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A drugmaker’s COVID-19 vaccine is 78% effective—but can it escape its spotty corporate history?

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On Thursday, Brazilian authorities said private Chinese vaccine maker Sinovac’s COVID-19 candidate was 78% effective in preventing infections, allowing it to join companies like Pfizer, Moderna, and AstraZeneca as leaders in the global race to help end the COVID-19 pandemic.

Sinovac’s vaccine, called CoronaVac, uses an inactivated form of COVID-19 to induce immune responses, a technology that is likely to prove an attractive option for many lower- and middle-income countries since it doesn’t require costly ultra-cold storage like Pfizer and Moderna.

Sinovac remains the sole Chinese manufacturer to publish peer-reviewed phase II trial data in a medical journal.

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Neither Brazil nor Sinovac publicly released data to back up Sinovac’s 78% efficacy rate. Brazil’s top health regulator said Thursday that it was convincing enough to approve the vaccine for emergency use but did not disclose when the data may be released to the public.

Brazilian officials will ask health regulators on Friday for emergency use authorization to begin rolling out the vaccine to the public.

“Today is the day of hope, the day of life,” Joao Doria, governor of Brazil’s Sao Paolo state, said at a press conference on Thursday. Sinovac did not respond to Fortune’s immediate request for comment on the results.

Sinovac has either brokered distribution deals or is in discussions to do so with the Philippines, Indonesia, Hong Kong, Turkey, and Chile.

Sinovac and its state-run counterpart, Chinese vaccine maker Sinopharm, are also expected to inoculate 50 million people in China by early February, even though China has yet to formally authorize either vaccine. Chinese authorities authorized Sinovac’s vaccine for emergency use in July, but haven’t officially approved it for distribution to the general public.

Sinovac’s high efficacy could make it a lifeline to nations left out of the Pfizer and Moderna frenzy since China, unlike the U.S., has pledged to share its vaccines with the world. But Sinovac’s status a frontrunner is also a chance at redemption for the 19-year-old Beijing-based company that has been embroiled in a years-long corporate governance battle and plagued by allegations of corruption.

CoronaVac

Sinovac’s founder Yin Weidong, a doctor, started his career in the 1980s in China’s northern city of Tangshan, where he investigated hepatitis outbreaks as part of a municipal public health agency. The experience inspired him to try to find a more lasting solution to the disease. In 1999, he and a group of scientists successfully developed China’s first inactivated hepatitis A vaccine. Chinese regulators approved Sinovac’s vaccine in 2005. China included the vaccine in its national inoculation program in 2008, and the World Health Organization pre-approved it for export to other markets in 2017.

Yin founded Sinovac in Beijing in 2001 to expand his research into other vaccines.

Soon after the company’s founding, China battled an outbreak of Severe Acute Respiratory Syndrome (SARS). SARS, another coronavirus, killed over 600 people in China from 2002 to 2004. In response to the outbreak, Yin developed the only SARS vaccine to reach phase I trials. SARS, a less contagious disease than COVID-19, largely disappeared in 2004, meaning that Sinovac’s SARS vaccine was never needed.

But years later, Sinovac found that its SARS work would be useful in tackling another coronavirus—COVID-19. Yin told Time in July that SARS and COVID-19 are like “brothers,” and Sinovac built on its SARS research to develop its COVID-19 vaccine.

Sinovac’s inactivated vaccine relies on a brute-force technology that has been around for hundreds of years. Essentially, Sinovac takes a live version of the COVID-19 virus, and then kills or inactivates the virus’s ability to cause disease, but it still provides the human body the tools it needs to build antibodies against the virus.

After testing CoronaVac’s safety and efficacy in phase I and II trials in China, Sinovac launched its phase III trials in Brazil in July, testing its candidate on 13,000 volunteers.

In the trials, Sinovac partnered with the Butantan Institute, a Brazilian research center and the region’s largest vaccine maker. The trials ultimately proved successful, but were subject to intense political debate in the country.

In October, Joao Doria, governor of Brazil’s powerful São Paolo state, declared CoronaVac the country’s most promising vaccine candidate. In response, Brazil’s President Jair Bolsonaro condemned Doria’s comments and said Brazil would not purchase a Chinese vaccine.

Bolsonaro’s government appears to be at odds with his pledge. On Thursday, Brazil’s health minister announced that it would purchase 100 million doses of Sinovac’s vaccine.

