Investors dump Hanmi Pharm shares

By Nam Hyun-woo

Hanmi Pharmaceutical’s shares took a severe beating Tuesday, taking the brunt of belated posting of a public notice on the cancellation of a major licensing deal, analysts said.

The stock closed down 7.28 percent at 493,500 won on heavy selling from domestic institutional investors. The KOSPI closed up 0.55 percent at 2,054.86 points.

Still, analysts turned negative on the outlook for the company’s drug development, questioning its trustworthiness.

The company announced Friday that its licensing deal with Boehringer Ingelheim on a lung cancer compound, olmutinib, was terminated. The announcement came just 30 minutes after the stock market opened, and Hanmi shares were trading firmer because of a separate anticancer drug deal which the company announced a day earlier.

Separately, the Ministry of Food and Drug Safety on the same day said in a letter that two people died during a trial of Hanmi’s Olita Tab, whose component is olmutinib, with one patient’s cause of death related to the drug. On the day, Hanmi shares closed at 508,000 won, down 18.06 percent.

After the volatile trading, the company said it received notice of the deal cancellation Thursday evening, causing controversy over the belated posting as it inflicted huge losses on retail stock investors.

With the questionable moves, securities companies rushed to cut their target prices.

Daishin Securities lowered its target price from 1 million won to 700,000 won.

“Hanmi’s existing drug development deals came under revaluation due to the cancellation of the deal. That’s why we’ve decided to lower the target price,” said Daishin analyst Seo Keun-hee. “Returning a license is an occasion that can be observed oftentimes in the process of new drug development, but when there is a high expectation on the success of development, unfavorable news, such termination of a licensing deal, heavily affects stock prices.”

Korea Investment & Securities also downgraded its Hanmi target price from 840,000 won to 790,000 won, citing the erosion of investor confidence in the company as a damper.

“Suspension of clinical trials can be accepted as inevitable in the process of developing a new drug,” said analyst Jeong Bo-ra at the securities firm. “However, the timing of Hanmi’s posting is still suspicious and also this is not the first case of the company posting favorable and unfavorable news on the same day and causing a stir in the stock market. ...The priority for the company is regaining market trust.”

Other securities firms also cut target prices. Still, they called Hanmi Pharm’s mid- and long-term growth fundamentals still solid, saying the company has the capability to develop new drugs.

Meanwhile, the food and drug ministry on Tuesday announced that it retains sales approval for Olita Tab.

The ministry said the drug’s effects outpace side effects. It said doctors should explain to patients the drug’s potential side effects and earn their consent before prescribing the drug.