(Yicai) Sept. 23 -- RemeGen has denied rumors of large-scale redundancies, saying that the axing of staff is a strategic move. However, public data shows that years of losses and high overheads have meant that the Chinese biopharmaceutical firm has burned through most of the proceeds from its listings in Shanghai and Hong Kong and is running out of cash.

RemeGen has laid off over a thousand employees from multiple departments, including research and development as well as manufacturing, citing business challenges as the reason, according to recent rumors circulating on social media.

The reduction in headcount is not a mass layoff but rather a strategic adjustment to optimize team structure and enhance efficiency, the Yantai-based company said on Sept. 19.

RemeGen logged losses of CNY780 million (USD110.6 million) in the first half and was left with cash reserves of just CNY676 million as of June 30, the lowest since it went public, according to its latest financial report. Only around CNY60 million (USD8.5 million) remains from its CNY6.4 billion (USD880 million) IPO proceeds in Hong Kong in 2020 and Shanghai in 2022.

From 2022 to June 30, 2023, RemeGen racked up cumulative net losses of CNY3.4 billion (USD474 million). The losses were mainly due to high R&D expenses, which came to CNY3.1 billion over the period, it said. In addition, the company incurred sales fees of CNY1.6 billion and administrative costs of CNY717 million (USD101.7 million).

It is also expensive to build factories for the mass production of drugs, as each factory can cost between USD200 million and USD700 million, the drugmaker said in its 2023 financial report.

RemeGen announced a private placement plan in March to drum up funds, but later reduced the fundraising target to CNY1.9 billion (USD269.6 million) from CNY2.5 billion (USD354.8 million). The scheme is still pending regulatory approval.

RemeGen’s Shanghai-traded shares [SHA:688331] were trading down 0.1 percent at CNY22.91 (USD3.25) as of 1 p.m. today. The stock has lost 52 percent of its value since it went public. And its Hong Kong stock [HKG:9995] was trading up 0.9 percent at HKD10.82 (USD1.40). This is a drop of 79.2 percent from its IPO price.

As the share price tumbles, investors are watching closely to see if the private placement materializes and if these funds will help the company turn itself around.

Editor: Kim Taylor