[Edaily Reporter NA EUN-KYUNG ] On the 9th, in the domestic pharmaceutical, biotech, and healthcare stock market, MGEN SOLUTIONS(032790)—whose stock price had already surged prior to the announcement of a change in management control—and BLUEMTEC CO., LTD.(439580)—which rose nearly 12% without any significant new catalysts—drew the market’s attention. Meanwhile, IlyangPharmaceutical(007570), which announced the termination of a technology export contract with Russia, remained flat despite the negative news.

According to KG Zeroin MP Doctor (formerly Marketpoint) that day, MGEN SOLUTIONS and BLUEMTEC CO., LTD. rose 13.19% and 11.88%, respectively. IlyangPharmaceutical rose 0.24%.

MGEN SOLUTIONS: What Lies Ahead for the Biotech Firm After a 7 Billion Won Capital Injection

? MGEN SOLUTIONS closed at 1,631 won, up 13.19% from the previous trading day. This marks the highest price in about three months since trading was resumed on May 26 following a suspension due to a stock consolidation. The stock price, which had remained in the 900-won range until mid-last month, began an upward trend on August 27. After surging more than 17% on the 7th of this month, it posted another double-digit gain today.

The announcement regarding the change in management control was made at 6:48 p.m., after the market closed that day. The announcement stated that the previous largest shareholder sold their shares to the JigenTech Investment Fund for approximately 4 billion won, and that MGEN SOLUTIONS plans to conduct a third-party private placement totaling 7 billion won, including 5 billion won from JigenTech. It is worth noting that the stock price had been rising sharply for several days prior to the announcement.

However, the assets of the JigenTech Investment Fund—established this month—amount to only 509 million won. Since the disclosure does not specify how the approximately 9 billion won—combining the purchase price for the existing shares and the subscription price for the new shares—will be raised, it remains to be seen whether the funds will actually be paid in. GigenTech, which formed the investment fund, is a manufacturer of basic organic chemicals established in 2023 that specializes in converting waste plastic into energy and petrochemical feedstocks through low-temperature pyrolysis.

MGEN SOLUTIONS began in 1973 as “Daeshin Jeonyeon,” a manufacturer of electronic components, and was listed on the KOSDAQ market in 1997. It entered the biotech sector in 2012 by merging with MGen, a research and development company specializing in xenotransplantation. Mgen was the company that produced “Hyeong-gwang-i,” South Korea’s first genetically modified cloned pig, in 2003, and conducted research on transplanting pig pancreatic islets and corneas into humans. However, MGEN SOLUTIONS—formed through the merger with MGen—ultimately discontinued its xenotransplantation business in September 2024 due to the suspension of new government-funded projects and the burden of research costs, and also closed its pig breeding research institute in Icheon, Gyeonggi Province.

Currently, as part of its biotech business, the company is developing meniscal grafts derived from xenogeneic tissue at the Tissue Engineering Research Institute in Osong, North Chungcheong Province. MGEN SOLUTIONS official stated, “We will continue our current operations and will not halt the development of meniscal grafts,” adding, “If new management is appointed at the extraordinary shareholders’ meeting this October, there is a possibility that the new majority shareholder’s business will be integrated with our existing operations.”

This fundraising appears to be driven more by accumulated losses and a decline in cash reserves than by capital impairment. Last year, MGEN SOLUTIONS posted an operating loss of 10.3 billion won and a net loss of 16.3 billion won, while its cash and cash equivalents fell from 13.0 billion won at the end of last year to 4.4 billion won at the end of June this year. The repayment of approximately 7.6 billion won in convertible bonds last June also had a significant impact.

Total capital as of the end of June stood at 27.6 billion won, exceeding the paid-in capital of 25.7 billion won, so the company is not yet in a state of negative equity. However, with the margin being only 1.9 billion won, there is little room to absorb further losses. Whether the 7 billion won raised through the rights offering will be used to cover losses or invested in the development of meniscus grafts is expected to determine the future of the company’s biotech business.

BLUEMTEC CO., LTD. Rebounds 12% Despite Lack of Clear Catalysts

BLUEMTEC CO., LTD. closed trading at 2,260 won, up 11.88% for the day. As there were no new disclosures or contract announcements, this is interpreted as bargain-hunting following the recent decline.

