Following statements about a drug to treat Covid-19 investors bought BrightGene shares, to much fanfare. Yet, the company's new product has not proven its efficacy yet, and the company is facing allegations about its patents.
Chinese drugmaker BrightGene has made a generic version of Gilead-owned remdesivir – a believed cure for pneumonia caused by the new coronavirus – the company said in a statement filed to China’s Nasdaq-style Star Market. Following the news, investors forayed into the firm's shares, pricing up to a 20% high on January 12 – yet they may have amplified the development.
Despite countless patent and efficacy-related allegations, the company's generic solution is seen as the most applicable mass-production solution to the ongoing public health crisis in China. Sequoia-backed BrightGene (688166: SH) warned investors of the risks, saying "Our imitation may possess no value if remdesivir proves ineffective to treat Covid-19."
Remdesivir first drew the global investor community's attention when the now-infamous Wuhan Institute of Virology of the Chinese Academy of Sciences applied for a patent in China for the use of the drug in treating Covid-19. The Gilead-made (GILD: Nasdaq) drug is a novel antiviral developed as a treatment for Ebola virus disease and Marburg virus infections.
Yet, even if remdesivir proves efficient, it will take a considerable time for the drug to enter the market, as the virus has lately been claiming around 100 people per diem. The statement showed that, after completion of the production of the core substance of the original drug, it needs to go through clinical trials, drug approval, and other timely procedures. If it is eventually listed, the company also needs to buy the patent from Gilead.
"We will not get into a patent dispute," the CEO of Gilead reportedly said, proving to prioritize public interest above all.
The optimism around the company is not only a product of investors’ trust in the Wuhan Institute of Virology. The Suzhou-based drugmaker has a long track record of developing successful generic APIs and FDFs. It has applied for over 281 patents since its inception.
BrightGene's announcement was an 'oasis in the desert' as investors eye a possible way out of the economic catastrophe for China. As of January 13, the new coronavirus has claimed over 1,100 lives and infected over 44,000 since the outbreak began in December. The death rate hasn't reached its peak yet, and markets are desperate for good news. The abnormal increase of 20% in BrightGene's shares can be read from this perspective.