Genscript Biotech plunges after chairman of Chinese gene and cell therapy firm is arrested on suspected smuggling offence

Stock headed for the biggest drop since September 22, rocked by news of its chairman being placed under residential surveillance

Investigations related to management of human genetic sources such as organs, tissues and cells, local media Caixin reported in September

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Genscript Biotech’s executives have come under the microscope on suspicion of smuggling prohibited goods under the state’s export and import regulations. Photo: AFP

Published: 1:22pm, 23 Nov 2020Updated: 10:15pm, 23 Nov 2020

Genscript Biotech plunged in Hong Kong by the most in two months after its chairman was detained on suspicion of smuggling prohibited goods in and out of the country.

Zhang Fangliang, a co-founder of the Nanjing-based gene and cell therapy firm, has been arrested after a period under “residential surveillance,” the company said in a stock exchange filing late Sunday. The company also announced his resignation as chairman and non-executive director.

“In connection with the investigation on November 21, [the company] received from the family member of Dr. Zhang a copy of a notice of arrest issued by the Customs Anti-Smuggling Department in Zhenjiang [of Jiangsu province],” Genscript said in the filing. “[He] has been arrested for the suspected offence of smuggling goods prohibited by the import and export regulations.”

Genscript shares tumbled 14.8 per cent to HK$10.74 at the close of trading on Monday, the most since a 17.3 per cent dive on September 22, a day after Zhang was placed under residential surveillance by the Chinese customs on suspicion of breaking the law. Some HK$605 million (US$78 million) of shares changed hands.

Zhang, chairman and chief executive officer of Genscript Biotech, in a 2018 file picture. Photo: K.Y. Cheng

Two employees who had previously handled import and export activities of Genscript have also been arrested with Zhang, although no formal charges have been made against them, the company said in the Sunday filing. Genscript said its operations remain “normal.”

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