Wuxi-backed Chinese biotech Cstone considers sale

Bloomberg: Cstone Pharmaceuticals, a Hong Kong-listed biotechnology company focused on developing cancer drugs, is exploring strategic options including a sale of the business, according to people familiar with the matter.

The WuXi AppTec Co.-backed Chinese firm is working with Goldman Sachs Group Inc. to help sound out interest from prospective buyers, the people said, asking not to be identified because the matter is private. Options also include a sale of a controlling stake in the company, the people said. A deal could draw interest from other Chinese and global drugmakers, the people said.

Considerations are preliminary, no final decision has been made and the company could still decide against pursuing a deal, the people said. A representative for Goldman declined to comment, while representatives for Cstone and Wuxi didn’t immediately respond to requests for comment.

Shares of Suzhou-based Cstone have plunged about 70% in the past year, valuing the company at about $799 million.

Founded in 2015, Cstone has developed a pipeline with a focus on immuno-oncology therapies, according to its website. It has offices in cities including Suzhou, Shanghai and Beijing. The company raised about HK$2.6 billion ($327 million) in a Hong Kong initial public offering in 2019.

WuXi Healthcare Ventures, the investment arm of Chinese pharmaceutical company Wuxi, is the biggest shareholder of CStone with a 24.7% stake, according to data compiled by Bloomberg. US pharmaceutical giant Pfizer Inc. holds about 9.8% of the firm. Other investors include funds such as Hillhouse Capital Group, Sequoia Capital China and Singaporean sovereign wealth fund GIC Pte.

Cstone’s shares were suspended from trading for about two months earlier this year as the company conducted an investigation into an investment that breached listing rules, leading to a delay of its earnings report. The company later named Wei Li as chairman, replacing Frank Jiang, who retained his title as chief executive officer. Cstone’s net loss widened to 1.9 billion yuan ($286 million) in 2021, from 1.2 billion yuan a year earlier, on lower income and higher expenses.