Inventage Lab, the parent company of KOSDAQ-listed Quratis, which must worry about maintaining its listing eligibility due to prolonged capital erosion, has stepped in with side support. Inventage Lab pledged to convert in full to shares the convertible bonds (CB) it invested in when it acquired management control early this year, regardless of the share price level at the time the conversion right can be exercised in Feb. next year.
Typically, CB investors convert to shares only when the share price exceeds the conversion price to realize revenue, but Inventage Lab chose an "obligatory conversion," accepting share price uncertainty. This is seen as a strategic decision to include the bonds in capital to improve Quratis' financial structure and resolve capital erosion.
Quratis said it unusually changed the terms of the 15 billion won CB issued to its parent Inventage Lab in Feb. The key changes were the deletion of the put option (early redemption right) and refixing (conversion price adjustment) clauses originally specified, and a drastic shortening of the conversion request period to just one week (Feb. 22–28, 2026).
Inventage Lab, the investor, gave up the refixing, a means to hedge losses from a falling share price, and even relinquished the right to demand early repayment of its investment (put option). For Quratis, which raised the funds, these are one-sidedly favorable terms that remove repayment pressure and increase the likelihood of capital expansion.
The unusual change to the CB terms is seen as a move to break through a situation in which the company's financial structure continues to deteriorate. Inventage Lab acquired management control early this year to use Quratis' vaccine production facility, the Osong Bio Plant. The problem is that as revenue is not being generated in the main business, concerns over capital erosion have grown.
Quratis, which entered the market under a technology special listing with tuberculosis and COVID-19 vaccine technology, was in a state of capital erosion from its 2023 listing. At the time of listing it announced goals to improve results, but losses continued over the past two years and the financial structure kept worsening.
Management difficulties deepened when founder and former CEO Cho Gwan-gu stepped down the year after the listing. After Cho left, the company was taken over by Peace to S Korea, a real estate investment advisory firm. Peace to S Korea, which remains a major shareholder even now with Inventage Lab as the largest shareholder, is the personal company of CEO Kim Sung-Joon, who oversees Quratis' management.
If Inventage Lab, which invested in the CB, converts the CB into shares, the bond-related account recognized as a liability will be changed to capital under accounting rules. The company said the amount to be converted into capital is expected to be around 20 billion won.
Some say Inventage Lab's decision could be interpreted as a positive signal for the future share price. This is because Inventage Lab planned to pursue contract manufacturing (CMO) and contract development and manufacturing (CDMO) businesses using Quratis' Osong plant, and Quratis said, "All equipment for Inventage Lab's CDMO facilities has been delivered, and after a trial run early next year, they are scheduled to operate normally."
However, Quratis' financial condition is unlikely to improve significantly in the short term. As of the end of last year, Quratis' capital erosion ratio was 29%, and the indicator has worsened as losses accumulated. As of the end of last year, the continuing operations loss rate before corporate income tax expense was close to 130%.
Because Quratis is a CMO and CDMO operator, there is an opinion that even if Inventage Lab produces meaningful clinical results, profitability will be difficult to improve dramatically.