[Edaily Reporter KIM SUNG-JIN ] On the 28th, stock prices of major companies in the pharmaceutical and biotech sector showed divergent trends depending on various events. SAMSUNG BIOLOGICS(207940), which announced a large-scale rights offering worth 3 trillion won, saw its stock price plunge 6.78% in the aftermath of the announcement. VUNO, Inc.(338220)also announced plans for a 31.4 billion won rights offering after the market closed that day, causing its stock price to drop sharply on the Next Market.

With signs of a recent resurgence in COVID-19, the stock price of ShinpoongPharmaceutical—which was previously grouped as a COVID-19-themed stock—soared, and ChoA Pharmaceutical Co., LTD.’s stock price is also believed to have risen significantly due to a stock consolidation.

Concerns Over Dilution of Shareholder Value at SAMSUNG BIOLOGICS Amid 3 Trillion Won Rights Offering

According to KG Zeroin’s MP DOCTOR on the same day, SAMSUNG BIOLOGICS closed at 1,486,000 won, down 108,000 won (6.78%) from the previous day. During the session, the stock fell as low as 1,480,000 won, with the decline widening to 7.15% at one point.

SAMSUNG BIOLOGICS’ stock price began to fall sharply at the market open at 9:00 a.m. Immediately upon opening, the price dropped to 1,487,000 won (6.71%). It then gradually climbed until 10:00 a.m., recovering to the 1,538,000 won level, but subsequently resumed its downward trend, eventually closing at 1,486,000 won.

The decline in SAMSUNG BIOLOGICS’ stock price is attributed to the fallout from its plan for a 3 trillion won rights offering. SAMSUNG BIOLOGICS announced that day it plans to issue 2.27 million new shares (common stock) at 1,322,000 won per share. The total amount of funds to be raised is 3 trillion 900 million won, and the capital increase ratio is 4.904%.

Regarding the reason for the rights offering, SAMSUNG BIOLOGICS explained, “This is to raise capital for the acquisition of the Polypeptide Group, the expansion of the Second Bio Campus in Songdo, Incheon, and the realization of our ‘three-pillar expansion’ strategy—which focuses on sustained performance and the expansion of production capacity, portfolio, and geographic footprint.”

In fact, most of the funds to be raised this time are expected to be used for the acquisition of Polypeptide Group. The amount allocated for this purpose is 2.7062 trillion won, while the remaining 294.8 billion won has been allocated for the expansion of the Second Bio Campus.

Previously, on July 20, SAMSUNG BIOLOGICS announced that it would acquire Polypeptide Group, a global peptide CDMO (Contract Development and Manufacturing Organization), for approximately 2.7 trillion won. This is the largest merger and acquisition (M&A) deal in the history of South Korea’s pharmaceutical and biotech industry, and SAMSUNG BIOLOGICS plans to use this acquisition to make a full-scale entry into the peptide sector.

Peptides are substances consisting of short chains of 2 to 50 amino acids—the basic building blocks of proteins. They act as messengers in the body, transmitting signals between cells or functioning as hormones. Peptide drugs are developed by synthetically producing these peptides for use as treatments for various diseases.

A prime example is GLP-1 (glucagon-like peptide-1), a treatment for obesity and diabetes that has recently emerged as a major topic of discussion in the global pharmaceutical industry. It was developed to mimic a hormone in the body that stimulates insulin secretion and induces a feeling of satiety.

The sharp drop in the stock price this week is attributed to concerns over the dilution of shareholder value resulting from the rights offering. The key factor moving forward will be the participation rate of SAMSUNG C&T CORPORATION and SamsungElectronics, the major shareholders of SAMSUNG BIOLOGICS. SamsungElectronics (31.22%) and SAMSUNG C&T CORPORATION (43.06%) hold a combined 74.28% stake; assuming these two companies subscribe to all the new shares, the burden on small retail investors is expected to be significantly reduced.

VUNO, Inc.’s Stock Price Plummets Following Announcement of 31.4 Billion Won Capital Increase

VUNO, Inc., an artificial intelligence (AI) healthcare company, also saw its stock price begin to plummet on the Next Market around 4:20 p.m. after announcing plans for a 31.4 billion won rights offering. Around 6:00 p.m., VUNO, Inc.’s stock price stood at 6,000 won per share, a drop of 18.70% from the previous day.

