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    Coronavirus outbreak pushes Chinese biotech stocks higher despite market downturn

    Date:2020-3-4 14:06:10Browse volume:Source of articles:Bioworld

    BEIJING – Share prices of Chinese biotechs that partner with Gilead Science Inc. have surged in China this week, after the U.S. firm’s remdesivir was identified as the most promising drug candidate to treat 2019-nCoV. Companies that manufacture drugs recommended by Chinese authorities also outperformed even as stock markets in China plunged 8% as the week opened.


    Gilead (NASDAQ:GILD) saw its share price jump 7.4% on Feb. 3 after remdesivir entered a phase III trial in China to investigate its efficacy in treating the novel coronavirus. The drug candidate is said to have cured a U.S. patient.

    The firm’s Chinese partners have also benefited, with share prices surging more than 20% since Chinese markets reopened on Monday after an extended Lunar New Year break. Shenzhen-listed Porton Fine Chemicals Ltd. (SHE:300363) and Zhejiang Yongtai Technology (SHE:002326), both of which rose by the maximum allowed 10% on Feb. 5, released statements the day before regarding the ongoing surge.

    Porton said it has been providing contract development and manufacturing services to Gilead for remdesivir since 2015 and is in talks regarding the drug candidate, while Yongtai said Gilead is one of its clients and it is seeking to expand the partnership.

    The share price of Shanghai-listed Zhejiang Jiuzhou Pharmaceutical Co. Ltd. (SHA:603456) also hit the 10% limit increase on Feb. 5 and have spiked more than 20% this week. The firm said it has been working with Gilead since 2011 to provide CDMO services, but stressed that it is not yet working on remdesivir.

    As hopes grow for Gilead’s remdesivir, Shanghai-listed Shanghai Medicilon Inc. (SHA:688202), which provides CRO service to the U.S. firm, has also seen its share prices surge 17% this week, including a 3.89% hike on Feb. 5. The surge came even as the company clarified in a notice that it has not participated in any work linked to remdesivir.

    “The antivirus concept has triggered surges in some biotech stocks, but it remains to be seen if their prices have really gone too high,” Terry Zhou, an analyst from Chuancai Securities, told BioWorld. “After all, it’s been only a few days and the share prices could be pushed higher if the outbreak gets worse and the risk appetite continues.”

    More potential treatments

    Besides remdesivir, Chinese authorities have also suggested a few more drugs that could be efficacious against 2019-nCoV this week. They include Arbidol, darunavir, chloroquine phosphate, and even an oral liquid traditional Chinese medicine called Shuanghuanglian.

    On Feb. 4 in Wuhan, the epicenter of the outbreak, Chinese epidemiologist Li Lanjuan claimed that Arbidol (umifenovir) and darunavir can contain 2019-nCoV. Li is part of the team that China has assembled to tackle the new coronavirus.

    She said, that according to preliminary tests, in vitro cell experiments showed that Arbidol, at a concentration of 10-30 micromolar, can effectively inhibit coronavirus and significantly inhibit the cytopathic effect, the changes in cells caused by the virus. Meanwhile, darunavir, at a concentration of 300 micromolar, can significantly inhibit the replication of the new strain.

    Arbidol is sold in China as an antiviral treatment for influenza infection, while darunavir is an HIV drug.

    As the news spread, companies and their partners that develop or manufacture those drugs saw a surge in their share prices. Arbidol sellers such as Shanghai-listed Jiangsu Wuzhong Industrial Co. Ltd. (SHA:600200) and Hong Kong-listed CSPC Pharmaceutical Group Ltd. (HKG:1093) saw their share prices up 10% and 4.47%, respectively, on Feb. 5.

    The share prices of Ningbo Menovo Pharmaceutical Co. Ltd. (SHA:603538), which said on Tuesday that it will work with Simcere Pharmaceutical Group (NYSE: SCR) to develop Arbidol and other antiviral active pharmaceutical ingredients, also went 10% higher.

    As a core supplier of Janssen Inc.’s darunavir, Chongqing-based Porton’s shares got a further boost after being supported by Gilead’s remdesivir. Shenzhen-listed Shandong Realcan Pharmaceutical Co. Ltd. (SHE:000756) also gained 9.97% in its share price, after disclosing long-term partnerships with manufacturers of darunavir. The stock rose another 4.92% on Feb. 5.

    Shares of Shanghai-listed Harbin Pharmaceutical Group Co. Ltd. (SHA:600664), a major manufacturer of Shuanghuanglian oral liquid, also edged up 10%.

    Diagnostic firms also saw enthusiasm from investors.

    “Companies with core businesses relevant to the diagnosis of viral infections will see higher share prices currently,” Li Yishi, director at Haoyue Capital, told BioWorld.

    BGI Genomics Co Ltd. (SHE:300676), which said it has successfully developed a nucleic acid test kit for the coronavirus, saw its share prices increase 10% on Feb. 3, while another test kit developer, Jiangsu Bioperfectus Technologies (SHA:688399), gained more than 17% this week.

    Shares of Beijing Hotgen Biotech Co. Ltd. (SHA:688068), an in vitro diagnostic instrument maker, have also added 16.4% since Monday.

    China’s biotech, pharma and med-tech sectors are getting overheated and fears of a coronavirus-driven bubble have led to calls for caution.

    After Bioperfectus and Hotgen flagged investment risks in late January, drugmakers such as Jiangsu Lianhuan Pharmaceutical Co. Ltd. (SHA:600513) and Shandong Lukang Pharmaceutical Co. Ltd. (SHA:600789) also released statements on Feb. 4 to clarify their principal business and remind investors of the risks.

    “After all, the outbreak of the coronavirus is a short-term event,” Kai Sun, an analyst from Shanghai-based Green River Investment, told BioWorld. “The share prices will go back to normal to a level consistent with market perception in the mid and long term.”

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