Sinovac Biotech Ltd. CEO Reportedly Bribed Chinese FDA, Buyout Offers Could Be in Jeopardy

December 22, 2016
By Alex Keown, BioSpace.com Breaking News Staff

BEIJING – An article published on Seeking Alpha outlining a Chinese bribery verdict against SinoVac ’s chief executive officer has sparked two U.S. law firms to announce an investigation concerning possible violations of federal securities laws by the Chinese company on behalf of shareholders.

On Wednesday, New York-based Bronstein, Gewirtz & Grossman, LLC and Los Angeles-based Goldberg Law PLC appealed to SinoVac investors that they would be investigating the possible violations. In addition to the two law firms, Heng Ren Partners is also calling for the U.S. Securities and Exchange Commission to probe the case to determine if U.S. laws were violated.

The appeals came hours after the Geo Investing piece was published indicating Weidong Ying, chairman and CEO of SinoVac, “paid bribes to Yin Hongzhang, the Deputy Director General of the Center for Drug Evaluation for the China Food and Drug Administration, and his wife, in order to assist its vaccine clinical trial and approval.” SinoVac has not issued any statements regarding the report of the bribery verdict on its website. The Seeking Alpha piece reporting the bribery verdict was written by Geo Investing, a company that said it was short on SinoVac stock. The piece was also published on the Geo Investing website.

The Geo Investing article on Seeking Alpha cited Chinese court documents as well as Chinese media sources that indicated Ying was found guilty in the Chinese courts. According to the article, Ying paid 1.5 million RMB (yuan) to the couple to spur approval of SinoVac drugs.

The revelation of the verdict could have an impact on two non-binding buyouts in place, one partly led by management at $6.18 and the other at $7, the Seeking Alpha article said.

SinoVac filed applications for hepatitis A, SARS, avian flu, HFMD and influenza A vaccines after Yin Hongzhang was appointed as Director of the Biological Product Division at the CFDA in 2002, Seeking Alpha reported.

SinoVac's product portfolio includes vaccines against hepatitis A and B, seasonal influenza, H5N1 pandemic influenza (avian flu), H1N1 influenza (swine flu), mumps and canine rabies. Sinovac primarily sells its vaccines in China, but also has markets in Mexico, Mongolia, Nepal, Tajikistan, Bangladesh, Chile and the Philippines. Citing court documents, Geo Investing said “CFDA official Yin Hongzhang helped SVA on its vaccine products' clinical trials, registrations and approvals for production.” In 2009, SinoVac was the first company worldwide to receive approval for its H1N1 influenza vaccine.

Shares of SinoVac dipped Wednesday following the publishing of the Seeking Alpha Article, but has since regained those losses. Shares of SinoVac are trading at $5.61 per share as of 11:23 a.m.