A Clear Summary of the Core Issues
This is a very typical case of a failure by an innovative pharmaceutical company during its rush to go public: Yimu Feng, a biotech company that has been burning through funds through financing but still has no approved products on the market and generates no revenue at all. During clinical trials for its core gastric cancer CAR-T therapy, a 49-year-old patient died less than two months after receiving the treatment. From the moment the incident occurred, the company pretended nothing happened, neither contacting the family nor disclosing any information about the incident. They managed to suppress the news for five months, hoping to wait until their Hong Kong IPO to raise public funds before dealing with it. However, on August 18th, just 15 days after submitting their second IPO application, the media exposed the issue. The only external director assigned by the shareholders to handle the situation even angrily told the reporter to "back off," revealing the company's complete lack of ability to respond and its complete failure to take responsibility. As a result, the company's chances of going public are now very slim, and the positive reputation it had built in the industry over the years has been completely ruined.
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A Step-by-Step Explanation
1. The Plan to Hide the News for Five Months Backfired Exactly Where It Hurt the Most
Many people may wonder: Why would a company hide a death for five months? The truth is, they were timing their IPO application. For such companies without any products, their success relies on the promise that their drugs will generate billions in sales in the future. Going public is a critical moment for them; if they succeed, they can raise hundreds of millions in public funds to continue their operations. If not, the millions invested by investors will be gone, and the company will cease to exist. Their original plan was to submit their IPO application again on August 18th, right after the first application expired. They hoped to keep the death of the patient hidden until the IPO hearing was over and the shares were listed. Even if the issue surfaced later, they could probably resolve it with a financial settlement with the family. Since many companies in the industry had done this before, they thought that staying silent was the most cost-effective option. They overlooked the fact that silence only allows problems to grow. If the issue emerged before the application was submitted, they could have delayed the IPO for a few months. But since it happened 15 days after the application was submitted, it was like handing over their resume to an interviewer just to find out that the key project mentioned in their resume had a major safety issue. The losses they had accumulated over the previous five months were more than ten times greater than if the issue had emerged earlier.
2. That Outburst from the Director Was Not Just Her Bad Temper
Many people criticized the director for her harsh words, but she wasn't really at fault. She was an investment representative sent by the shareholder Fosun Pharma, who usually had no involvement in the company's operations, let alone dealing with the media or handling crises. A company preparing for an IPO usually has a public relations team, a secretary for the board, and a spokesperson. In this case, no one from these roles stepped forward to handle the situation. It seems that everyone responsible had disappeared: the chairman didn't answer the phone, the PR department didn't respond, and the secretary in charge of information disclosure pretended nothing happened. The director, having no choice but to answer the media, simply lost her temper. Her outburst was a clear sign that the company had no proper crisis management system. How can anyone trust a company with such poor management when it comes to public communications?
3. The Claim of “Relying on Medical Institutions” Reveals Their Efforts to Shirk Responsibility
A notable statement from Yimu Feng was, “Our company is willing to continue communicating with the family through medical institutions.” In other words, they wanted to avoid direct contact with the family, using the hospital as a buffer between them and the family. The reason for this was to shift the blame. They wanted to suggest that they had no direct agreement with the family and that the hospital was responsible for handling the situation. Their so-called “humanitarian compensation” was also misleading. According to regulations, pharmaceutical companies must compensate for any harm caused during clinical trials as part of their legal obligations, not as a act of generosity. By adding the word “humanitarian,” they tried to make it seem like they were giving the family money out of pity, rather than acknowledging that their drug was at fault. This was a way of trying to distance themselves from the issue.
4. The Secretive Tactics in the Innovative Pharma IPO Scene
Hiding crises through pretense is a common tactic in this industry. These companies, with no revenue, rely on the progress of their research projects for their valuation. Any negative news could lead to a disruption in financing or the failure of their IPO efforts. Many companies have previously covered up adverse reactions or minor accidents, waiting until they went public to resolve the issues at a low cost. Yimu Feng followed this approach, but the media didn’t follow their timeline, exposing the issue at the most critical moment. Now, the stock exchange will likely investigate whether they concealed the death of the patient in their IPO application and whether there were any safety issues with their core product. If they were able to hide such a serious matter, what else might they be hiding from investors? It’s clear that they lost this bet, and their chances of going public are very slim, along with the millions they invested in financing.