Shares of Legend Biotech are moving lower after the company announced that its Dr. Fangliang Zhang is presently under residential surveillance by the People’s Republic of China law enforcement.
Legend appointed Dr. Ying Huang as interim Chief Executive Officer, effective immediately. Huang will continue to hold his position of Chief Financial Officer. Dr. Zhang remains Chairman of the Board of Directors of Legend Biotech.
The company said that it learned on September 17 that the Customs Anti-Smuggling Department of the People’s Republic of China inspected places of business in Nanjing and Zhenjiang, China, of GenScript Biotech, Legend’s parent majority shareholder, and certain of its subsidiaries, including Legend Biotech’s location in Nanjing. The inspections are in connection with what Legend Biotech understands to be an investigation relating to suspected violations of import and export regulations under the laws of the PRC. In addition to the inspections, the Authority also questioned certain Legend employees who were previously employed by GenScript. In connection with the investigation, Dr. Fangliang Zhang is presently under residential surveillance.
“The Authority has not provided any documents indicating that the questioning or residential surveillance of Dr. Zhang relates to his role as an officer or director of Legend Biotech, nor have charges been filed against any entity or individual at this time. Importantly, Legend Biotech has not experienced any operational disruptions as a result of the investigation and remains focused on conducting its business in the normal course,” the company said in a statement. Legend Biotech shares are down 11%, or $3.50, to $28.50 in premarket trading.