Chinese stocks listed in the United States were hit hard again. The China Securities Regulatory Commission made a statement late at night, and pharmaceutical companies fell into the vortex of the "tentative list" of the United States.
US stocks closed on Thursday, with Chinese stocks falling in stocks. JD.com , Pinduoduo, B station, iQiyi, NetEase, NIO , and Ctrip all suffered double-digit plunges. Excluding negative factors such as the performance of some stocks is not as good as expected, the shadow of the US "list" once again shrouded Chinese stocks.
news shows that starting from March 8, U.S. Securities and Exchange Commission (referred to as "SEC") will include five Chinese companies in the tentative list of the Foreign Company Accountability Act (referred to as HFCAA), including BeiGene (BGNE.US/06160.HK/688235.SH), Zai Lab (ZLAB.US/09688.HK), Hutchison Pharmaceuticals (HCM.US/00013.HK), Yum China (YUMC.US/09987.HK), Shengmei Semiconductor (ACM Research, ACMR.US/Shengmei Shanghai, 688082.SH).
The above five Chinese stocks listed in the United States were pushed into the center of the storm, and US stocks closed sharply on Thursday. On March 11, Hong Kong and A opened , and five individual stocks opened low and closed low, and the intraday decline continued to expand.
SEC requires these companies to provide evidence to them by March 29 to prove that they do not meet the conditions for being delisted, otherwise they will be included in the "determined delisting list". In response, China Securities Regulatory Commission issued a late-night response, respecting supervision, but opposing the wrong practices of some forces to politicize securities supervision, and is willing to solve the problems of US regulatory authorities conducting inspections and investigations on relevant firms through regulatory cooperation, which is also in line with international practices.
Among the five Chinese stocks involved this time, BeiGene, Zai Lab and Hutchison Pharmaceuticals are all local pharmaceutical companies. Before this, the CXO sector, which is a subdivided industry in the domestic health sector, was severely damaged twice due to rumors of the US "list".
3 pharmaceutical companies have entered the "tentative list". What is the impact?
BeiGene, Zai Lab, and Hutchison Pharmaceuticals are all companies in the field of tumor treatment.
BeiGene is a biotechnology company listed in the United States, Hong Kong and . It focuses on the development and commercialization of innovative molecular targeted and oncology immunotherapy drugs for the treatment of cancer. Founded in 2000, Hutchison Pharmaceuticals is also listed in three places. It was listed on the London AIM Stock Exchange and the Nasdaq in the United States in 2006 and 2016 respectively. It was listed on , Hong Kong stock in June last year. Zai Lab was listed on Nasdaq in 2017 and joined the army of secondary listings back to Hong Kong in 2020. It is also the "most expensive" stock among the Hong Kong stock Biomedicine B stocks.
After the news of the "tentative list" came out, three pharmaceutical companies fell in multiple capital markets one after another, which shows the power of the "Foreign Company Accountability Law".
In 2020, the US Congress voted to pass the Foreign Company Accountability Act, which mainly includes 's main content to put forward additional information disclosure requirements for foreign companies to list in the United States. At the end of last year, the SEC passed an amendment.
According to the requirements, if the listed company cannot meet the inspection requirements of accounting firms for the US Public Company Accounting Supervision Committee (PCAOB) for three consecutive years, its securities are prohibited from trading in the United States. Among them, foreign companies listed in the United States must submit to the SEC that the accounting firm hired by the company is not owned or controlled by foreign governments. When the stock price of 13 pharmaceutical companies in
html dives into , they all responded. BeiGene believes that company was included in the "temporary identification list" based on HFCAA by the SEC. This determination may be because the company submitted the annual report form 10-K to the SEC as of December 31, 2021 to the SEC on February 28, 2022.BeiGene said: "We believe that this temporary recognition list is an administrative measure taken by the SEC, indicating that after these companies recently released their 2021 financial performance reports, SEC began to identify companies that use audit institutions that have not been reviewed by PCAOB. However, this is true. The five companies included in the "tentative list" have all released their performance reports. Among them, on the evening of February 25, BeiGene released its fourth quarter and full-year performance report for 2021; on March 2, Zai Lab Pharmaceutical released its 2021 financial performance announcement; on March 3, Hutchison Pharmaceutical released its full-year performance and latest business progress report.
and Huang Pharmaceuticals expect that when other similar U.S. listed companies with business in Hong Kong and other parts of China submit annual reports to the SEC, the companies will be included in the list. In other words, after five companies including BeiGene, Zai Lab, and Hutchison Pharmaceuticals, the list of "tentative list" may increase.
However, there are currently 15 working days left for the five companies to provide evidence to apply for clearing from the list. will not be fulfilled immediately for the delisting risks that the outside world is worried about. According to HFCAA regulations, the company's listing will only be affected after a company has been officially recognized by the SEC and has used audit institutions that have not been reviewed by PCAOB for three consecutive years.
