AbClon, a KOSDAQ-listed company developing a cell gene therapy platform, raised a large amount of funds from Chong Kun Dang. Facing the risk of delisting, AbClon plans to strengthen its competitiveness in new drug development based on this investment. However, maintaining its listing hinges on securing revenue within the year.
AbClon announced on the 9th that it had decided to raise 12.2 billion won through a third-party allocation of new shares to Chong Kun Dang. Chong Kun Dang was allocated 1.4 million shares at 8,723 won per share and agreed to pay for them by the 19th.
After the paid-in capital increase, Chong Kun Dang's equity will be 7.33%, making it the second-largest shareholder following founder Lee Jong-seo and affiliates (13.06%). After the capital increase, Lee's personal equity will be diluted from 7.66% to 7.34%, similar to that of Chong Kun Dang.
Chong Kun Dang is a company associated with Lee. He obtained his bachelor's and master's degrees from Sogang University and Yonsei University, and worked as a researcher in the new drug development team at Chong Kun Dang before leaving for Japan in 1995.
The company has decided to invest all the funds from this paid-in capital increase into clinical research and development expenses. This year, it plans to spend 5.2 billion won and 6 billion won next year, with the remainder earmarked for use after 2027. Currently, AbClon is developing various immunotherapies, including the immune-oncology antibody drug "AT101", dual antibodies, and cell therapies. In a tough environment for attracting external investment, Chong Kun Dang's participation as a strategic investor (SI) is expected to accelerate pipeline expansion and development.
However, AbClon urgently needs to secure revenue through technology transfer, milestone receipts, and sales. Failure to generate revenue this year increases the likelihood of delisting. AbClon failed to submit its audit report on March 21; it later reported on the 24th that its sales had decreased from the previously announced 3 billion won to 2.3 billion won. The sales figures for 2023 were revised down from 3.1 billion won to 2.9 billion won.
Having failed to meet the KOSDAQ market listing standard of annual sales of 3 billion won, AbClon has been designated as a management issue. If sales remain below the threshold this year, the eligibility review for listing will determine whether delisting occurs. Once designated as a management issue, there is a possibility of increased pressure for early repayment of existing bonds. Previously, AbClon bought back its 2nd convertible bond (CB) issued in December last year for 10.4 billion won, including principal and interest, three months after issuance and then retired it.
The market sees the revenue generation of the CAR-T therapy AT101 as crucial. CAR-T therapy works by attacking and killing cancer cells through T-cells extracted from the patient's blood using genetic modification. AbClon's AT101 aims to treat diffuse large B-cell lymphoma (DLBCL), which has the highest incidence among lymphomas.
The company is currently conducting Phase 2 clinical trials for AT101 with the goal of applying for expedited approval within the year, and results are expected to be disclosed next month. At the end of March, a technology transfer agreement was signed with Turkey TCT Health Technology. The contract amount has not been disclosed at the request of the contractor.
Investors interpret Chong Kun Dang's participation in the paid-in capital increase as recognition of the company's technological capabilities, expressing expectations for a rise in stock prices. However, there are also concerns about the dilution of equity among the management. The stock price of AbClon, which was in the 14,000 won range at the beginning of the year, dropped to 7,290 won after issues with its management designation last month but has since recovered to 11,270 won this month. However, on the first trading day after the paid-in capital increase announcement on the 12th, the stock price fell nearly 10% to finish at 10,060 won.
Currently, most individuals who have invested in AbClon are reporting losses. According to NH Investment & Securities's Namoo app, the proportion of investors with losses in AbClon stands at 91.04%, with an average return rate reaching minus (-) 44.59%.