Genscript soars 20pc as blood cancer treatment moves closer to clinical trials
Shares of Genscript Biotech jumped 20 per cent after the company said the government had accepted its application for running clinical trials for its blood cancer treatment.
The company, one of the world’s largest providers of gene synthesis services – primarily to university researchers and pharmaceutical firms – had its application for an “investigational new drug” accepted by China Food and Drug Administration.
“Subject to the approval by CFDA, [Genscript] shall be eligible to commence clinical trial of its proprietary CAR-T cell technology to treat multiple myeloma in [China],” Genscript said in a filing to Hong Kong’s bourse on Monday.
Its shares closed 19.6 per cent higher at HK$12.56, or 73.5 times next year’s consensus earnings according to a Bloomberg poll of three analysts.
The share has more than tripled so far this year, and is up sharply from its offer price of HK$1.31 two years ago.
Multiple myeloma is an incurable cancer that causes the build-up of abnormal plasma cells – a type of white blood cell – in the bone marrow.
There were an estimated 27,000 multiple myeloma patients in China in 2013, according to a paper published three years ago in the Value in Health Journal of the International Society For Pharmaco-economics and Outcomes Research.
Genscript – controlled by co-founder and chairman Zhang Fangliang – said CFDA’s acceptance of its application “is only the first step towards the application for new drug … it is uncertain whether the CFDA will grant approval”.
Before setting up Genscript in 2002, Zhang was an associate principal scientist at US pharmaceutical major Schering-Plough.
Genscript has most of its research and production operation in Nanjing, while sales and marketing is located in New Jersey.
Luye Pharma Group said in its shareholders’ circular released on Monday that two drugs it is developing to cure colorectal cancer and osteoporosis both are estimated to take seven years from regulators’ acceptance of its application for clinical trials to market launch.
“We have not factored in any upside from revenues related to CAR-T product as commercialisation is likely more than four years away,” said a research report by JP Morgan, a joint bookrunner of Genscript’s initial public offering two years ago.
JP Morgan forecast Genscript’s net profit to reach US$29 million this year, a rise of 7.4 per cent on year, rising to US$34 million next year.
Excluding development costs of CAR-T, they project recurrent earnings to grow 25 per cent this year and by more than 50 per cent next year.
Genscript posted net profit of US$15 million in the first half, a rise of 13.6 per cent on year.
(This corrects an earlier version of the story to clarify that the company’s application for a clinical trial of its cancer treatment has been accepted by regulators in China)