(Yicai Global) Dec. 28 -- Luxin Venture Capital Group, China’s first listed VC firm, is projecting CNY140 million (USD21.4 million) in losses as its investment target US biopharma company Intarcia Therapeutics is set to embark on bankruptcy liquidation. Luxin shares [SHA:600783] were trading 6.9 percent down at CNY13.62 (USD2.08) by late afternoon after the news broke.

Intarcia, which Luxin’s Qilu Investment unit invested in through a special-purpose Cayman Islands vehicle, has retained a third party to dispose of its assets and liquidate the company, the venture capital firm based in Jinan, capital of eastern Shandong province said a statement yesterday.

It plans to downgrade its valuation of the US medicine developer to zero by year’s end, it added. This is projected to yield CNY140 million in losses, equal to its net profit for one quarter. Luxin logged CNY450 million net profits in the first nine months.

Formed in 1995, Boston, Massachusetts-based Intarcia develops drugs to treat chronic diseases. Its ITCA650 is a long-term implant for type-2 diabetes that delivers a steady six-month dose of the GLP-1 agonist exenatide, public data show.

Intarcia filed a second new drug application for the medication to the US Food and Drug Administration, but the agency rejected it again, per the statement, adding the pharma firm is appealing the ruling, but now lacks the wherewithal to keep operating.

The Chinese VC announced its overseas investment, planning to infuse up to USD50 million into Intarcia to gain a stake for USD60 per share in July 2016. Luxin actually spent USD30 million to take 500,000 preferred shares in the US medicine developer, it said in a follow-up April 2017 statement. ITCA650, Intarcia’s core product at that time, had already finished its third-phase clinical trials, earning it a pre-investment valuation of USD3.5 billion.

Risky Businesses

Luxin also declared further investment in Intarcia at the start of the year. The company had planned to buy Intarcia’s convertible bonds, offering up to some USD2.2 million, it announced on Feb. 29.

Luxin also disclosed Intarcia’s financial data in its statement at this year’s start. The US pharma firm had about USD90 million in total assets, and a deficit of USD1.9 billion. It chalked up USD231 million in net profit in the first 10 months.

Luxin will toggle its positioning in various sectors and retrench its investment in its future overseas businesses to dissipate risks, Luxin said, addressing potential pitfalls in its other foreign ventures.

The company focuses mainly on venture capital and businesses related to grinding tools. It also invests in advanced manufacturing, modern agriculture and the marine economy. It is further assaying into emerging sectors such as information technology, energy conservation and environmental protection, new energy, new materials, biotechnology and high-end equipment manufacturing. It also manages government investment funds and market-oriented self-investment funds.

Editor: Ben Armour, Xiao Yi