The merger between Solux and Aribio, which has been pursued since last year, has fallen into a prolonged stalemate. It has been more than a year since the merger plan was first announced in Aug. last year, but the merger registration statement has yet to clear the review threshold of the financial authorities. The financial authorities said they had made several requests for corrections of similar content, but Solux was not reflecting them.
The Financial Supervisory Service (FSS) requested corrections to Solux's merger securities registration statement on Oct. 28. This is the eighth correction request. Accordingly, including voluntary corrections, Solux must resubmit the securities registration statement for the 11th time.
The FSS did not specify the corrections requested this time, but said the company had not sufficiently reflected points repeatedly raised earlier. An FSS official said, "No particular content was added in this correction request," and noted, "Because earlier requests were not properly reflected, we slightly modified the existing requests."
It is not unusual for the FSS to strictly review mergers between corporations, but requesting corrections to the filing eight times over more than a year is unusual.
As the authorities' review drags on longer than expected, the merger process is being delayed. A person in the biotech industry said, "As the merger has been significantly delayed, there is now less than a year left until the expected timing for the new drug application (NDA)," and explained, "It seems difficult for the authorities to readily accept the valuation results." The point is that if approval for the merger is granted hastily now and next year's results are not good when the NDA comes next year, the FSS could be in a tougher position.
Aribio is currently conducting a phase 3 clinical trial of AR1001 and valued the company on the assumption that it will file an NDA next year. However, the merger ratio was calculated based on a valuation derived while commercialization of the new drug remains uncertain.
In fact, Aribio's corporate value was adjusted through multiple corrections to the securities registration statement. The corporate value, initially assessed at more than 1 trillion won, was set at 852.2 billion won in the securities registration statement submitted in Oct. The problem is that the criteria for evaluating the value of AR1001 in Aribio's corporate valuation are unclear.
After its KOSDAQ debut through a technology exception listing fell through, Aribio has been attempting a merger with Solux. The review process by the financial authorities is bound to be more stringent.
From the early stages of the announced merger plan, the FSS is known to have focused on the stock merger ratio of the two companies and the business feasibility of Aribio's flagship pipeline, the Alzheimer's disease drug candidate "AR1001." In fact, earlier corrections to the securities registration statement have also centered on Aribio's corporate valuation and the merger ratio.
Solux issued a statement on the 29th saying it would promptly supplement the FSS's correction request and resubmit the securities registration statement.
Solux said it would "meticulously supplement the materials, focusing on sections that lacked sufficient persuasiveness and where the density of explanation and evidence needs to be raised," and added, "We will not only fully reflect the requirements but refine the filing to exceed the requested level and resubmit the correction registration statement."