Bio platform corporations Alteogen will push in earnest for a transfer listing to the Korea Composite Stock Price Index (KOSPI). The company plans to convene an extraordinary shareholders meeting on the 8th of next month to table the transfer listing agenda. The transfer strategy, made official in Aug., appears to be gaining speed in step with the shareholders meeting process.
The U.S. Food and Drug Administration (FDA) last month approved the "Keytruda subcutaneous (SC) formulation," "KEYTRUDA QLEX," to which Alteogen technology (ALT-B4) is applied. Through this, Alteogen secured its first commercialization performance. The industry expects the KOSPI transfer to help improve overseas investor access, strengthen transaction credibility, and improve the negotiating environment.
◇ Continued demand for formulation switching…possibility of additional technology transfer
Alteogen, founded in 2008, has grown on the basis of formulation-change platform technology since entering KOSDAQ in 2014. It established a proprietary platform in 2018 and, in 2020, signed a technology export deal worth 4 trillion won with Merck (MSD), beginning a full-fledged overseas expansion.
With FDA approval making commercialization of ALT-B4 more tangible, Alteogen will receive a certain percentage of Keytruda sales as royalties going forward. This moves it away from a one-off licensing fee–centered structure to securing recurring cash flow. The royalty rate is undisclosed, but the industry expects it to be around 4%–5%.
As demand for formulation switching continues in next-generation anticancer drugs such as antibody-drug conjugates (ADC), there is also room for additional technology exports. To date, Alteogen has signed contracts with six global pharmaceutical companies, including MSD, Sandoz, Daiichi Sankyo, and MedImmune, and has proceeded with follow-up contracts with MSD and Sandoz.
Jung Hee-ryeong, a Kyobo Securities researcher, said, "Based on 2028, Alteogen's Keytruda-related royalty revenue is estimated at about 1.001 trillion won," and added, "Considering technology transfer within the year, the KOSPI transfer, and the Keytruda SC launch milestone, the investment appeal remains high."
◇ Preparing for "qualitative review" is essential…absence of an audit committee
For a KOSDAQ corporations to transfer list on KOSPI, it must meet the following: ▲ equity capital of at least 30 billion won ▲ at least 1 million listed shares ▲ at least 25% of shares held by general shareholders or at least 5 million shares. It must also achieve at least one of the standards related to sales, profitability, or market capitalization.
As of the second quarter of this year, Alteogen recorded equity capital of 347.7 billion won, 53.46 million shares issued, and a 71.79% general shareholder equity ratio. Based on the first half, sales were 102.3 billion won, meaning the formal requirements have already been met.
The remaining task is responding to the Korea Exchange (KRX)'s qualitative review. The key is to establish governance and internal control systems, including ▲ increasing the ratio of outside directors ▲ establishing audit and compensation committees ▲ advancing the internal accounting management system ▲ enhancing the convenience of exercising voting rights.
Alteogen plans to begin internal overhauls for this. Currently, Alteogen's board consists of three inside directors and two outside directors, and there are no committees within the board. The company said, "We plan to prepare a specific restructuring plan reflecting shareholder opinions."
◇ External investors at 75%...entry into KOSPI could threaten management control
Alteogen is currently run under the sole leadership of CEO Park Soon-jae. As of Sept. 30, the largest shareholder Park and related parties held 20.36% equity (10,891,700 shares). The only shareholder with 5% or more is Smart & Growth CEO Hyeong In-woo (2.7 million shares, 5.05%), and the remaining other shareholders account for 74.59% (39,914,088 shares).
Hyeong is known as the brother-in-law of Kakao founder Kim Beom-su, the chair. In 2020, he disclosed that he, his family, and Smart & Growth held 5% or more equity in Alteogen, and in July he noted on his personal blog the need for Alteogen's KOSPI transfer.
The industry believes that, given the high proportion of external investors, their influence could grow further after the KOSPI transfer. According to the Korea Capital Market Institute, as of the end of 2023, the average largest-shareholder equity ratio at KOSPI and KOSDAQ–listed companies was 29.21%, and the pharmaceutical/biotech sector average was 40.19%. Even the largest-shareholder equity ratio at PharmaResearch, ranked No. 4 by market cap on KOSDAQ, is around 30.8%, meaning Alteogen's largest-shareholder equity ratio falls below the industry average and its ability to defend management control is relatively weak.
A frequently cited case where a low largest-shareholder equity ratio weakened management control is the Samsung C&T–Elliott Management dispute. In 2015, after Elliott secured a 7.12% equity stake in Samsung C&T, it filed suit demanding adjustments to the merger ratio, among other things. At the time, the Samsung C&T owner family's equity ratio was only 13.83%, leading to the analysis that it was vulnerable to external demands. Although the industry differs, it offers implications that a low largest-shareholder equity ratio can expand external variables.
However, experts assess that the current equity structure does not immediately translate into instability in management control. For domestically listed companies, if the largest shareholder typically holds around 25%–30% equity, it is considered to have secured de facto management control, and in some cases, even around 20% equity can provide sufficient defense.
Analysts say Alteogen's review of shifting to a professional management system is in the same vein. Since the structure in which Park exercises appointment authority remains, changes in de facto control are limited. Kim Beom-jun, a professor in the accounting department at Catholic University, said, "Introducing a professional management system is a management approach carried out under the authority of the largest shareholder," and added, "It should be viewed separately from a weakening of control."
However, some point out that if Park later chooses to sell equity or fully retire, uncertainty over management control and governance could resurface. Park has repeatedly said he does not consider succession, and co-founder and spouse Jeong Hye-sin, former chief strategy officer (CSO), also stepped away from management after a 316.4 billion won block deal (bulk trade) last year.
Alteogen did not respond to requests for comment or additional explanation on this matter.