This article was published on the ChosunBiz MoneyMove (MM) site at 4:53 p.m. on Sept. 9, 2025.
D&D Pharmatech, a biotech developing new drugs, has launched a direct issuance of perpetual convertible bonds (perpetual CBs) worth 80 billion won. Kiwoom Securities, which initially acted as the arranger, sought a sell-down structure aggregate underwriting, but the company recently shifted direction to solicit investors directly.
According to the investment banking industry on the 9th, D&D Pharmatech recently decided to directly issue bearer coupon non-guaranteed private subordinated perpetual CBs and has begun a demand survey for investors. The company is known to have prioritized contacting existing financial investors (FIs) such as venture capital (VC) firms and started negotiating terms.
The issuance size was set at around 80 billion won. The structure excludes an early redemption right (put option) for investors; it applies a 0% nominal interest rate (coupon) for the first four years of a 30-year maturity and then rises to a simple annual rate of 2% thereafter. A conversion price repricing clause is expected to be included.
D&D Pharmatech chose this perpetual CB issuance to raise funds for new drug development. The company is currently conducting a phase 2 clinical trial in the U.S. for DD01, a metabolic dysfunction-associated steatohepatitis (MASH) treatment that is also known as an obesity drug, and the need for funding has grown ahead of plans to advance clinical development of the anti-fibrosis treatment TLY012.
The fact that perpetual CBs with maturities of 30 years or more and without investor put options are recognized as equity for accounting purposes also led to D&D Pharmatech's issuance of perpetual CBs. Because biotech firms inevitably require large-scale fundraising, the move is expected to lower the liability ratio and improve the financial structure.
Earlier, the market speculated that D&D Pharmatech would issue perpetual CBs in September because Kiwoom Securities, acting as arranger, proposed aggregate underwriting. Aggregate underwriting is a method in which a financial firm first purchases the entire issuance and then resells it to investors, providing high deal certainty.
However, negotiations broke down during the terms discussion. Kiwoom Securities' risk management investment review team required securing a preferred portion of a letter of commitment (LOC) before aggregate underwriting. D&D Pharmatech objected that this was not the initially agreed aggregate underwriting and pivoted to directly soliciting perpetual CB investors.
Investor interest appeared strong because expectations for the obesity treatment's development have steadily pushed D&D Pharmatech's stock higher. KB Investment, LB Investment, and Smilegate Investment are already reported to have begun reviewing investments of more than 10 billion won each.
D&D Pharmatech said, "It is true that we switched to directly attracting perpetual CB investments instead of aggregate underwriting," and added, "Having been selected as a beneficiary of the Korea Drug Development Fund (KDDF)'s new drug development support, we have already secured about 4.5 billion won and will take time to proceed with fundraising."
D&D Pharmatech, a biotech founded in 2014 that develops innovative new drugs for metabolic diseases and degenerative brain disorders, saw its stock rise 240% this year alone as glucagon-like peptide-1 (GLP-1), which was being developed as a diabetes treatment, drew market attention as an obesity treatment.