16 September 2019
Regent Pacific Group will be transformed from a coking coal miner to a supplier of premature ejaculation medicine PSD502. Photos: Reuters
Regent Pacific Group will be transformed from a coking coal miner to a supplier of premature ejaculation medicine PSD502. Photos: Reuters

Will this sex drug stock rise to the challenge?

A company that offers a cure to a common sex problem among men is set to debut in the Hong Kong stock market.

Regent Pacific Group (0575.HK), an investment holding company focused on the biopharma and mining sectors, is offering to buy out Plethora Solutions in a share swap deal worth £122.6 million (US$188.6 billion).

Regent now owns 29.88 percent of Plethora, which is listed on London’s Alternative Investment Market.

Regent is effectively offering a backdoor listing for the UK firm, which has developed a medicine to treat premature ejaculation, PSD502™, ahead of its full commercialization.

James Mellon, chairman of both Regent Pacific and Plethora, said: “This possible offer is about optimising growth and realising the potential of an innovative product that can address a known medical condition affecting almost one in four men.

“With increased investment and commercial innovation, we see huge scope for the product initially in Europe where it has approval, and in the important US market and in the fast-growing Asian market in due course.”

The deal could not have come at a more opportune time. Chinese men must rise up to the challenge posed by Beijing’s abandonment of its three-decade-old one-child policy.

The call of duty is for all abled-bodied individuals to help in boosting the country’s slowing economy by producing more babies, and they certainly need all the help they could get in order to prove their love for the motherland.

There are no official statistics on how many men are suffering from premature ejaculation, which is understandable as most men wouldn’t admit that they have the affliction.

But, for now, we could go along with Mellon’s estimate that it’s 25 percent, which is a lot.

If that’s also true in China, then Beijing’s new two-child policy may be in jeopardy even before it could even start because, according to a few medical websites we’ve perused, premature ejaculation could have an impact on fertility, especially if it happens before the requisite penetration.

The question, of course, is how will the Plethora deal impact on the stock.

Any news about sex excites people, but the impact, sadly, does not often last long.

One example is state-owned Guangzhou Baiyuanshan Pharmaceutical Holdings (00874.HK), which has developed a Chinese version of Viagra after the patent of Pfizer expired.

The drug appears to be doing great in terms of sales, but we haven’t heard much about the stock after the initial excitement.

For Regent Pacific, which was listed as a hedge fund manager before branching out to coal mining and now life sciences, the acquisition gives a much-needed boost to a company which is still worth a tiny HK$350 million in market capitalization even after 18 years of being listed.

Yet the stock appears ready to go higher and stronger with the impending deal with Plethora, which is in need of capital to roll out its aggressive marketing plan next year after it starts production this month.

Its principal product PSD502™ obtained marketing authorization from the European Commission as early as November 2013.

However, it was still struggling to meet the requirements about weight and container closure as of the end of last year, according to Plethora’s own release in the first half of this year.

For the six months to June, Plethora made a loss of £493,000 or HK$5.9 million.

It had a cash balance of £2.8 million or HK$33.4 million as of the end of June, but this decline to approximately £1 million or HK$11 million at the end of October.

Watch this space!

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EJ Insight writer