Beijing: A Chinese biotech firm has skyrocketed more than 4,500% in the three months since its Hong Kong debut, stoking worries of speculative buying.
Shares of TransThera Sciences soared as much as 64% to HK$679.50 or about US$87.35 in Hong Kong trading yesterday, after pricing at just HK$13.15 in late June.
The more than 50-fold gain has made it the top performer on the Hang Seng Healthcare Index this year.
TransThera noted the “unusual movements” in its share price in an announcement yesterday, while confirming “business operation remains normal”.
The blistering rally highlights investor appetite for China’s biotech push amid a red-hot Hong Kong equity market, but it also heightens concerns about lofty valuations in a sector still fraught with drug development risks.
In the company’s latest interim report, TransThera posted zero revenue for the period ending June 30.
“Up 4,000% in three months is definitely crazy,” said Haris Khurshid, chief investment officer at Chicago-based Karobaar Capital LP.
“But it says more about sentiment than fundamentals.”
The rally also drew widespread attention in local media.
Trade publication Pharmaceutical Finance yesterday wrote “a company with only 121 employees and no products, no revenue, no profits” has overtaken industry heavyweights in just over 80 days.
Financial news outlet Cailian noted that TransThera has yet to commercialise any products on the market, with its drugs still in clinical testing.
The biotech company now surpasses the market value of pharmaceutical giants like Akeso Inc and Innovent Biologics Inc, and is now closing in on BeOne Medicines Ltd, a Chinese biotech trailblazer dual-listed in the United States and Hong Kong.
“Hong Kong’s biotech sector has been starved for a big win, and traders are clearly chasing anything that looks like the next breakthrough,” said Khurshid.
“These kinds of rallies can reverse just as violently,” he added. — Bloomberg
