Why are investors offloading Hua Medicine stock which is close to launching a novel diabetes drug?

George Lin, Hua Medicine’s chief financial officer, says results for dorzagliatin are good and has advantages over existing diabetes drugs on the market

Company is targeting a launch for the drug in 2021

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A man checks his blood sugar level using a glucometer. China has around 120 million diagnosed diabetes patients. Photo: Shutterstock

Published: 6:30am, 15 Nov 2019Updated: 6:30am, 15 Nov 2019

Hua Medicine, whose shares have shed more than 40 per cent this week after the interim clinical trial results of a diabetes drug did not meet investors’ expectations, said it was confident of receiving marketing approval from Chinese regulators.

“The results were good … [as] some investors are probably not well-informed of the trial requirements and the advantages of the drug over existing products on the market,” chief financial officer George Lin Chien Cheng said on Thursday. “On top of that, they were concerned about the implications of [China’s] ongoing price cutting of generic drugs via mandatory government hospital bulk tenders.”

Hong Kong-listed Hua’s shares fell 5.3 per cent on Thursday at HK$4.12, taking its overall losses since to 40.2 per cent since the results were announced late on Monday.

Investors have questioned the high therapeutic reading – relative to existing drugs in the market – of the trial’s placebo.

George Lin Chien Cheng, chief financial officer of Shanghai-based Hua Medicine, says he expects the 52-week trial for diabetes drug candidate dorzagliatin to be completed in February next year. Photo: Handout

Lin attributed the high reading to the fact that this was the first time that a novel diabetes drug has gone through phase three trial in China, where regulators have yet to set guidelines for such trials but have demanded that patients be subject to doctors’ check-up every four weeks.