According to the Financial Supervisory Service’s electronic disclosure system on the 13th, pharmaceutical and biotech companies such as Joa Pharmaceutical, PromBio, PeopleBio, Noeul, and Chaperone have recently decided to conduct stock consolidations or are preparing to hold shareholder meetings to approve related proposals.
This is interpreted as a response to the government’s delisting reform measures, which have significantly tightened the criteria for maintaining a listing. Previously, the Financial Services Commission and the Korea Exchange announced, through the “Delisting Reform Plan for the Swift and Strict Removal of Underperforming Companies,” that starting on the 1st of this month, stocks trading below 1,000 won for 30 consecutive trading days would be designated as “stocks under surveillance.” If the stock price fails to recover to 1,000 won within 45 trading days thereafter, delisting procedures will commence.
Companies with a market capitalization of less than 20 billion won on KOSDAQ or less than 30 billion won on KOSPI are also subject to delisting review. Starting next January, these thresholds will be raised further to 30 billion won for KOSDAQ and 50 billion won for KOSPI.
As the Threshold for Delisting Rises, Companies Rush to “Protect Their Stock Prices”Ahead of these measures, one of the companies currently in the midst of a stock consolidation process is Joa Pharmaceutical. At an extraordinary general meeting held on the 6th, Joa Pharmaceutical approved a proposal to consolidate five common shares with a par value of 500 won each into one common share with a par value of 2,500 won. The move aims to stabilize the stock price and enhance corporate value by maintaining an appropriate number of shares in circulation. Joa Pharmaceutical’s stock price fell by more than 42% from early this year through last month.
As a result of the consolidation, Joa Pharmaceutical’s number of issued shares will decrease from approximately 30.98 million to approximately 6.2 million. Accordingly, trading will be suspended from the 5th to the 26th of next month, and trading of the new shares resulting from the consolidation is scheduled to resume on the 27th.
On the same day, PromBio also passed a resolution at an extraordinary general meeting of shareholders to implement a 5-for-1 stock consolidation aimed at stabilizing the stock price and enhancing corporate value. The par value will increase from 100 won to 500 won, and the number of issued shares will decrease from 28.31 million to 5.662 million. Accordingly, trading will be suspended from the 20th of this month through the 9th of next month, and the new shares resulting from the consolidation are scheduled to be listed on the 10th.
As the recovery of its core business has been slow and the slump in its stock price has persisted, management has stepped in directly to defend the share price. PromBio posted an operating loss of approximately 3.3 billion won in the first quarter of this year, with the loss widening by more than 1.4 times compared to the same period last year. In response, Shim Tae-jin, CEO of PromBio, purchased 130,000 shares of the company’s stock last month and subsequently bought an additional 150,000 shares on the open market.
PeopleBio will hold an extraordinary general meeting of shareholders on the 20th to propose a 2-for-1 stock consolidation. If the consolidation is approved, the par value will increase from 500 won to 1,000 won, and the number of outstanding common shares will decrease from 24,320,660 to 12,160,330. Trading will be suspended from the 3rd to the 30th of next month, and the new shares resulting from the consolidation are scheduled to be listed on the 31st of next month.
Noeul and Chaperone have also joined the ranks of companies conducting stock consolidations in the second half of the year. Noeul will hold an extraordinary general meeting of shareholders on the 21st to propose a consolidation of five common shares into one. The number of outstanding shares is expected to decrease from 51,291,323 to 10,258,264. If the proposal is approved, trading will be suspended starting on the 20th of next month, and the new shares resulting from the consolidation are scheduled to be listed on September 7.
Chaperone is also pursuing a 5-for-1 stock consolidation. If the proposal is approved at the extraordinary general meeting of shareholders on the 6th of next month, the par value will change from 500 won to 2,500 won, and the number of issued shares will decrease from 46,243,031 to 9,248,606. Trading will be suspended from September 4 to 28, and the new shares resulting from the consolidation are scheduled to be listed on September 29.
