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WuXi Pharma WX continues to drop

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WuXi Pharma Tech (NYSE:WX) continued to slide, during my absence. One (main) concern is heavy insider selling (source: seekingalpha) lately, after the secondary offering was suspended on May 4.

I double checked the F1 filings for secondary offering (principal and selling shareholders), and found its CEO Dr. Ge Li was going to sell 8 million shares, and he unloaded 200,000 shares on May 30 according to AOL finance. BTW, it is a bit strange I could not find those transactions at SEC web site. Adding insult to the injury, United Overseas Bank (UOB) said it was going to sell 2.1 million shares at $18.4 each, according to Reuters. I guess they must need cash badly (hint: sub-prime trouble). Seriously, from its F1 it appears to me UOB is a venture investor in WuXi, and I am not surprised to see it wants to cash out some (note it intended to sell those shares in the now aborted Secondary). In other words, UOB still sells the shares planned in the Secondary, but the Wuxi management did not.

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Got some WX Wuxi Pharma again

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Wuxi Pharma logo

I bought some Wuxi Pharma (NYSE:WX) shares today, last year I traded it shortly after its IPO in Aug/Sept.

Recent developments
Q4 and full year 2007 results (MSN Money): total net revenues increased 93.3% to $135.2 million (compared to 2006);

Chemsitry CRO of the year by Pfizer;

Q1 2008 results to be released on May 27;

Wuxi postponed secondary offering today; here is F1 prospectus for secondary offering (I have not found its 2007 annual report).

Background (in Chinese)

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WuXi Pharma Tech Q2 results

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Here are the results from Yahoo Finance, some highlights:

Second Quarter 2007 Highlights:

— Total net revenues increased 99.3% over the second quarter of 2006 to
US$30.2 million. (1H revenue $64 m, slight decline over Q1 2007?)
— Net income increased 482.1% over the second quarter of 2006 to US$7.1
— Diluted earnings per American Depositary Share (“ADS”) for the second
quarter of 2007 was US$0.11. Diluted earnings per ADS excluding share-
based compensation expenses (non-GAAP) for the second quarter of 2007
was US$0.13.

The stock took a hit last Thursday because the market expected more for its year 2007 outlook. Currently the company expects rev of $128 to 132 million.

On business level, I like Wuxi’s business model and the global outsourcing trend in the pharma R&D. One concern of outsourcing is margin. I’m listening to its Conference Call now, will add comments if I find anything interesting.

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WuXi Pharma Tech looking good

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WuXi Pharma Tech (NYSE: WX) is a pharmaceutical R&D service company based in Shanghai, and they do work for the pharma giants like Pfizer, Merck, etc. They are the No. 1 player in China and growing fast.

Wuxi Pharma Tech pic

To give some background, here is a discussion thread from; and a valuation analysis article from Yahoo (ChinaBio Today).

I’m not in the pharma business but from my observation, pharma R&D outsourcing is a sweet area because of the following trend.

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