China Shenghuo To Publish Results Of Ulcer Drug Trial Soon

| About: China Shenghuo (CKUN)

China Shenghuo (KUN) has completed a Phase II trial in China of its Wei DingKang Soft Capsules, a product that is being tested for SFDA approval as a treatment for peptic ulcers. Results are expected in a few weeks.

Like China Shenghuo’s other products, the Wei DingKang Soft Capsules are based on Sanchi, which are derived from Panax notoginseng root. Although China Shenghuo is listen on an American exchange, its revenues come almost entirely from sales within China.
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China Shenghuo also applied to the Yunnan Provincial Development and Reform Committee to plant enough trees for an annual harvest of 72 tons of Daemonorops margaritae palms, which is used to produce Wei Dingkang Soft capsules. The company estimates it will cost $9,210 per metric ton to grow its own herbs. The initiative will assure availability of the herb while cutting costs by 20%.

The traditional Chinese medicine is thought to inhibit the growth of helicobacter pylori by relieving stomach muscle spasms and reducing inflammation in the intestinal lining. The medication is a National Type V innovative drug.

As we reported earlier (see story), China Shenghuo staged a very small scale IPO in June, offering just 2% of its shares to the public. The initial reaction to the financing was very strong. Shares doubled from a $3.50 IPO price to $7, but they have since fallen back to $4.50.

China Shenghuo, which was formed in 1995, earned $3.6 million in 2006 on revenues that totaled $20 million. The company offers westernized forms of traditional medications, most of which are derived from Panax notoginseng. The herb is reputed to invigorate individuals and build blood supply.

The company offers thirty one SFDA-approved medicines, which it distributed to 1,650 hospitals and 1,500 drug stores as prescription and OTC drugs.

Disclosure: none.