[NEW YORK] A blistering rally in a tiny, money-losing traditional Chinese medicine company’s stock has vaulted its founder’s net worth to among the world’s largest fortunes.
The firm, Hong Kong-based Regencell Bioscience Holding, was for all intents and purposes trading as a microcap stock on the Nasdaq just eight weeks ago. But its shares have since exploded, gaining more than 82,000 per cent since its Feb 13 low. The move has boosted the value of chief executive officer Yat-Gai Au’s 86 per cent stake to US$33.3 billion, according to the Bloomberg billionaires Index, making Au’s paper wealth greater than rich-list stalwarts such as Phil Knight and Masayoshi Son.
The shares closed up 30 per cent to US$78 on Tuesday (Jun 17) in New York trading, after gaining 283 per cent on Monday following a 38-for-1 stock split.
Regencell is an improbable vehicle for creating a multibillion-dollar fortune. Largely self-funded by Au, the company sells herbal medicine treatments for ADHD and autism spectrum disorder. The firm is still in the R&D phase and has never turned a profit since going public, losing US$4.4 million in the fiscal year through Jun 30, 2024, according to filings. Its chief medical officer position has been vacant since the last doctor to hold the job resigned in 2022.
“Both entities [Regencell and its associated foundation] are Gai’s passion projects, and he will continue to invest his personal funds to defend what he believes in,” according to Au’s bio page on the company’s website. “He has literally put his money where his mouth is by investing over USUS$9 million in RGC to demonstrate his personal belief and commitment.”
Regencell did not respond to a request for comment.
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Family business
Founded in 2014, Regencell’s main line of business is marketing and licensing traditional treatments developed by the founder’s father, Sik-Kee Au. The elder Au has a background in electrical engineering and formerly owned a security alarm business in California. In August 2021, he was found guilty of professional misconduct by a practitioners’ board in Hong Kong for overprescribing medicine, according to a public order.
Regencell has exclusive rights over traditional medicinal formulas developed by Sik-Kee Au trademarked under the name Brain Theory. They consist of liquid-based herbal compounds taken twice daily, aimed at treating neurocognitive disorders.
The younger Au started Regencell after he was diagnosed with ADHD as a child and suffered from dyslexia through much of his schooling. Despite those learning difficulties, he attended the Haas School of Business at the University of California-Berkeley and landed a job at Deutsche Bank in the late 1990s, working on more than US$4 billion in deals before founding Regencell.
His older brother Yat-Pang is the founder and CEO of Veritas Investments, a property investment company that manages roughly 250 buildings on the US West Coast. In 2019, Bloomberg valued his wealth at more than US$100 million.
As a high schooler growing up in Silicon Valley, Yat-Pang made headlines as a symbol of alleged anti-Asian discrimination in college admissions when he was rejected from UC Berkeley despite an excellent academic record, according to a 1987 Los Angeles Times report. He later went on earn an MBA from Harvard Business School in 2000.
Boosting stake
Yat-Gai Au has spent more than US$12 million buying Regencell shares since it went public in 2021. The company’s next-largest backer is Samuel Chen, an investor whose early investments in Zoom Video Communications made him a fortune when the company’s stock soared almost 1,500 per cent during the pandemic. Chen owned a stake in Regencell worth more than US$2.9 billion at Tuesday’s closing price.
Beyond investing in neurological treatments, Regencell has dabbled in other areas, too. In 2021, the company signed a two-year licensing agreement to distribute traditional Chinese medicine treatments for Covid-19 in Asia.
It’s unclear what prompted Monday’s massive stock move, which wasn’t preceded by any company news and came immediately after the forward stock split. Regencell’s shares are very thinly traded: Only about 6 per cent of its outstanding shares float, which makes the stock price more susceptible to extreme fluctuations. BLOOMBERG
