On the evening of October 16th, Kanghui Pharmaceuticals, which was associated with the concept of a “miracle weight-loss drug”, issued a clarification announcement.
The announcement stated that since its consolidation with the company’s controlling subsidiary, Shaanxi Youbang, in October 2020, it has been continuously losing money. They are currently conducting pilot production of semaglutide and tirzepatide intermediates. After the pilot is completed, they need to complete the medium test phase before scaling up production. At present, Shaanxi Youbang does not have the capability to produce semaglutide and tirzepatide intermediates. The company currently does not produce or sell any other weight-loss drugs, and their previous response led to misunderstandings and misinterpretations by some investors. For this, the company and its securities department sincerely apologize to investors.
The company apologizes for previous responses that led to misunderstandings
It is understood that on October 13th, in response to investor inquiries, Kanghui Pharmaceuticals stated that Shaanxi Youbang mainly produces pharmaceutical intermediates and has not yet been involved in the production of raw materials. The current pharmaceutical intermediate production lines 1 and 2 have been officially put into operation, and equipment is being installed in workshop 3, which is expected to be tested by the end of the year.
The company mentioned that the intermediates Shaanxi Youbang can produce include: sunitinib for cancer, oseltamivir for antiviral, sacubitril valsartan for heart failure, etoricoxib for arthritis, antibacterial drugs such as tezobactam, cefotetan, cefoxitin, hemostatic drugs like tranexamic acid, and weight loss/diabetes drugs semaglutide and tirzepatide, as well as PEG series products for biopharmaceuticals.
Among these, semaglutide is the recently popular “miracle weight-loss drug”. Influenced by this, Kanghui Pharmaceuticals opened on October 16th with a “straight limit up”, closing at 20.85 yuan/share, with a volume of 2.5 million hands and a total turnover of 73.88 million yuan.
During the trading session on the 16th, the company stated on the E-Interaction platform that it currently does not produce weight-loss drug intermediates.
After the market closed on the 16th, the Shanghai Stock Exchange issued a supervisory letter regarding matters related to Kanghui Pharmaceuticals, requiring the company to clarify supervisory requirements in its E-Interaction response.
In the evening of the 16th, Kanghui Pharmaceuticals issued a clarification announcement detailing the situation with semaglutide and stated that the previous response led to investor misunderstandings. The company stated that Shaanxi Youbang is currently conducting pilot production of semaglutide and tirzepatide intermediates and that Shaanxi Youbang does not currently have the capability to produce these intermediates.
Shaanxi Youbang is a high-tech enterprise that integrates the R&D, production, sales, technology transfer, CRO, CMO, and CDMO outsourcing of high-purity raw materials and high-end pharmaceutical intermediates.
Shaanxi Youbang was acquired as a controlling subsidiary by the company in September 2020. Affected by the overall market environment, since its consolidation in October 2020, Shaanxi Youbang has been continuously losing money. In the first half of 2023, it achieved a revenue of 16.5119 million yuan and a loss of 7.5301 million yuan. From October 2020 to December 2022, the total loss was 30.32 million yuan.
“Miracle weight-loss drug” ignites the stock market
Semaglutide, known as the “miracle weight-loss drug”, was developed by Danish pharmaceutical giant Novo Nordisk. It is a GLP-1 (Glucagon-Like Peptide-1) receptor agonist that can stimulate insulin secretion, inhibit glucagon secretion, slow gastric emptying, and reduce appetite, ultimately achieving the effect of reducing blood sugar and weight.
In June 2021, the US Food and Drug Administration (FDA) approved semaglutide for chronic weight management in obese adults (BMI≥30kg/m2) or overweight adults (BMI≥27kg/m2) with at least one weight-related comorbidity. By the end of 2022, due to its effective treatment and online promotion by celebrities like Elon Musk, semaglutide quickly became a best-selling “miracle weight-loss drug”, with demand exceeding supply for its various products.
Recently, Novo Nordisk’s official website announced that sales for the first nine months of 2023 increased by 33% year-on-year at constant exchange rates (CER), and operating profit increased by 37% year-on-year. In addition, the company raised its full-year sales and operating profit forecast, expecting full-year sales growth of 32%-38% and operating profit growth of 40%-46%.
In recent years, GLP-1 class drugs like semaglutide, known for their blood sugar-lowering and weight-loss effects, have garnered significant market attention, with related concept stocks rising continuously. Changshan Pharma, Jinkai Shengke, Ganli Pharma, Puli Pharma, Notai Bio, and other related concept stocks have shown notable gains recently.