Sinovac Biotech (SVA) Picks Up 'Friendly' Activist Which Urges Disclosure, IR Boost

Boston-based Heng Ren Investments LP, which describes itself as a friendly activist investor in Chinese stocks, is urging Sinovac Biotech (NASDAQ: SVA) to boost its disclosure and IR efforts. In a letter sent to Sinovac's Chairman and Chief Executive Officer, Mr. Weidong Yin, Heng Ren's Managing Partner and Portfolio Manager, Peter Halesworth, highlighted four ways the company could increase shareholder value:

1. Timely Disclosure on Regulatory Status of Vaccine EV71 - During Sinovac’s Third Quarter 2014 conference call on November 17, Chairman Yin said in the coming weeks he did not plan to disclose to shareholders the outcome of a key step – an expert panel review - in the China Food and Drug Administration’s (CFDA) advanced review of Sinovac’s new vaccine, EV71(Enterovirus 71). Heng Ren stated itsdisagreement with Sinovac’s plan not to disclose the upcoming outcome. "We believe this is a material event for Sinovac and its shareholders.Sinovac has invested heavily in the research and development of the EV71 vaccine," Heng Ren said.

2) Hire Specialist Health Care Investor Relations Firm - Heng Ren notes health care investors in the United States are highly technical and demanding of public companies for scientific, medical, and financial information. They note there are Investor Relations firms that specialize in representing health care companies, especially those like Sinovac with important early-stage products.

3) Intensify Attendance at Investment Conferences - Heng Ren's research found more than 30 investment conferences scheduled between November 23, 2014 and March 31, 2015 available for health care companies like Sinovac to present to both generalist and health care investors. According to Sinovac’s Investor Relations calendar of events, its management so far has no plans during this period to attend any conferences, nor has it attended any investment conferences for more than two months. Heng Ren believes more outreach is needed to increase Sinovac’s visibility with investors. Heng Ren offered to assist Sinovac by supplying a list of these upcoming conferences,

4) Intensify International Expansion - Sinovac has achieved international recognition. Sinovac is collaborating with the World Health Organization (WHO) to develop and commercialize polio vaccine. As mentioned, a peer-reviewed publication of Sinovac’s EV71 Phase III clinical trials was published in The New England Journal of Medicine. As shareholders, we applaud Sinovac’s development of business and sales in Mexico, Mongolia, Nepal, and The Philippines. Heng Ren recommends Sinovac extend its sights to sell its vaccines in the United States, where hepatitis and influenza vaccines like Sinovac’ssell at a significant premium to prices in China. Heng Ren offered to assist Sinovac in this search for a distribution partner in the United States.

"We believe it is important at this time for Sinovac to intensify investor relations, disclose material events in a timely fashion, and maximize opportunities for shareholder returns," said Halesworth. "We recommend these become top priorities for senior management at Sinovac."

Chairman Yin thanked Heng Ren for the feedback and support. Mr. Yin stated that Sinovac, based in Beijing, China, would consider Heng Ren’s recommendations.

The full letter can be seen here

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