WuXi PharmaTech Lists API Subsidiary on China OTC Exchange

WuXi PharmaTech, a contract services provider, reports that its wholly owned subsidiary, SynTheAll Pharmaceutical Co. Ltd. (STA), has received approval from the National Equities Exchange and Quotations (NEEQ) in China to list its shares on the New Third Board, the over-the-counter (OTC) stock exchange in China. STA shares were listed beginning April 3, 2015. WuXi does not currently plan to issue new STA stock to the public immediately upon listing. In March 2015, following receipt of required government approvals, WuXi agreed to sell a 5.55% stake in STA stock to members of STA management and WuXi management at a price based on a third-party appraisal of the STA equity value. This sale will be settled in early April for approximately $28 million in total cash consideration, with WuXi recognizing a related gain on the sale in the second quarter of 2015. Two thirds of the shares purchased by the management employees are subject to a lock-up, with one-third available for sale on the first anniversary of the listing date and another one-third available for sale on the second anniversary of the listing date.

STA provides process chemistry services and manufactures small-molecule advanced intermediates and active pharmaceutical ingredients for customer use in preclinical and clinical trials and for marketed small-molecule drugs. Its operations are located in the Waigaoqiao Free Trade Zone and Jinshan, both in Shanghai, and in Changzhou. STA does not include WuXi’s biologics manufacturing business. STA’s business is significantly more capital intensive than WuXi’s laboratory services business and is in the process of building new facilities in Changzhou to increase its production capacity. STA filed this application to list on the New Third Board late last year to allow the flexibility to raise capital eventually from the Chinese capital markets to fund its future growth and to pursue potential mergers and acquisitions.

The New Third Board was established by the State Council in January 2013 as a national OTC stock exchange to supplement trading activities on the Shanghai and Shenzhen stock exchanges, including the related Growth Equity Market (GEM) exchanges. China’s GEM exchanges provide for trading of stock of growth companies that do not otherwise satisfy the requirements for listing on the main Shanghai and Shenzhen stock exchanges. The New Third Board provides a pricing mechanism for valuing a company’s stock. Policies are currently expected to be introduced in the second half of 2015 to enable NEEQ-registered companies to transfer to the GEM exchanges.

Source: WuXi PharmaTech 

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