After the Financial Supervisory Service demanded three corrections to GemVax & KAEL's paid-in capital increase plan, GemVax & KAEL ultimately withdrew the plan. Following news that its Alzheimer's drug candidate failed to show efficacy in a global phase 2 trial and a limit-down close, its funding plan also became uncertain.
According to the Financial Supervisory Service's electronic disclosure system on the 11th, GemVax & KAEL submitted a withdrawal report for the paid-in capital increase after the market closed that day. This came just one day after the Financial Supervisory Service requested a correction filing to the securities registration statement the previous day.
Through a disclosure, GemVax & KAEL said, "As the promotion of the paid-in capital increase has been prolonged, we determined there is a risk of causing confusion for existing shareholders and new investors, so we inevitably decided to withdraw it."
GemVax & KAEL hit the lower limit the previous day. It ended trading at 38,200 won, down 29.91% (16,300 won) from the previous session. The company said the fallout was largely due to its disclosure after the market closed on the 7th that Alzheimer's drug candidate GV-1001 failed to demonstrate efficacy in a global phase 2 trial.
GemVax & KAEL's share price, which was 14,590 won early this year, rose 378% to 69,800 won in mid-June on expectations for GV-1001. However, after a disclosure on Aug. 29 of a paid-in capital increase worth 248.6 billion won, it moved sideways in the 40,000–50,000 won range on dilution concerns, then plunged into the 30,000 won range after the trial failure disclosure. The paid-in capital increase was 16% (6.7 million shares) of the existing share count, with most of the 167.6 billion won in funds planned for GV-1001 research and development and the phase 3 trial.
To make matters worse, the Financial Supervisory Service put the brakes on the paid-in capital increase plan. The Financial Supervisory Service had previously rejected GemVax & KAEL's paid-in capital increase securities registration statement on Sept. 26 and Oct. 27, and on the 10th again requested the submission of a correction filing.
An Financial Supervisory Service official said, "Regarding the clinical substance, the filing contained mainly content favorable to the company," and noted, "We made the correction request with the intent that matters that must be communicated objectively should be disclosed even if they are unfavorable."
With the paid-in capital increase withdrawn, GemVax & KAEL's clinical trials are also expected to face setbacks. An Financial Supervisory Service official said, "The very purpose of the funding through this paid-in capital increase is to finance the phase 3 clinical trial, and it seems the premise that this substance can enter phase 3 needs to be explained."