As HLB moves to merge with its subsidiary HLB Science, which is listed on the KONEX, discontent is growing among HLB Science shareholders. That is because the company's promised transfer listing of HLB Science to the KOSDAQ has fallen through.
Investors had long been waiting only for the announcement of clinical trial results and the transfer listing, but suddenly a decision was made to merge with HLB, prompting backlash with remarks such as, "If I had known this would happen, I would have bought HLB earlier."
HLB held a board meeting on 17th and decided to merge with HLB Science. The aim is to strengthen business competitiveness by creating synergy in the two companies' R&D capabilities.
In 2022, HLB Science selected Shinhan Financial Investment (now Shinhan Investment & Securities) as its lead underwriter for a transfer listing to the KOSDAQ and said it would move to the KOSDAQ market by this year.
HLB Science is conducting a global clinical trial of "DD-S052P," a treatment for sepsis and superbug infections. It recently completed a phase 1 clinical trial in the United States and, depending on the results, is also planning the next clinical trial for combination therapy with the antibiotic colistin.
In particular, investors are focusing on the fact that HLB disclosed follow-up clinical trial plans in the securities registration statement related to this merger. The disclosure of follow-up plans has raised expectations that the results of the phase 1 clinical trial in the United States were positive.
A person in the financial investment industry said, "Including follow-up clinical trial plans in the securities registration statement after completing a phase 1 clinical trial shows confidence that they can move on to the next development stage," adding, "If, in fact, the merger is being pursued after the clinical trial results came out, existing shareholders could reasonably push back."
The company said that, rather than listing HLB Science on the KOSDAQ, boosting synergy through a merger with HLB would be more effective in enhancing shareholder value.
An HLB official said, "At the group level, we set a strategic direction for rapid and efficient global new drug development," adding, "A transfer listing to the KOSDAQ takes a long time due to the review procedures and requirements, and there are structural limits for HLB Science to raise funds independently and accelerate development."
HLB had previously sought a merger with HLB Life Science, a KOSDAQ-listed subsidiary, but scrapped the plan due to shareholder backlash and the burden of appraisal right expense costs reaching the 40 billion won range.
At the time, HLB Life Science shareholders who opposed the merger could exercise appraisal rights to sell their equity to the company instead of exchanging their holdings for HLB shares. HLB had decided to cancel the merger if the appraisal payments exceeded 40 billion won, and when the payments surpassed that amount, the plan fell through.
By contrast, this merger with HLB Science has no cap clause on appraisal rights. A cap clause on appraisal rights can be set in contracts between corporations involved in a merger, but no specific cap was set for this deal. With the appraisal price granted to HLB Science shareholders set below the current share price, the likelihood of the merger plan being withdrawn is expected to be low.