Sinovac Says Operations, Website Suspended After Attempted Coup
In an ongoing confrontation between Sinovac and a chairman of its Beijing subsidiary, the company blamed the chairman in seizing its storage facilities, financial documents, and website.
In a continuous battle of allegations, Sinovac Biotech Ltd. (Nasdaq: SVA) said today that it blocked its website and planned to destroy certain raw materials in vaccine production because of actions by Aihua Pan, chairman of its subsidiary, Sinovac Beijing.
The announcements sent the shares of the company down 9 percent in early trading Monday. At the close, Sinovac had recovered slightly to $7.66 per American depositary share, down 3 percent, or 25 cents per share.
Today's announcement continued repeated rounds of pointing fingers between Sinovac and Pan, who is also the chairman of Shandong Sinobioway Biomedicine Ltd. Sinobioway holds a 27 percent stake in Sinovac Beijing.
Two weeks ago, Sinovac said that Pan, a former professor and biochemical doctor at Peking University, led a dozen people to invade the offices of Sinovac Beijing because the company stalled on releasing its financial statements.
Back in January, Sinobioway released a statement in which it said that Sinovac's board "failed to disclose financial statements in a timely manner, which has resulted in material losses to SVA's shareholders, and subjected SVA to intensive regulatory oversight and warnings from the United States Securities and Exchange Commission."
Sinobioway also said it found "major discrepancies" in Sinovac's accounting and claimed its board did not act in the best interest of shareholders.
Among other things, Sinobioway accused the chairman and chief executive officer of Sinovac, Weidong Yin, of bribery involving the China Food and Drug Administration (CFDA).
Sinovac denied the claims, saying the statements by Sinobioway were "false" and "intended to mislead and publicly harm the interest of Sinovac and our shareholders."
The company also said it would release its financials "as soon as practicable," but delayed filing the 2017 report, blaming Pan and the aggressors for occupying the financial department.
The forced entry, according to Sinovac, also involved cutting power to its facilities and the company had to suspend operations and discard vaccines in the making "to prevent risks associated with biosafety." Then, a week ago, Sinovac said it resumed production of certain vaccines at its Beijing subsidiary and was testing others for quality.
Today, Sinovac said some of its manufacturing and refrigeration facilities where the bacterial seeds for production of its pneumonia-prevention vaccine were stored, remain occupied by Pan and the aggressors. Sinovac said it would destroy the supplies to ensure quality control and postpone a planned inspection of its facilities by CFDA.
"Sinovac Beijing has been left with no choice but to plan to destroy the bacterial seeds and suspend preparations for the CFDA site inspection required for production approval," the company said.
The relationship between the two companies dates back to 1994, when Sinobioway and Pan revived a failing company that became Sinovac.
The altercation apparently stemmed from disputes over privatizing Sinovac, an ongoing process as multiple parties, mainly a consortium led by Sinobioway, and Sinovac's chairman Yin, placed competing bids for its ownership. The board of Sinovac has accepted Yin's proposal. The going-private deal was to be finalized on Thursday, but the company filed an extension until May 26.
Sinovac said today that Pan "inappropriately and without authorization seized control" of its websites, Sinovac.com and Sinovac.com.cn. The company said it has blocked its websites "to avoid any further unauthorized access or tampering that could mislead any interested stakeholders."