HONG KONG – SK Biopharmaceuticals Co Ltd.’s shares are still basking in the afterglow of a successful entrance on the Korea Exchange, which raised ₩959.30 billion (US$799 million).
The stocks recorded a third day of double-digit growth, gaining 30% to close at ₩214,500, after gaining 29.92% to close at ₩165,000 on July 3. The pharmaceutical arm of South Korean conglomerate SK Holdings Co. Ltd. saw shares close at ₩127,000 on the first day of trading, up 159% from the ₩49,000 indicative price set by the company on June 19. The stock price opened at ₩98,000 and quickly hit ₩127,000, the limit under KOSPI market regulations prohibiting stock prices from increasing more than 30% in a day.
The bookbuild for the 19.57 million shares on offer attracted 1.076 domestic and foreign institutional investors as well as retail investors, all of which made bids for 11.75 million shares, or 60% of the offering, according to the company.
Meanwhile, shares for parent company SK Holdings dropped 2.33% to ₩272,000 by the end of the day on July 3.
“Through this IPO, we will strive to accelerate our rise as a global pharmaceutical firm,” SK Biopharmaceuticals CEO Jeong Woo Cho said.
The IPO is the biggest so far this year in South Korea, according to the Korea Exchange. The listing was not as big as the 2017 issue by Celltrion Healthcare, which raised more than $858 million and was less than half Samsung Biologics Co.’s $1.9 billion listing in 2016.
SK Biopharmaceuticals plans to use the new funds for R&D. The company focuses on developing treatments for the central nervous system, and recently received FDA approval for two additional new drugs. Xcopri (cenobamate), the anti-epileptic drug developed by SK Biopharmaceuticals alongside U.S. subsidiary SK Life Science Inc., was approved in November 2019 and Sunosi (solriamfetol), a drug for narcolepsy discovered by SK Biopharmaceuticals and developed by partner Jazz Pharmaceuticals plc, received the FDA nod in March 2019.
Xcopri was launched in the U.S. market for the partial-onset seizure indication in May 2020. SK Pharmaceuticals is preparing to launch the drug in other markets, and it inked an agreement to develop and market the drug in Europe with Switzerland’s Arvelle Therapeutic GmbH in February 2019.
SK Biopharmaceuticals is currently running phase III trials for the drug as a potential treatment for primary generalized tonic-clonic (PGTC) seizures and is currently developing other compounds to treat central nervous system disorders, including epilepsy, Lennox-Gastaut syndrome and attention deficit hyperactivity disorder. The company received an orphan drug designation in 2017 for carisbamate, its treatment for Lennox-Gastaut syndrome. That drug is currently being evaluated in phase I/II trials.
The company also signed a joint research agreement with U.S.-based artificial intelligence-driven biopharmaceutical company Twoxar Inc. in April 2019 to discover and develop drugs for non-small-cell lung cancer.
SK Biopharmaceuticals set its IPO timetable after discussions with IPO underwriters NH Investment & Securities and Citi Global Market Securities about various market factors, including the COVID-19 pandemic.
Korea is currently dealing with a second wave of COVID-19 that started in nightclubs in Seoul’s Itaewon neighborhood and in the southwestern city of Gwangju. It tightened its social distancing measures after recording more than 50 cases over the past few days. The country reported 61 new cases as of July 4, according to the Korea Centers for Disease Control and Prevention.
But a source at Hi Investment and Securities told BioWorld that “it is difficult to conclude that [SK Biopharmaceuticals’] successful IPO will have an impact on Korean [biopharmaceutical] IPOs as a whole. This is because SK Biopharmaceuticals’ IPO was unique in the Korean market in that the company raised funds on the back of an FDA-approved drug.”
Given that Xcopri has FDA approval, it is likely that the company could also be planning to list in the U.S., according to the source.
SK Biopharmaceuticals’ listing signaled a good start to July for the Korean stock market, with 15 of 26 companies who have passed the listing eligibility aiming to list during the month, according to SK Securities’ July 1 note. The note further said that the KOSDAQ index had recovered to pre-COVID-19 levels, with a concurrent recovery of investor sentiment. A total of 49 applications for review were received by the Korea Stock Exchange between April and June, with the results expected between July and September.
The successful IPO raises hopes that companies who delayed plans for a stock exchange outing due to the volatility in the equities market in the beginning of the year due to COVID-19 will revive their plans. COVID-19 test kit maker Solgent Co., for instance, picked Mirae Asset Daewoo as its underwriter in April for a potential listing on the KOSDAQ board.
The company posted ₩87.6 billion of operating losses in 2019, alongside sales that reached ₩123.852 billion.