The new drug development corporation GemVax & KAEL decided to proceed with a paid-in capital increase worth 248.6 billion won to secure operating funds and repay debt, leading to a sharp decline in its stock price.
GemVax & KAEL shares traded at 41,850 won on the NextTrade at 4:57 p.m. on the 29th, down 16% (8,000 won) from the regular session closing price of 49,850 won.
GemVax & KAEL seems to have seen its stock price drop in the after-market after announcing its capital increase plan following the regular market closing.
GemVax & KAEL will issue 6.7 million new shares, allocating them to existing shareholders, and if there are any unallocated shares, they will conduct a public offering targeting general investors. The paid-in capital increase ratio is approximately 0.16 to 1.
The anticipated issue price for new shares is 37,100 won, which is 25.6% (12,750 won) lower than GemVax & KAEL's regular market closing price that day. The new share issue price will be finalized on Nov. 28.
GemVax & KAEL plans to conduct subscriptions for existing shareholders starting Dec. 3 and will list the new shares on the 23rd of the same month after going through public offering procedures. SK Securities will act as the lead underwriter.
GemVax & KAEL plans to use the funds raised from the capital increase to research and develop 'GV1001' as a treatment for Alzheimer's disease and progressive nuclear palsy and to utilize it for clinical trials. They also intend to repay borrowing funds raised from Hana Bank and affiliates, saving approximately 2.06 billion won in annual interest expense.
GemVax & KAEL noted, "As various studies and clinical trials for the new drug development substance GV1001 are being conducted simultaneously, related expenses have increased significantly," and stated, "Given the situation where the company's performance is deteriorating, we planned to secure funds through the capital increase."