Korea Investment & Securities Co. said on the 26th that, for AprilBio, which recently moved to sell its management control, the current market capitalization is attractive compared with the cash it will secure. It maintained a "Buy" rating and a target price of 112,000 won.
On the 24th, AprilBio decided on a third-party allotment paid-in capital increase totaling 346.8 billion won, targeting TKG Huchems and IMM Investment Group. When payment is completed on the 23rd of next month, the largest shareholder will change to IMM Asset Management, and TKG Huchems is expected to exercise management control.
IMM Investment Group holds a put option to sell all of its equity to TKG Huchems five years after the closing of the transaction, and TKG Huchems can exercise a call option. As a result, both the largest shareholder position and management control are expected to be attributed to TKG Huchems.
Wi Hae-joo, an analyst at Korea Investment & Securities Co., said, "It is a deal that structurally blocks overhang in the open market," adding, "The extent of CEO Cha Sang-hoon's sale of existing shares remains unconfirmed so far."
After this deal is completed, AprilBio is expected to secure about 437 billion won in cash liquidity, including existing cash.
The research and development (R&D) system led by CEO Cha will remain intact, and the funds secured are expected to be invested in expanding the number of pipelines that can proceed in parallel and in reinforcing research staff.
The analyst said, "Referring to the past cases of LigaChem Biosciences and Orion, large cash securing by biotech companies led to pipeline expansion and technology transfer results," adding, "AprilBio could follow a similar path to LigaChem Biosciences, which proved technology transfer results and drove a stock price rise after a change in the largest shareholder."
AprilBio has consistently pursued a cost-efficient business model of out-licensing at the nonclinical or phase 1 stage, and the model is expected to remain unchanged after this deal.
Compared with the 4370 won in cash AprilBio will secure, its current market capitalization is about 901.4 billion won. Korea Investment & Securities Co. evaluated this as an attractive level.
The analyst explained, "Overall biotech stocks have fallen due to macro issues, but the qualitative level of AprilBio's research and development is rising."