HONG KONG – South Korean conglomerate SK Group is preparing to list its subsidiary, SK Biopharmaceuticals Co. Ltd., on the Stock Market Division of the Korea Exchange. The listing will tap both domestic and foreign investors by selling about 19.6 million ordinary shares that are expected to be priced between ₩36,000 and ₩49,000. The IPO could raise up to ₩959.3 billion (US$781 million), a top figure for the country in three years.
The company submitted the application to the Financial Services Commission on May 19, almost seven months after filing a pre-screening application to list on the Korea Exchange in late October 2019. Its ₩10 billion (US$8 million) investment in Standigm Inc. has helped to boost its investment value.
The listing will be the country’s biggest since 2017 when mobile gaming company Netmarble raked in ₩2.7 trillion in April that year. The IPO proceeds will be used to further finance SK Biopharmaceutical’s research and development, as well as commercializing its future innovative new drugs.
A source close to the deal told BioWorld that as SK Biopharmaceuticals develops new drugs targeting the global markets, “global funds will help [SK Biopharmaceuticals] build [its] corporate image as a fully integrated global pharmaceutical company. The IPO will also push [SK Biopharmaceuticals] into the fore of the Korean pharma industry and improve its global presence.” The global offering will target foreign qualified institutional buyers, the source added. The company will gauge investor demand between June 17 and 18 and aims to price the stock on June 18. Books will open between June 23 and 24. Citigroup and NH Investment & Securities have been appointed as lead managers, with Morgan Stanley and Korea Investment & Securities joining the team as joint managers.
SK Corporation shares hit ₩239,000 the day after the IPO application was announced. The shares were able to hold their momentum over the next few days, closing 7.88% higher at ₩246,500 on May 25. The country’s IPO market took a battering with the COVID-19 virus souring investor risk appetite and companies deciding to wait for calmer waters before attempting a listing. In light of the continuous volatility in the global equity market, SK Group “took a comprehensive approach to review and analyze various factors affecting the market, including the COVID-19 pandemic, and we have set our IPO timetable after a thorough discussion with our underwriters,” said the source.
Focused on researching and developing treatments for central nervous systems and cancer, SK Biopharmaceuticals has a research center in Pangyo, Gyeonggi province, with U.S. subsidiary SK Life Science based in Paramus, N.J. It signed a joint research agreement with the U.S.’ Twoxar Inc. in April 2019 to discover and develop drugs to treat non-small-cell lung cancer.
SK Biopharmaceuticals has also “continuously monitored the COVID-19 pandemic situation and established measures to respond to the potential risks on our business,” although the source did not elaborate on what the measures are.
SK Biopharmaceutical launched cenobamate (known as Xcopri in the U.S.) in May to treat partial-onset seizures in the U.S. market after the FDA granted approval for the drug in November. Swiss firm Arvelle Therapeutics GmbH signed an exclusive agreement to develop and market the drug in Europe in February 2019. The EMA accepted the firm’s marketing authorization application in late March, and its Human Medicinal Products committee will begin its formal review. The company expects to generate revenues from the drug post-launch “soon” and is preparing to launch it in other global markets, said the source. The company is also conducting phase III trials for cenobamate as a potential treatment of primary generalized tonic-clonic seizures. It is also developing other compounds to treat central nervous system disorders.
A successful IPO means that SK Biopharmaceuticals will secure the funding to invest in research and development, as well as the commercialization of new drugs.
The U.S. FDA approved SK Biopharmaceutical’s dual-acting dopamine and norepinephrine reuptake inhibitor, Sunosi (solriamfetol), in March 2019. The inhibitor was discovered by the Korean company and developed by its Irish partner, Jazz Pharmaceuticals plc.
Other major Korean biotech IPOs in recent years include Samsung Biologics Co.’s $1.9 billion listing in 2016 and Celltrion Healthcare’s $858 million IPO in 2017.