese media outlet Caixin said.
These inspections were started in December last year and covered the collection and utilisation of human genetic resources – organs, tissues and cells – and whether these had ever been exported.
China tightly regulates the export of such resources and their use by foreign organisations.
Foreign organisations and individuals, as well as organisations directly controlled by them, are not allowed to collect or preserve China’s human genetic resources, and cannot provide such resources abroad, according to a regulation issued by China’s State Council in June 2019.
“China has laws that say you cannot export cells, biologic samples or genomics data of its citizens. It might be that some samples were processed outside China. It could even be something as simple as genomics data being shared over the computer with an outside institution,” a china biotechnology sector observer, who requested anonymity, said. They added that Zhang was “well respected in cell therapy circles”.
“The company, as a listed company, has a strict compliance and management system and our business will not be impacted by the emergent incident. We will follow the matter closely and will update the public on time to dismiss any misunderstanding,” the company said in a written reply on Tuesday night.
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Zhang is also the chief executive and chairman of Legend Biotech, a Nasdaq-listed blood cancer treatment focused subsidiary of Genscript.
The company remained focused on its path forward, Huang Ying, Legend’s chief financial officer, who has also been appointed its interim CEO, said in a filing to Nasdaq on Monday. “I am committed to ensuring that our company remains focused during this important time,” he said.
Genscript reported an increase of 36.5 per cent year on year in its revenue to about US$166 million for the first half of 2020 on August 30.
