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Briefing: Chinese biotech firm denies fake data allegations after shares plunge
China’s Genscript jumps after denying faking allegations–Financial Times
What happened: China’s Genscript, which is listed on the Hong Kong Stock Exchange, has denied claims that its subsidiary Nanjing Legend Biotechnology faked research data, selectively sharing results with investors and misrepresenting its capabilities. On Thursday, an anonymous group called Flaming Research released a report accusing Nanjing Legend, which is developing a cancer treatment called CAR-T in partnership with Johnson & Johnson, of all of the above. Genscript suspended trading of its shares after a 27% drop in value on Thursday, but has since released a denial of the allegations (“All the clinical data disclosed by the Company are true and traceable”) and resumed trading. As of late Friday morning, the company’s shares had risen as much as 19.9%.
Why it’s important: Johnson & Johnson’s deal last December with Genscript was considered a milestone for Chinese biotech. It followed stellar results in Nanjing Legend’s CAR-T treatment study last June, which triggered a 500% increase in share value over the next year. The firm’s stupendous rise in value has caused commentators to voice doubts, however, since the path towards drug development has a low rate of success. Investors, too, may feel themselves on shaky ground given the speed with which Genscript’s shares dropped following the unconfirmed report.