Zai Lab also stated in a media response that the company was temporarily identified as an issuer who used an audit agency that had not been reviewed by the US Public Company Accounting Supervision Committee. This determination is based on routine operations required by the " Foreign Company Accountability Act " and has been temporarily identified in the company's expectations that it does not indicate that the company will be delisted from the Nasdaq Exchange by the SEC.
and Huang Pharmaceutical also have expectations for future changes, saying that unless the bill is amended to exclude the company or PCAOB can conduct a comprehensive verification of the company's auditor within the specified time, will be delisted from the Stark securities market in early 2024. In addition, the United States is considering legislation to shorten the number of non-verification years from three to two years.
Pharmaceutical companies are frequently attacked by "list". Is "globalization" a false proposition?
For the implementation of the Foreign Company Accountability Act, domestic capital market policy makers and Chinese companies listed in the US have not failed to expect. The opening of the second listing of return to Hong Kong and A is to reduce the negative impact of the "SEC forced delisting" of Chinese stocks listed in the US have as much as possible.
Before the Hong Kong 18A system came into effect and before the establishment of the Science and Technology Innovation Board, the Chinese capital market lacked the listing financing channels for unprofitable biopharmaceutical companies. Before 2018, domestic biopharmaceutical companies could only cross the ocean and support through the US stock market demand for financial support.
Even though the domestic capital market has given a green light, some pharmaceutical companies still prefer to go public in the United States. On the one hand, the Nasdaq market is relatively mature, the investor structure is rich, and the pricing of innovative drugs is stronger. It is often the preferred market for biopharmaceutical companies. On the other hand, the new drugs under the company have been deployed in foreign markets, and clinical trials are promoted at home and abroad, and the local market is also convenient for the market to understand the progress of drug research and development.
The three pharmaceutical companies that entered the "tentative list" this time have business in the United States.
In November 2019, BeiGene created the first new anti-cancer drug BTK inhibitor Baiyueze, independently developed by China and approved by the US FDA. According to the financial report, in 2021, Baiyueze's global sales totaled 1.406 billion yuan, a year-on-year increase of 391.6%, and sales revenue in the United States reached 746 million yuan, a year-on-year increase of 492%, accounting for more than 20% of the total revenue. In addition, BeiGene has authorized cooperation with American pharmaceutical companies Bristol-Myers Squibb and Amgen. In 2021, the two cooperations generated 938 million yuan in revenue for it, accounting for nearly 30% of the total revenue.
The application for the US new drug marketing of Sutaida (the Chinese trade name of sofantinib) under Hutchison Pharmaceuticals began to be submitted rollally in December 2020 and was accepted in June. As of the end of 2021, Hutchison Pharmaceutical has established a US commercialization team to prepare for the potential approval of the drug in the United States in 2022. Zai Lab has the only PARP inhibitor approved in the United States, , EU, and China for advanced stages of warm nest cancer patients.
Like most innovative drug companies, although BeiGene, Hutchison Pharmaceuticals and Zai Lab have been approved for sale, they have suffered losses so far.
The accumulation of early biotech stocks in the US stock market, coupled with the continued overseas trip in recent years, will inevitably lead to many Chinese pharmaceutical companies coming to the end step by step toward the "SEC forced delisting" node. 's loss of the US stock trading market will hit significantly for biopharmaceutical companies that are still in the drug research and development stage and need strong financial support.
Compared with the "list" threat in the US stock market, domestic biopharmaceutical companies are also shrouded in the shadow of more names "lists" and "lists".
In February this year, news came out that CXO company WuXi Biologics was on the US "blacklist". The secondary market immediately responded that the CXO sector suffered a general decline. Ultimately, WuXi Biologics clarified that it was not a "Black List" or an "Entity List", but an "Unverified List" ("VUL" for short).
entry into VUL means that US exporters must submit additional documents to export certain products to companies on the list, which means that the root of the problem has not yet been touched. However, the market includes WuXi Biologics, WuXi AppTec , Kanglong Huacheng, Tiger Pharmaceutical , Kailaiying , Zhaoyan Pharmaceutical, and Yaoshi Technology CXO "Dragon Ball" companies fell for four consecutive trading days.
earlier. In mid-December 2021, the British " Financial Times " released a message saying that the US Department of Commerce will include some domestic companies involved in biotechnology on the "entity list". At that time, the COX sector had experienced a wave of drop in . At that time, some industry insiders expressed concerns about the linkage of the overall environment of the pharmaceutical market.
For biopharmaceutical companies, the "globalization" layout is almost an industry feature, but whether it is the capital market or the upstream and downstream of the industry, institutional constraints are becoming increasingly obvious. Although the domestic market is large, the business system established by local pharmaceutical companies for a long time cannot be rewritten overnight.
(This article was first published on Titanium Media App, author丨Yang Yaru, editor丨Sun Cheng)
