FAST NEWS: Luzhu Biotech repurchases shares

The Latest: Beijing Luzhu Biotechnology Co. Ltd. (2480.HK) announced Monday that it repurchased a combined 1.43 million of the company’s shares on July 12 and 15, after its board authorized the repurchase of up to 20.24 million shares at its annual general meeting on June 12.

Looking Up: Announcement of the repurchase plan only a year after the company’s IPO implies that management is optimistic about Luzhu’s future prospects, and believes its shares are undervalued.

Take Note: The repurchase of shares may draw away internal funds from other uses such as for operations and future investments.

Digging Deeper: Luzhu was established in 2001 and initially produced five vaccines to prevent severe bacterial diseases such as meningitis. The company subsequently gave up rights to all five vaccines in 2008, and shifted to R&D in the emerging field of human monoclonal antibodies in 2009. Its major products are currently in the development stage with none approved for sale, leading it to report combined losses of over 1.5 billion yuan ($207 million) in the past three years.

Market Reaction: Luzhu’s shares were little affected by the repurchasing news and closed unchanged at $24.45 by the midday break. The stock now trades near the lower end of its 52-week range.

Translation by A. Au

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