This article was published on March 17, 2025, at 3:40 p.m. on the ChosunBiz MoneyMove site.
The concerns of Korea Investment & Securities, the investment company of the bio firm Organoid Science and the listing underwriter, are deepening. The Financial Supervisory Service has once again demanded that performance estimates be specified, citing investor protection, leading to a situation where the market capitalization after the listing must be adjusted.
Some are even weighing the possibility of a listing delay. The estimated market capitalization of Organoid Science after listing is 140 billion won, and Korea Investment & Securities, which previously invested at a valuation of 160 billion won, is already at a loss. The underwriter, Korea Investment & Securities, has found itself in a situation where it must increase the scale of its losses.
According to the financial investment industry on the 17th, Organoid Science and Korea Investment & Securities have been unable to confirm their submission schedule for over 10 days since the FSS's demand for corrections to the securities registration statement on the 7th. This stands in contrast to the first correction request last month, when they finalized corrections in about five days and submitted a revised securities registration statement.
Organoid Science, a bio company developing organoid technology that replicates human organs by cultivating stem cells, was established in 2018. It recorded a loss of 9.469 billion won by the third quarter of last year but has estimated a net profit of 25.9 billion won in 2028, projecting a post-listing market capitalization between 110.6 billion and 136.6 billion won.
The FSS is reportedly pointing out a lack of basis for the performance estimates. In particular, it has become an issue that Korea Investment & Securities presented the Organoid regenerative therapy product "ATOM (ATORM)-C" as a key indicator for performance improvement, forecasting a significant increase in Organoid Science's sales starting next year.
According to the FSS, Organoid Science and Korea Investment & Securities anticipated substantial sales after the completion of Phase 2 clinical trials for ATOM-C this year, but they have yet to receive approval for clinical progress. It is understood that the Ministry of Food and Drug Safety rejected the company’s application for approval of the clinical trial plan last December due to insufficient data.
Previously, when the first correction request was made, Korea Investment & Securities applied conservative assumptions, reducing the estimated net profit for 2028 from 25.9 billion won to 23.4 billion won. At the same time, the per-share appraisal price also fell from 27,908 won to 25,214 won, but by raising the discount rate, the maximum post-listing market capitalization of 136.6 billion won was maintained.
In the market, observations suggest that Korea Investment & Securities is in a dilemma. Despite lowering performance estimates and proceeding with corrections by adjusting the discount rate, the FSS has issued further correction demands. This is effectively a warning not to use tricks to adjust the discount rate.
Notably, the FSS's second correction request was made on the same day that Korea Investment & Securities began demand forecasting for Organoid Science among institutional investors. Typically, the FSS conducts behind-the-scenes adjustments with issuing companies and underwriters when they determine that additional information or corrections to the securities registration statement are necessary, but it has taken a tough stance this time.
The issue is that if the market capitalization is adjusted downwards after listing, Korea Investment & Securities' losses will increase. Prior to being the underwriter for Organoid Science's listing, Korea Investment & Securities was a financial investor (FI), having acquired 62,500 shares of Organoid Science for approximately 2 billion won in April 2022.
It has been understood that Korea Investment & Securities previously evaluated Organoid Science's corporate value at 160 billion won. The per-share acquisition price has been recorded at around 32,000 won. Compared to the upper limit of the hoped-for public offering price range (17,000 won to 21,000 won) that applies the discount rate to the per-share appraisal price, this results in a loss exceeding 34%.
There are also speculations in the industry that Korea Investment & Securities may suggest delaying the listing of Organoid Science. Recently, Korea Investment & Securities has been promoting revenue enhancement in the IPO department under the leadership of CEO Kim Sung-hwan, but it is on a path toward deteriorating profitability as the listing underwriter.
A source in the securities industry noted, "The FSS suspects that Korea Investment & Securities may have inflated performance estimates to minimize investment losses in Organoid Science," adding, "Delaying the listing to solidify performance estimates may be a viable option."