Trouble centers on China Biologic Products

Written by BioMedReports.Com

Sunday, 07 February 2010 21:05

There is an interesting article in Monday's edition of Barrons which points out that the number of small Chinese companies with shares traded in the U.S. grew last year, with small firms born as reverse mergers and special-purpose acquisition companies raising some $1.6 billion, according to the PIPEs Report. The total value of such companies could now be $25 billion. Yet this universe is fraught with peril.

According to the report, the latest trouble centers on a small company called China Biologic Products (NasdaqGM: CBPO), with a market value of $240 million. Listed on Nasdaq in December, it bills itself as China's largest non-state-owned plasma-based biopharmaceutical company. Over the past year, China Biologic shares are up 400% to a recent 10, though they are down from a January high of 13.70.

On Jan. 26, a posting on the SeekingAlpha Website described a lawsuit filed against China Biologic by Zuying Du, an original shareholder, about a company holding Du claims to own. The posting was by a group called Worthless Pennies, which identified itself as "U.S. and Chinese research analysts working for an elite hedge-fund clientele," and said it was "short at $12 and adding aggressively to [its] position."

Among other things, the posting alleged that the chief of the company's key operating subsidiary was once accused of fraud, and that the husband of a board member had a criminal history. An effort to reach Worthless Pennies was unsuccessful.

We tried to load the website listed on the Yahoo profile page and it didn't respond to multiple pings.

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