Trial error of AstraZeneca COVID-19 vaccine affects share price of parent company

By Timothy Oyomare

Growing questions over the COVID-19 vaccine being developed by AstraZeneca are casting uncertainty over the initial public offering (IPO) ― scheduled for early next year ― of the vaccine’s contract manufacturer SK Bioscience, as it could affect the market value of the company.

Though the Korean firm has a number of coronavirus vaccine candidates in its manufacturing backlog, and is developing its own COVID-19 vaccine, market watchers say a controversy over the clinical trials of the AstraZeneca vaccine may dent investors’ high expectations for the company, which could affect its IPO price.

According to the Korea Exchange, the share price of parent company SK Chemicals has remained highly volatile over the past week losing 33,000 won from Tuesday to Thursday, although it bounced back 18,000 won or 4.33 percent Friday.

The swing was interpreted as investors’ concern that the controversy over AstraZeneca’s COVID-19 vaccine may dent SK Bioscience’s value, consequently affecting its parent’s share price too. SK Chemicals holds a 98.04 percent stake in SK Bioscience

AstraZeneca and Oxford University acknowledged a trial error after a number of scientists raised doubts about the validity of preliminary results that showed its vaccine was 90 percent effective. On Thursday, AstraZeneca CEO Pascal Soriot told Bloomberg that there would likely be an additional trial after the recent results.

Industry officials say this is anticipated to affect the valuation process for SK Bioscience.

The company became a big name vaccine manufacturer after it bagged two major COVID-19 vaccine production deals. After signing the deal with AstraZeneca in July, SK Bioscience signed a contract manufacturing deal with U.S. biotech Novavax’s COVID-19 vaccine in August.

Along with the manufacturing deals, its own COVID-19 vaccine, NBP2001, went into clinical trials earlier this month, encouraging the company to move forward with an IPO.

SK Bioscience is seeking to make its debut on the domestic bourse in the first quarter of 2021. For this, the company selected NH Investment & Securities and Korea Investment & Securities as lead managers, and is expected to file for a preliminary review with the Korea Exchange by the end of the year.

Some brokerages are anticipating the company’s value may reach 3 trillion won, but industry officials say the AstraZeneca mishap shows that SK Bioscience is also exposed to the uncertainties that pharmaceuticals and biotechs are bound to have.

“Though there can be some variables related to milestones, the general impact on the company’s business will be limited, because SK Bioscience is in charge of manufacturing the AstraZeneca vaccine, not its development, trial and efficacy,” an official at a domestic drug maker said.

“When it comes to the IPO, however, there could be an impact, because the valuation of drug makers and early-stage share prices are largely swayed by investors’ expectations on the successful commercialization of key drugs or vaccines. There are many variables and unexpected factors in developing a drug or a vaccine, meaning there’s no guarantee of success.”

SK Bioscience refused to comment on AstraZeneca’s vaccine issue, but added it was doing utmost to fulfill its part as a contract manufacturer.

– Koreatimes