Interface News reporter | Tang Zhuoya
Interface News Editor | Xie Xin
On the evening of May seventeenthUltimatexpokerharrah'sKang long Huacheng issued an announcement on the sale of shares in overseas equity companies, and its wholly-owned subsidiary Kanglong Hong Kong Investment holds 10% of the ProteologixUltimatexpokerharrah's.21% stake will be sold by Proteologix to Johnson in a merger and acquisition at a consideration of about US $102.1 million (RMB 725 million).
This is the second domestic CRO (pharmaceutical R & D outsourcing) company to adjust overseas operations after the US House of Representatives also passed the draft Biosafety Act.
Since the beginning of this year, the US Senate and House of Representatives have successively passed the draft Biosafety Act, which has not only led to a sharp fall in the share prices of named companies such as Yao Ming Kant, but also affected CRO companies such as Kang Longcheng. When the draft Biosafety Act was passed by the US Senate on March 6, Kanglong's A shares nearly fell by the daily limit, while H shares fell more than 15%. In Kanglong's investor question and answer column, there are also many questions such as the impact of the passage of the US Biosafety Act on Kanglong, and whether Kang Longcheng is on the list of biotechnological innovation organizations in the United States, but Kang Longcheng did not give a positive answer.
On May 15, the US House of Representatives also passed the draft Biosafety Act, which means that the draft legislation of the US Biosafety Act is another step forward. Yao Ming Kant, as one of the "concerned biotechnology companies", has also begun to make a substantial response in business.
According to foreign media endpointsnews, Yao Ming Kant is cutting a small number of jobs at a factory in St. Paul, Minnesota, and has suspended construction of its Worcester base in Massachusetts. Yao Ming Kant also mentioned in his 2023 annual report that it would expand the production capacity of its Worcester base in Massachusetts to 36000 liters.
The US market is one of the main sources of revenue of Yao Ming Kant. In the 2023 annual report, Yao Ming Kant disclosed the distribution of employees in various regions, with a total of 1919 employees in the United States, of which the United States has the largest number of sales staff, accounting for more than 50% of the total. 65% of Yao Ming Kant's 2023 revenue came from the American market.
Although Kang Longcheng, which belongs to the same CRO company as Yao Ming Kant, has not been listed as a "concerned biotechnology company" by the United States, the United States has severely restricted Chinese CRO companies, which means that Kanglong Kancheng, which is also highly dependent on the US market, may also need to re-evaluate its overseas business. From the perspective of domestic and foreign business structure, Kanglong Kancheng's foreign business accounted for more than 80% of the total revenue in 2022 and 2023. Among them, the revenue from North American customers accounted for 64.14% of Kanglong's total revenue in 2023.
The Proteologix sold by Kanglong Kasheng was established in 2021 and is mainly engaged in the research and development of innovative bio-drug pipelines for the treatment of autoimmune diseases. There was no revenue in 2023 and the first quarter of 2024, and the net loss was $5.7438 million and $5.7381 million, respectively.
Proteologix's product portfolio includes PX128, which is preparing to enter the first phase of clinical development, and PX130, which is in the preclinical development phase. PX128 is a bispecific antibody targeting IL-13 and TSLP for the treatment of moderate and severe atopic dermatitis (AD) and moderate and severe asthma, while PX130 is a bispecific antibody targeting IL-13 and IL-22 for the treatment of moderate to severe AD. In short, Proteologix is a company focused on the development of bispecific antibodies for the treatment of immune-mediated diseases.
Kang Longcheng's current stake in Proteologix was mainly subscribed with its own capital of US $3 million and US $4 million in September 2021 and November 2022. Kang long Huacheng announced that after a comprehensive analysis of the biological drug market, the core technology and operation of Proteologix, it intends to agree to the overall sale arrangement of Proteologix.
After Johnson's successful acquisition of Proteologix, he will first make a down payment of about US $86.821 million to Kanglong Kasei; within 60 days after completing the agreed R & D project milestone, Johnson or his affiliated companies will pay Kanglong Kancheng about US $15.321 million for the milestone event.
In other words, Kanglong's investment of US $7 million has increased by more than 13 times in two or three years. Moreover, Proteologix has nothing to do with Kanglong's main business, and the sale of the asset will not only increase the company's cash flow, but also reduce its business in the United States.
It is worth noting that in 2020 and 2021, Kang Longcheng also made two acquisitions of foreign companies, one acquiring 100% stakes in Absorption Systems LLC (hereinafter referred to as "AS") and Absorption Systems California LLC (hereinafter referred to as "ASC") and Absorption Systems Boston LLC (hereinafter referred to as "ASB"), wholly owned subsidiaries of AS, for no more than US $137.5 million, and the other acquiring Allergan Biologics Limited (hereinafter referred to as "ABL") for US $120 million.
The main business of AS, ASC and ASB is to provide non-clinical in vitro and in vivo laboratory analysis, biological testing and animal testing services for macromolecular / small molecular drugs, gene therapy, cell therapy and medical device products to support the discovery, development and approval of related drug, therapy and medical device products.
ABL mainly conducts research and development of biological agents (macromolecular drugs) and state-of-the-art therapies (including CMC (Chemical, Manufacturing and Control) services) in Liverpool, UK.
Kang long Kasheng's foreign investment is mainly concentrated in the United States and the United Kingdom, and at the time Kang long Kasheng believed that the two acquisitions were in line with its goal of building a fully integrated and international drug research and development service platform. According to the 2023 annual report, Kanglong Huacheng has 21 R & D centers and production bases in China, the UK and the United States.
On May 20, Kanglong Huacheng A shares rose as much as 2.07%, while Hong Kong stocks rose as much as 4.26%. But the share price of Kanglong turned into A shares plummeted at noon. As of the close, Kanglong Huacheng A shares were down 0.41% at 22.13 yuan per share, while Hong Kong shares were at 11.5 Hong Kong dollars per share, up 1.95%.
