What happened
BeiGene (BGNE 6.17%), a Chinese biopharmaceutical company, saw its shares rise 33.7% on Wednesday. The stock closed at $146.52 on Tuesday but opened at $175.82 today and rose as high as $195.95 in the first hour of trading. So far this year, the stock is still down more than 45%.
Image source: Getty Images.
So what
There were three reasons for the bounce, one related to the overall market and the other two associated directly with BeiGene.
Last week, the Securities and Exchange Commission named BeiGene as one of five Chinese stocks that faced being delisted because the company was not complying with the Holding Foreign Companies Accountable Act by refusing to make its financials available for U.S. regulators. On top of that, a spike in COVID-19 cases in China has led it to tighten restrictions in some provinces, driving Chinese stocks down in general.
That negative vibe changed a bit for BeiGene when China's state-run Xinhua News Agency reported Wednesday that the country would work to stabilize Chinese stock markets and spur economic growth with "concrete actions," adding that it was working with U.S. regulators to solve the nonreporting issue.
BeiGene had additional good news when it announced on Tuesday that Israel had approved the company's oncology therapy, Brukinsa, as a second-line or third-line treatment for adults with Waldenström's macroglobulinemia, a type of non-Hodgkin lymphoma. Israel had already approved Brukinsa last year to treat mantle cell lymphoma. The drug has been approved in 45 markets, the company said.
The biotech announced positive news in its full-year report. BeiGene said it had full-year revenue of $1.2 billion compared to $308.9 million 2020. The company isn't yet profitable, but its losses narrowed to $1.17 per share, down from losses of $1.47 a year ago.
Now what
Investors will wait to see exactly what China means when it says it is working with U.S. regulators regarding compliance with the Holding Foreign Companies Accountable Act. The law states that the U.S. Public Company Accounting Oversight Board must be able to inspect audits of foreign firms listed on U.S. markets. The Chinese government has, up to now, prohibited its companies from submitting their audits to U.S. regulators.
If that issue is resolved, BeiGene appears to be on solid financial footing considering its revenue growth, and it could easily see its shares rise.
