Is this Chinese biotech going out of business?

The Equity Dispatch #38

This Nasdaq-listed, Hong Kong-based company hopes to apply Traditional Chinese Medicine (TCM) to significant illnesses like ADHD, but that seems unlikely. The company is a family affair, with all research provided by the CEO’s father, so one wonders how objective scientific assessment can be.

The stock surged by more than 700% in a month without patent approval, a buyout offer, or other notable news. The CEO funded a share buyback, but rather than demonstrating faith in the company, the repurchase looked suspiciously like a way to inflate the short-term share price, possibly for an equity issue or insider self-enrichment since the CEO’s compensation is tied to market capitalization. This is a highly speculative business run by a family team from Hong Kong, thus little trusted in the U.S. and very volatile.