VUNO, Inc.’s capital increase is understood to be aimed at reducing its interest burden. Lee Ye-ha, CEO and Executive Officer of VUNO, Inc., stated, “Since the interest rate on our third series of perpetual convertible bonds will be incrementally increased starting from the interest rate adjustment date in December 2026, we determined that taking preemptive action before that date arrives would be optimal,” and “As a result, we concluded that a public rights offering—which allows us to directly expand capital and strengthen our financial structure without incurring potential interest or repayment burdens—was the most reasonable choice,” he said.

CEO Lee said, “Before requesting shareholders’ participation in the rights offering, we redesigned our work processes through an enterprise-wide digital transformation (DX),” adding, “We fully repaid the principal and interest of the second series of perpetual convertible bonds—approximately 9.3 billion won—on the 26th.”

He continued, “We intend to use the funds raised through this public rights offering primarily for the early redemption of the third series of perpetual convertible bonds to eliminate the interest burden and potential dilution factors,” and added, “The remaining funds will be used as working capital for business expansion, including research and development, sales and marketing, and operating expenses for overseas subsidiaries.”

VUNO, Inc., established in December 2014, garnered attention in 2018 when it received approval for South Korea’s first AI-based diagnostic assistance medical device.

Signs of

a COVID-19 Resurgence… ShinpoongPharmaceutical Soars

On that day, ShinpoongPharmaceutical closed at 10,170 won, up 1,330 won (15.05%) from the previous day. Early in the session, the stock soared as high as 10,930 won (23.64%), but after fluctuating up and down, the gain narrowed to 15% by the close.

ShinpoongPharmaceutical(019170) The sharp rise in the stock price is believed to be driven by recent signs of a resurgence in COVID-19 cases. The Chinese Center for Disease Control and Prevention (CCDC) announced last month that the number of COVID-19 cases had reached 522,000. This represents a rapid increase compared to the 79,000 confirmed cases reported the previous month (June).

ShinpoongPharmaceutical was previously categorized as a COVID-19-themed stock and has a history of attempting to develop the malaria treatment “Piramax” as a COVID-19 therapy. However, the company effectively failed in its efforts to develop Piramax as a COVID-19 treatment, so even if COVID-19 were to resurge domestically, it is unlikely to lead to an improvement in ShinpoongPharmaceutical’s earnings. ShinpoongPharmaceutical’s stock price has repeatedly experienced significant fluctuations whenever signs of a COVID-19 resurgence emerge.

ChoA Pharmaceutical Co., LTD. Soars After 5:1 Stock Consolidation

On that day, ChoA Pharmaceutical Co., LTD.’s stock price also rose 20.97% from the previous day, closing at 3,230 won. This rise in ChoA Pharmaceutical Co., LTD.’s stock price is attributed to the effects of its recent stock consolidation.

ChoA Pharmaceutical Co., LTD.(034940) The stock consolidation was a strategic move in response to the government’s policy to phase out penny stocks. After approving a 5:1 stock consolidation on the 22nd of last month, trading was suspended from the 5th to the 26th of this month and resumed on the 27th. As a result of this stock consolidation, the par value increased from 500 won to 2,500 won, and the number of issued shares decreased from 30,979,827 to 6,195,965—a reduction to one-fifth of the original amount.

A stock consolidation, as the term suggests, involves combining multiple shares into a single share; it is primarily used by companies whose stock prices have fallen excessively as a means to make their stock prices appear higher. The government has established delisting criteria, effective since last month, under which a stock is designated as a “monitored stock” if its price remains below 1,000 won for 30 consecutive trading days. If, following such designation, the stock fails to recover to 1,000 won or higher for 45 consecutive trading days within the subsequent 90 trading days, delisting proceedings will be initiated.

Companies must also meet market capitalization requirements. According to government guidelines, market capitalization must exceed 20 billion won this year and 30 billion won starting next year. As of today, ChoA Pharmaceutical Co., LTD.’s market capitalization stood at 20 billion won.

ChoA Pharmaceutical Co., LTD. recorded sales of 29.9 billion won in the first half of this year, a 6.6% increase from the previous year. Its operating loss was reduced to 1.1 billion won this year, down to one-third of last year’s 3.6 billion won loss.