[Edaily Reporter Kim Jinsoo ] Peptron, Inc.(087010)Peptron is expected to face pressure to secure funding starting next year after concluding a two-year technology evaluation with Eli Lilly without a follow-up commercialization agreement.

Although Peptron, Inc. secured a portion of the construction costs for its second plant and operating expenses through a large-scale rights offering in 2024, analysts suggest that without additional technology exports or revenue generation, the company’s ability to sustain both investment and R&D will inevitably dwindle rapidly.

On the 7th, Peptron, Inc. announced that the period for Lilly’s technology evaluation of its long-acting drug delivery platform, “SmartDepot,” had ended, and that no follow-up commercialization agreement had been signed by the conclusion of the evaluation. According to Peptron, Inc., signing a commercialization agreement by the evaluation deadline is not mandatory, and the possibility of a commercialization partnership remains open.

However, given the uncertainty surrounding the inflow of additional upfront payments, coupled with the fact that previously raised funds are being used for facility investments and operating expenses, and that clinical development for several pipeline candidates is gaining momentum, Peptron, Inc.’s cash flow pressures are expected to increase.

According to its semi-annual report and other documents, Peptron, Inc. raised 138.3 billion won through a rights offering in November 2024. The raised funds are scheduled to be allocated as follows: approximately 65 billion won for facilities, approximately 55 billion won for operations, and approximately 18.3 billion won for contingencies. In August of last year, the company issued an additional 24.2 billion won in exchangeable bonds (EBs), with all of these funds also earmarked for facility investments.

The Osong Plant No. 2 is the focal point of the capital expenditures. Of the 89 billion won Peptron, Inc. secured for capital expenditures, approximately 10 billion won had been spent by the end of June this year, and the remaining investment amount is expected to reach approximately 79 billion won.

In addition, a significant portion of the funds from the rights offering allocated for operating purposes has already been spent. According to Peptron, Inc.’s semi-annual report, of the approximately 55 billion won allocated for working capital during the 2024 rights offering, about 51.3 billion won was used for offering-related expenses and research and development costs. The remaining funds amount to approximately 3.7 billion won. Of the approximately 18.3 billion won in contingency funds, 3.5 billion won was used to repay loans, leaving approximately 14.8 billion won.

Limited Funds, Rising Expenses

Last year, Peptron, Inc. recorded revenue of 5.6 billion won and an operating loss of 21.3 billion won. In the first half of this year, the company reported revenue of 3.4 billion won, an operating loss of 13.7 billion won, and a net cash outflow from operating activities of 8.0 billion won.

According to Peptron, Inc.’s interim financial statements as of the end of the first half of 2026, the company’s cash and cash equivalents, as well as short-term financial instruments, totaled approximately 116.7 billion won.After subtracting the remaining planned investment of approximately 79 billion won for Plant No. 2, only about 30 billion won in surplus funds remains. Although Peptron, Inc. has been selling Loop One through LGCHEM,LTD since the end of last year, the profits are not substantial, making it difficult to cover operating and R&D expenses, and the funds it has secured continue to be depleted.

The possibility of further increases in construction costs for Plant No. 2 is another variable. At the end of last year, Peptron, Inc. raised its planned investment for the plant from the original 65 billion won to 89 billion won—an increase of approximately 24 billion won. This is believed to be partly due to the recent upward trend in construction costs. In particular, since Peptron, Inc. has extended the completion date for its facility investment to February 2028, there is a possibility of additional investment burdens arising from rising construction costs. Furthermore, since procedures necessary for commercial production—such as GMP-related validation and licensing—are required even after the facility is built, additional costs may arise before the second plant actually contributes to revenue.

The burden of research and development (R&D) expenses is also growing. Peptron, Inc.’s R&D expenses rose by 21%, from approximately 13.2 billion won in 2024 to about 16.0 billion won last year. In the first half of this year, they totaled approximately 9.6 billion won, a 26% increase from the approximately 7.6 billion won recorded in the same period last year. If expenses remain at a similar level in the second half of this year, R&D expenses are projected to rise to about 19.0 billion won.

In particular, Peptron, Inc. requires more funding as it begins full-scale R&D on its own pipeline. In August of this year, Peptron, Inc. submitted a plan for a domestic Phase 1 clinical trial of “PT403,” a once-monthly semaglutide formulation, and expects approval as early as this year. With research on the terzepatide-based “PT404” and platform research continuing, R&D expenses are projected to rise rapidly in the future.

The exchangeable bonds (EBs) issued last year, totaling approximately 24.2 billion won, also pose a potential financial burden. Although these EBs have a coupon rate and maturity interest rate of 0%, investors may request early redemption starting next June. In particular, if Peptron, Inc.’s stock price falls below the exchange price of 326,895 won per share, investors are more likely to opt for principal repayment rather than a stock exchange. In this scenario, if early redemption requests are made for the full amount of the unexchanged EBs, a cash outflow of up to approximately 24.2 billion won could occur. With the burden of EB redemption compounding at a time when massive funds are being invested in plant construction and clinical development, funding pressures could intensify further.

Consequently, if the inflow of advance payments from new technology export agreements or improvements in operating cash flow are delayed, Peptron, Inc.’s cash management burden is likely to increase starting next year. In particular, since additional funding may be required to proceed with both plant investments and in-house clinical development as planned, the possibility cannot be ruled out that the company may have to adjust its facility investment schedule or the scale of R&D spending if securing external funding becomes difficult.

A Peptron, Inc. official stated, “Although the joint research with Lilly has ended, the possibility of further collaboration remains open, so we are not yet at the stage where we need to worry about funding,” adding, “As we are also in discussions regarding overseas licensing rights for Loop One, the burden of fundraising is expected to decrease.”