Since its IPO at $15/share in February of 2023, shares of Structure Therapeutics have seen a quite impressive price increase of over 450%. What did this trailblazing biotech company do to warrant its stock price having such a massive increase? Well, despite an impressive market cap of $2.8 Billion, this company has no FDA-approved drugs nor any drugs currently on the consumer market. In fact, the only pharmaceuticals this company has are those in the early stages of the FDA pipeline. Let’s take a closer look.
Structure has strong ties to Shanghai, China, a place which isn’t exactly celebrated for their biopharmaceutical innovation.
$GPCR recently underwent a $300 million dilutive private placement in which they sold shares to raise capital.
The company is incorporated in the Cayman Islands, a known tax haven which is becoming increasingly popular for Chinese nationals engaged in American stock market scams and manipulation
GPCR’s lead drug candidate is in a class which has very little success with FDA approvals
The Background
Structure Therapeutics was formerly known as ShouTi Inc., based in Shanghai, China. The company is a clinical stage biopharmaceutical company. Nowadays, their press releases state that they are based in San Francisco, California.
However, the company has not strayed far from their Shanghai roots as in their recently filed form S-1, they state, “There are legal and operational risks associated with having certain of our operations in China, including risks related to Chinese and U.S. regulations, changes in the legal, political and economic policies of the Chinese government, and the relations between China and the United States which may affect our business, financial condition, results of operations and the market price of our ADSs.”
Now, what are ADSs? American depositary shares (ADSs) are the U.S. dollar-denominated equity shares of a foreign-based company. So, if you were to purchase a share of $GPCR stock, you would not be buying an ordinary share of stock like a typical American-based company. You’d be buying shares of a foreign-based (Chinese) company which trade on the Nasdaq.
If a Chinese-based biotech company with foreign units of stock doesn’t sound attractive to you, don’t hold your breath. The company is incorporated in the Cayman Islands.
Following a Trend
Structure shares some characteristics with a troubling trend of Chinese-based scam companies which were incorporated in the Cayman Islands. Tickers such as $TOP, $CHSN, $ILAG, $EGRN are all Chinese-based companies that are incorporated in the Cayman Islands and have had significant share price increases before crashing to well below their inflated price levels.
The Pipeline
Structure’s Yahoo Finance profile states, “The company’s lead product candidate is GSBR-1290, an oral and biased small molecule agonist of glucagon-like-peptide-1 receptor, a validated G-protein-coupled receptors (GPCRs) drug target for type-2 diabetes mellitus and obesity. However, these weight loss pills are often FDA “flops” meaning that they are extremely difficult to get approved for the consumer market.
Recently, Pfizer’s GSBR-1290 pill (the same drug as Structure’s) was yanked by the company due to difficulty getting it approved. As CNBC states, “Pfizer’s move to drop two obesity drug candidates in just a few months demonstrates how difficult it is to develop an effective, safe and tolerable treatment for losing weight, even after recent breakthrough medications entered the space.” CNBC calls this “A long list of obesity drug flops.” We encourage you to read the full CNBC article by clicking here.
Despite these failures, Structure’s GSBR-1290 pill is being hailed in an article from September as “keeping up with Pfizer and Eli Lilly.”
Conclusion
We argue that $GPCR’s shares have increased as a result of manipulated hype on a drug that isn’t likely to be FDA approved . Furthermore, we simply don’t believe that Structure has the “magic” that top names in the biotech space do not for an approval of their obesity drug. At a current market cap of $2.8 billion, we believe this Chinese biotech with a couple of “Phase 1” drugs to be overvalued.
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