(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

 

HONG KONG - Finding China’s answer to Moderna comes with huge health warnings for investors. The $87 billion biotechnology giant’s Covid-19 vaccines have inspired copycats in the People’s Republic, where cities like Xian are scrambling to contain fresh outbreaks. With foreign jabs yet to be approved, Shenzhen-listed Walvax Biotechnology and its smaller partner look promising. Their feverish valuations leave little room for error.

More than 80% of China’s 1.4 billion citizens have been inoculated as of December, an impressive feat for manufacturers like Sinovac Biotech and Sinopharm. Still, studies show the domestic-made vaccines using inactivated virus to be less effective than Moderna’s and Pfizer-BioNTech’s so-called mRNA-based jabs. Researchers from Hong Kong, which yesterday announced another round of stringent travel and social distancing curbs to counter new infections, found three doses of Sinovac’s CoronaVac do not produce adequate levels of antibodies against the latest Omicron variant.

As more Chinese cities go into lockdown, Beijing is under pressure to search for a better homemade solution. The leading contender may be the ARCoV vaccine co-developed by the $13 billion Walvax and Suzhou Abogen Biosciences. The latter, founded by former Moderna scientist Bo Ying in 2019, has benefitted from fast-tracked regulatory approvals and a partnership with China’s Academy of Military Science. The jab candidate is currently undergoing clinical trials in Mexico and other countries and could be rolled out as early as this year.

Investors have piled in. In November, Abogen raised $300 million from backers including SoftBank’s 9984.T Vision Fund at a valuation of over $6 billion. That’s 45% more than its price tag just three months earlier when it raised a whopping $720 million from Singapore’s Temasek and others, according to Chinese data provider ITjuzi. After doubling over the past two years, Walvax shares now trade at 58 times forecast next-12 months earnings, per Refinitiv, well above the average 22 times by a dozen Chinese rivals; Moderna and Pfizer trade at just 10 times.

ARCoV promises plenty, including easier storage requirements that might make it more attractive than Moderna’s vaccines. The risks, though, are high. Shares of Germany’s CureVac are down 80% since the company revealed in June that its mRNA candidate was only 47% effective, a reminder of how difficult it is to master the technology. Investors may want some extra protection.

 

CONTEXT NEWS

- A Covid-19 vaccine using mRNA technology jointly developed by Suzhou Abogen Biosciences, a research institute affiliated with the Chinese military and Walvax Biotechnology, has obtained approvals to begin Phase III clinical trials in Nepal, Mexico and Indonesia, and is in the most advanced stage of clinical development among vaccine candidates using mRNA technology that China is researching, according to multiple statements by Walvax.

- Suzhou Abogen Biosciences said it had completed a series C+ fundraising round led by Softbank Vision Fund, Chimera Abu Dubai, IMO ventures and others, in a WeChat post on its official account dated Nov. 29.

- China’s northwestern city of Xian has been under lockdown for two weeks after Covid-19 cases were found, while central Chinese cities including Yuzhou and Zhengzhou in the province of Henan imposed varying degrees of travel curbs, Reuters reported on Jan. 5.

- Hong Kong will roll out a two-week ban on incoming flights from eight countries, including the United States and Britain, and tighten other restrictions, Hong Kong leader Carrie Lam told reporters in a briefing on Jan. 5.

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

(Editing by Robyn Mak and Katrina Hamlin) ((For previous columns by the author, Reuters customers can click on CHEN/ SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS https://bit.ly/BVsubscribe | yawen.chen@thomsonreuters.com; Reuters Messaging: yawen.chen.thomsonreuters.com@reuters.net))