Bolsonaro, meanwhile, said on Thursday that he wouldn’t take any vaccine and continues to insinuate, without proof, that citizens perhaps shouldn’t be taking any vaccines at all.

“No one can force a person to take something whose consequences are yet unknown,” Bolsonaro said on Thursday.

Poison pill

In addition to Brazil’s political debate, Sinovac has its own checkered history to overcome.

In 2016, China sentenced Yin Hongzhang (unrelated to Sinovac’s Yin Weidong), the former deputy director of China’s Food and Drug Administration, to ten years in prison after he admitted to accepting over $500,000 in bribes from vaccine companies from 2002 to 2013 in exchange for helping manufacturers speed up or gain drug approvals. Yin, the Sinovac founder, testified in Yin Hongzhang’s trial, admitting to paying over $83,000 in bribes to Yin Hongzhang to license Sinovac’s vaccines.

In New York, Sinovac’s stock price dropped over 20% in value after Yin’s conviction, but later recovered.

Neither Yin nor Sinovac was formally charged in the matter, but in February 2018, a group of Sinovac investors sought to wrest control of the company away from Yin. The investors alleged that Yin’s history of corrupt practices made him unfit to serve on the company’s board, but Sinovac claimed it was an “ambush” and declared the takeover invalid.

Undeterred, a group of investors raided Sinovac’s Beijing offices in April 2018 in an attempt to steal the company’s official seal, legal documents, financial filings, and information systems, Sinovac claimed in a filing to the U.S. Security and Exchange Commission.

In February 2019, Sinovac’s leadership activated a financial weapon called a ‘poison pill’ to stop the attempted takeover, issuing itself 28 million new shares to dilute investors’ control over the company. Sinovac triggered the poison pill, which was written into the company’s bylaws, after Sinovac claimed investors secretly conspired to amass over a 15% stake in the company.

“By the time that Sinovac discovered the coup plan, most of the takeover defenses were too late to be effective,” says Wei Jiang, a finance professor at Columbia University. “This led them to resort to a poison pill, which could be immediately effective.”

The Nasdaq, where Sinovac had debuted in 2012, suspended trading of the firm’s stock following the poison pill, since the number of shares Sinovac traded on the platform were in dispute. Now, nearly two years later, Sinovac’s stock remains halted, as lawsuits over the corporate battle play out in the U.S. and Antigua (where Sinovac is officially headquartered). Its suspension is one of the longest ever in the U.S.

With its U.S. shares suspended, Sinovac has still managed to raise capital to fund its COVID-19 vaccine effort.

In April, the state-backed Bank of Beijing provided Sinovac an $8.5 million low-interest rate loan to begin construction on its first COVID-19 vaccine manufacturing plant on 70,000 square meters of land that a branch of the Beijing government sourced for the company. In May and June, Sinovac raised an additional $32 million from private investors and Brazil’s Sao Paolo state to accelerate vaccine development and conduct clinical trials.

On Dec. 7, Sinovac received a $515 million cash injection from Chinese medicine company Sino Biopharm. The investment will help Sinovac double manufacturing capacity to produce 600 million doses per year.

“Whatever impact corruption charges and governance instabilities were going to exert upon the vaccine race are already reflected in the marketplace,” says Brock Silvers, chief investment officer at Kai Yuan capital.

Vaccine for the people

Based on the positive Brazil data, Sinovac is poised to roll out its vaccine to countries that have been left behind in the global vaccine rollout so far.

In the Philippines, for example, presidential spokesperson Harry Roque said on Dec. 15 that talks with the U.S. to acquire Pfizer’s vaccine had fallen through amid intense global demand, causing that government to shift its focus to importing Sinovac’s vaccine.

“The reason we are purchasing [CoronaVac] is we cannot immediately get Pfizer, AstraZeneca or Moderna,” Roque said on Dec. 15.

Roque’s comments signaled that the Philippines government’s own probe into Sinovac’s corporate history, announced just days earlier, would not deter the country from buying Sinovac’s vaccine. The Philippines health minister said the probe would investigate whether Sinovac had paid bribes in connection to its COVID-19 vaccine. (No evidence has been presented thus far; Sinovac has not commented on the matter.)

Sinovac’s troubled corporate history may give desperate governments pause, but wealthy nations have largely gobbled up the early vaccine supplies, making Sinovac’s COVID-19 candidate a critical lifeline for developing nations, no matter its past shortcomings.

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Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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