(Yicai Global) Aug. 14 -- China Securities Regulatory Commission recently fined Guangdong Highsun Group CNY350,000 (USD50,000) over false claims it made about developing a drug that prevents and treats African swine fever.
The local CSRC office in Guangdong province also issued the company's chairman, president and board secretary with a warning and slapped fines totaling CNY200,000 on them.
The company and the three senior executives recently received the administrative penalty decision issued by the regulator for multiple information disclosure violations, the company said in a statement yesterday. Highsun accepts the regulator's punishment and apologizes to investors, it said in the statement.
The firm announced its investment in and construction of an industrial production line for African swine fever vaccine, saying on June 11 it planned to shell out CNY900 million -- about one-quarter of its net assets last year -- and cooperate with a team of natural medicine researchers in China's southernmost province of Hainan to invest in and develop industrial production of a medication that both prevents and treats the pestilence.
The court's decision listed seven major differences between the information Highsun disclosed and the true facts as these unfolded throughout the incident. They include Highsun's claim of "having relevant patented technology" without having any such thing, claiming with no foundation that the prevention and control rate of the purported drug will be "at least 92 percent," unfounded performance forecasts and capital operation estimates for the project, and characterization of a veterinary drug as a "vaccine."
The disease, which is now epidemic throughout China, is an acute, virulent contagious one, with an up to 100 percent death rate in pigs, and for which as yet no effective inoculant exists.
The first domestic case emerged in Northeast China last August and it has since gradually spread to the whole country, seriously impacting pig production and disrupting pork supplies in all regions.
The company's share [SHE:000861] price jumped for several consecutive days after the statement even though it provided no experimental data as evidence to back its extravagant claims. The research team's new drug development process was not filed, the Ministry of Agriculture and Rural Agriculture, the regulatory body for vaccine development, said in a statement two days later. The claim that the drug "can effectively prevent African swine fever" lacked any scientific basis without animal experiment data, per the statement.
Many dubious points lie in the "research and development results" claimed by the team, the subsequent investigations conducted by the Chinese media also revealed.
For example, the main leaders of the research team have been mainly engaged in recent years in the development of betel nut products and health foods, which have not the remotest connection with either vaccines or veterinary drugs, and the project company's registered address was a hotel room.
Editor: Ben Armour