BLUEMTEC CO., LTD. official explained, “The company has not identified any specific reason for the stock price increase,” adding, “Given that the stock price had fallen sharply due to the recent weakness in the KOSDAQ market and changes in supply and demand, we view this as a partial recovery from those losses.”

Improved earnings are a factor that will support the stock price going forward. Second-quarter consolidated revenue reached 54.967 billion won, a 20.3% increase from the same period last year, and operating profit turned from a deficit of 800 million won to a surplus of 182 million won. The expansion of distribution for obesity treatments such as Wegovy and Mounjaro also drove revenue growth.

The second half of the year, when vaccine distribution peaks, is typically a peak season for increased revenue and profits. While the company incurred losses last year due to an imbalance in the supply and demand of flu vaccines, this year demand has exceeded supply, alleviating inventory burdens and price competition. A company official stated, “We view the business environment for the second half positively,” adding, “We expect to return to profitability for the full year.”

Although there are concerns about an overhang stemming from bonds with stock subscription warrants (BWs), the likelihood of a large volume being released in the short term is limited. The exercise price for the third series of BWs is 4,613 won, more than double the day’s closing price, and the fourth series of BWs, with an exercise price of 2,129 won, will not be exercisable until July 2027. Although the deadline for early redemption requests for the third series of BWs arrived last July, the actual amount claimed was only 5 billion won out of a total of 18.4 billion won. The fact that the BWs are non-separable and that the subscribers consist of KOSDAQ venture funds also helps alleviate the immediate burden of redemption and new share issuance.

IlyangPharmaceutical’s Stock Price Remains ‘Stable’ Despite End of Russia Contract

IlyangPharmaceutical showed little reaction despite the termination of the technology export and supply contract for the leukemia treatment “Spect” signed with Russian pharmaceutical company R-Pharm. The closing price was 8,260 won, up 0.24% from the previous day.

This is interpreted as the market having already undervalued the economic significance of the contract. In fact, in the approximately 12 years since the contract was signed in 2014, there has not been a single instance of product approval or supply in Russia. The contract extension in 2025 was also an automatic renewal in accordance with the contract terms. Although the disclosed total amount, combining the signing fee and milestone payments, was 14.5 billion won, the actual amount received by IlyangPharmaceutical amounted to only $1 million.

Alpharm, which was responsible for local marketing authorization, did not conduct the additional clinical trials on local Caucasian subjects required by Russian authorities and notified the company of its intention to suspend operations in June 2024. Founder Alexei Refik also stepped down from day-to-day management in 2022—the year the invasion of Ukraine began—after selling his stake in Alpharm and its overseas business subsidiaries; he was subsequently placed on sanctions lists in the UK and other countries the following year.

This situation is believed to have posed an obstacle to conducting multinational clinical trials. In fact, due to the war and sanctions, logistics and patient recruitment for multinational clinical trials—including those in Russia—became difficult; as a result, the number of new international multicenter clinical trials approved in Russia in the first half of 2024 was eight, a 94.3% decrease from the average for the same period between 2017 and 2021.

However, the Spect business had shown no progress for a long time even before the war. Since there was no track record of product supply, the termination of this contract will not result in any new financial losses. Rather than being a new setback, this move is largely a formal resolution of a contract that had effectively been suspended.

IlyangPharmaceutical plans to shift its focus from the Russian market to the Chinese market. An IlyangPharmaceutical official emphasized, “The Chinese clinical trials for Spect are in the final stages, and we are currently preparing the marketing authorization application,” adding, “Our original goal of obtaining approval within this year remains unchanged.” Although the company has stated in its business reports since 2023 that it has completed Phase 3 clinical trials in China, it has not yet applied for marketing authorization.

The Chinese securities industry estimates the local BCR-ABL tyrosine kinase inhibitor (TKI) market at approximately 4 billion yuan (about 800 billion won) as of 2023. The first-line treatment market is dominated by imatinib, nilotinib, and the Chinese new drug flumatinib, while subsequent treatments such as dasatinib and olverembatinib for patients with the T315I mutation have also been launched.

In particular, flumatinib is estimated to have generated approximately 1 billion yuan (about 200 billion won) in sales in 2023. Even if Spect receives approval, it will need to break into the prescription market dominated by existing drugs based on its price and clinical data.