Preclinical cancer treatment developer falls most in 6 weeks on share sales to raise US$302 million

The share placements to institutions will raise capital to fund research and manufacturing facilities

PUBLISHED : Tuesday, 05 June, 2018, 12:35pm
UPDATED : Tuesday, 05 June, 2018, 5:55pm

Shares in Hong Kong’s Genscript Biotech, life sciences research services provider and preclinical cancer treatment developer, fell the most in six weeks on Tuesday after it announced plans to raise about HK$2.37 billion (US$302 million) from selling shares at a near 8 per cent discount.

The company said that it was selling 4.09 per cent of its enlarged share capital, or 75 million shares, at HK$26.50 per share, on a 7.99 per cent discount to Monday’s closing price of HK$28.80.

Controlling shareholder and president Wang Ye is also exercising 15 million options granted to her in July 2015 before the company listed later that year, at HK$26.50. The price represented about 0.82 per cent of the enlarged issued share capital.

“The directors consider that the vendor placing price to be fair and reasonable under the current market conditions and is in the best interests of the company and the shareholders as a whole,” according to a statement by Genscript filed to the Hong Kong stock exchange.

Shares in Genscript tumbled by as much as 7.3 per cent in the morning session, before finishing 6.1 per cent lower to close the day at HK$27.05. It was the biggest decline since March 23.

Both placements will be made to institutional investors. Proceeds will be used for building up its CAR-T (the company’s proprietary technology to treat multiple myeloma – a cancer of plasma cells) research and production facilities in China, the US and Europe; global team building for a talent programme; and building up the GMP manufactory facilities for plasmid and biologics products.

JP Morgan Securities and Goldman Sachs are the placing agents.

After the transactions are completed, the combined stake owned by, among others, Zhang Fangliang, Wang Ye and Wang Luquan, will decrease to 48.42 per cent from 50.48 per cent.

The share sales do not require shareholders’ approval as the directors were granted authority to issue up to 348,573,421 shares, representing 20 per cent of the total number of shares, based on a resolution passed at the company’s annual general meeting on Friday.

Chinese biotech firm 3SBio also slid 5.6 per cent to HK$21.25 after announcing that one of its substantial shareholders CS Sunshine Investment had placed 149 million shares, or 5.9 per cent of the total issued share capital to other investors through Goldman Sachs.

Upon completion of the placement, CS Sunshine’s shareholding in the company will drop to 18.6 per cent, representing 472 million shares.

Other pharmaceutical stocks were mostly higher on Tuesday. Sanai Health Industry surged 13.6 per cent to 75 HK cents and AK Medical climbed 10.8 per cent to HK$5.65. CSPC Pharmaceutical Group gained 1.8 per cent to HK$26 while Wuxi Biologics (Cayman) eased 0.3 per cent to HK$95.25 after gaining record highs.