Share Price Rises, but Market Cap Remains the Same… Ultimately, “Profitability” Is the Key IssueThe problem is that a stock consolidation is not a measure that fundamentally increases corporate value. For example, in a 5-to-1 consolidation, the share price increases fivefold, but since the number of outstanding shares decreases to one-fifth, there is no change in market capitalization.
A securities industry official stated, “While this measure may allow companies to avoid the risk of delisting as penny stocks for the time being, it cannot resolve the issue of the KOSDAQ market capitalization threshold, which is set to rise to 30 billion won next year,” adding, “It appears that the purpose of these regulatory improvements is ultimately to encourage companies to demonstrate their corporate value through earnings and business performance.”
In reality, the financial health of the five companies undertaking stock consolidations is far from robust. As of last year, Joa Pharmaceutical posted sales of 58 billion won and an operating loss of 6 billion won. During the same period, PromBio had the largest sales volume at 72.2 billion won, but its operating loss also reached 18.6 billion won. PeopleBio recorded sales of 2.9 billion won and an operating loss of 8.4 billion won.
So, which of these companies has a relatively clear path to business growth? First, Joa Pharmaceutical generates annual revenue of over 50 billion won, meaning it has the smallest deficit relative to revenue among the five companies being compared. However, to break out of its prolonged slump in performance and see its stock price revalued, it needs to demonstrate momentum for improving profitability beyond mere cost-cutting.
PromBio’s strength lies in its health functional food business, which generates annual revenue of over 70 billion won. It is also pursuing new growth drivers, such as the development of candidate compounds for hair loss treatments using stem cells. However, despite high sales, the company posted operating losses of 15.4 billion won in 2023, 24.3 billion won in 2024, and 18.6 billion won last year. This means that restoring profitability in the immediate term is a prerequisite before waiting for results from its new biotech ventures.
PeopleBio has been working to expand the market for “AlzOn,” a blood test kit for the early diagnosis of Alzheimer’s disease, since its commercial launch in 2018; however, sales growth has fallen short of expectations. Sales declined from approximately 4.5 billion won in 2023 to 2.5 billion won in 2024 and remained at around 2.9 billion won last year. This is why analysts are saying the company must demonstrate the actual number of tests conducted with AlzOn and the pace of revenue growth.
For Chaperone, the company’s enterprise value is largely determined by the performance of its clinical pipeline, including treatments for atopic dermatitis. Given that last year’s revenue was only 200 million won, analysts note that it is difficult to consider the company to have established a stable foundation for commercialization. If clinical progress or technology transfers do not translate into actual cash inflows, the burden of securing funding for R&D and operating expenses is likely to persist.
Although Noeul continues to post large losses, its growth trajectory is seen as being driven by the simultaneous expansion of overseas sales of its artificial intelligence (AI) diagnostic platform “miLab” and the diversification of its product portfolio.
miLab is a diagnostic platform that utilizes AI and robotics technologies to automate processes ranging from specimen pretreatment to digital imaging and AI analysis. Starting with the malaria diagnostic solution “miLab MAL,” the company is expanding its testing capabilities to include blood analysis with “miLab BCM” and other applications. As this platform strategy involves expanding diagnostic menus based on the same equipment, the increase in installed units and test volume is likely to translate into recurring revenue from consumables—a key distinction from traditional biotech companies focused on new drug development.
The company is also expanding its overseas supply chain. Noeul has been working to supply miLab and secure local distribution networks in the Middle East, Africa, Europe, and Latin America. It is also expanding its market presence into Saudi Arabia, Nigeria, Angola, and Benin. The strategy for its blood analysis products is to broaden sales regions to Latin America, Europe, and Southeast Asia.
Consequently, while Noeul’s revenue actually decreased from 2.7 billion won in 2023 to 1.6 billion won in 2024, it more than tripled to 5.1 billion won last year. This represents the most pronounced revenue growth over the past year among the five companies under comparison.
