[Edaily Reporter NA EUN-KYUNG ] D&D Pharmatech Inc.(347850) Investors in convertible bonds (CBs) have exercised their conversion rights for approximately 29.9 billion won worth of bonds. This move is interpreted as investors opting for stock conversion over cash redemption amid growing expectations for a technology transfer following the recent release of tissue biopsy results from DD01’s Phase 2 clinical trial for metabolic and alcoholic steatohepatitis (MASH).

D&D Pharmatech Inc. announced on the 22nd that conversion rights for convertible bonds worth 29.92328 billion won had been exercised. The conversion price is 21,017 won, and the number of newly issued shares is 1,423,762. These shares are scheduled to be listed on July 9.

The number of shares to be issued through this conversion represents 3.21% of the total number of outstanding shares. From an investor’s perspective, this move is interpreted as betting on the potential for future stock price appreciation rather than holding bonds to recover principal and interest.

Analysts note that concerns over a short-term overhang (potential selling pressure) are inevitable, given that approximately 1.42 million new shares will be listed on the 9th of next month. However, the company largely mitigated the risk of further dilution by exercising a call option on the remaining 4.4 billion won worth of convertible bonds on the 15th, thereby repurchasing them before maturity.

Industry observers believe that heightened expectations for a global technology transfer following the recent release of DD01’s histological biopsy results likely influenced this decision to convert the bonds. The company has currently appointed JPMorgan as its business development (BD) advisor and is conducting negotiations with global pharmaceutical companies regarding the technology transfer of DD01.

Lee Seul-ki, CEO of D&D Pharmatech Inc., said in a recent interview with Edaily, “Although DD01 is still in small-scale clinical trials, we have confirmed clear histological improvements, so we expect it to sufficiently demonstrate its competitiveness in late-stage clinical trials as well.” She added, “We are continuing discussions with global partners who are strongly committed to commercialization to ensure the drug reaches patients as quickly as possible.”