(Yicai) Nov. 4 -- Shares of Innovent Biologics rebounded after the Chinese drugmaker said it has dropped a proposed sale of stock in an overseas unit to its founder Yu Dechao, a plan that had concerned investors, after HKD15 billion (USD1.9 billion) was wiped off its value last week.

Innovent [HKG: 1801] ended almost 13 percent higher at HKD39.55 (USD5.09) a share in Hong Kong today. The stock sank by as much as 20 percent last week.

Innovent and Lostrancos, a company owned by Yu, who is also Innovent’s chairman and chief executive, have agreed to terminate the proposed sale of 20 percent of Fortvita, which was set up in 2018 for overseas expansion, the Suzhou-based company said yesterday.

Lostrancos offered to buy the stake on Oct. 25 for CNY146 million (USD20.5 million). Yu sold HKD152 million (USD19.55 million) of Innovent shares on Sept. 30 and Oct. 2, enough to cover the cost of the equity purchase.

Some small and medium-sized shareholders questioned the lack of disclosure on Fortvita's specific business activities and raised concerns that the stock may have been underpriced, thereby potentially infringing their interests.

In response, Yu said at a business briefing hosted by China Securities on Oct. 29 that Fortvita's assets are still in the early stages and are high risk, and that the valuation reflected their actual value. None of the assets in its overseas portfolio have yet received the US Food and Drug Administration’s Proof of Concept approval, he noted, without disclosing the nature of Fortvita’s business.

His remarks failed to reassure investors, with Innovent’s stock price slumping by 4 percent that day.

Editor: Kim Taylor