Don’t get burnt: Hong Kong biotech stock Genscript is hot stuff but also high risk
Without profit model details of a new R&D work for cancer immunotherapy contract and commercialisation success records, analysts warned investors to ‘handle with care’
Hong Kong shares of life sciences research services provider and preclinical cancer treatment developer Genscript Biotech Corp soared 27 per cent to another fresh record, raising concerns that investors are taking extremely high risk on the low success rate of typical drug development.
The price surge came after the Nanjing-based firm announced it won a contract to provide preclinical research and development work for Shenzhen-listed Harbin Gloria Pharmaceuticals on a cancer immunotherapy almost identical to the commercialised antibody Ipilimumab.
“Ipilimumab is a fully human monoclonal antibody, which specifically recognises and blocks CTLA-4, which is overexpressed in many cancer patients leading to abnormal growth of tumour cells,” Genscript said in a filing to Hong Kong’s stock exchange on Wednesday.
It did not provide the contract’s value, duration, revenue and profit model.
The company, which went public two years ago, has seen its share price surge 3.4-fold in the past four months, and is 20 times its initial public offering price of HK$1.31.
It closed at the intraday high of HK$26.80 on Wednesday, 220 times its earnings per share last year and with HK$1.37 billion (US$175.3 million) worth of shares changing hands, making it the 11th most traded stock in the local bourse.
Albert Jin, a health care sector analyst at CCB International, said the source of the firm’s existing revenue and profit – gene synthesis service and industrial enzyme production – was completely different from the drug research hope that investors are buying into.
