G2GBIO, which listed on KOSDAQ in Aug., is drawing attention for developing technology that can extend the dosing interval of obesity drugs. Obesity drugs are currently administered once a week. As market competition intensifies, technology that extends dosing to once a month is becoming important. That is because patient convenience increases accordingly.
G2GBIO's largest-shareholder equity was only 17% at the end of the third quarter. Some are concerned that low largest-shareholder equity could shake management control. G2GBIO is securing friendly equity as a means to defend management rights.
◇Technology to extend dosing interval for obesity drugs
G2GBIO was founded in 2017 by Chief Executive Lee Hee-yong, formerly head of the Peptron research institute. It has the InnoLAMP platform, a technology that prolongs drug effects. InnoLAMP encapsulates drugs in small, round particles to release them slowly in the body. It delivers high-dose drugs for several months while minimizing injection-site reactions.
Semaglutide, the active ingredient in Wegovy, is injected once a week. Applying G2GBIO's technology has raised expectations that obesity drugs could be injected once a month. Patients would feel less aversion to injections and be less likely to forget their doses.
Han Yong-hee, a researcher at Growth Research, said, "If the number of injections decreases, you can reduce (drug) use," and noted, "It is an attractive development direction for big pharma because it can cut costs and improve profitability."
G2GBIO is jointly researching long-acting injectable formulations with global pharmaceutical companies, including C. H. Boehringer Sohn AG & Co. KG in Germany. The biotech industry sees a possibility that these joint studies could lead to technology exports.
◇Low largest-shareholder equity, defending control with joint-purpose holding commitments
G2GBIO faces criticism that low largest-shareholder equity makes it vulnerable to losing management control. According to the Financial Supervisory Service's electronic disclosure system, as of the end of the third quarter, the combined equity of the largest shareholder, including Lee (11.1%), and related parties was only 16.9%. Lee is the only shareholder with at least 5%. The rest of the equity is held by executives (5.1%) and relatives (0.4%).
According to the Korea Capital Market Institute, as of the end of 2023 the average equity held by the largest shareholders of domestically listed pharmaceutical and biotech corporations was around 40%. If the largest-shareholder equity is insufficient, stable management could become difficult. The company is currently defending management control with friendly equity.
A 14.17% equity stake in G2GBIO is under joint-purpose holding commitments with Peptron, Humedix, DreamCIS, and Pharmbio Korea. Based on the KOSDAQ listing date, those shares are locked up with a protection agreement for one to three years to prevent sales. Including this, friendly equity, including Lee, rises to the mid-25% range.
However, the joint-purpose holding commitments are time-limited. Once the period ends and the lockup is lifted, friendly equity could come onto the market, so additional safeguards are needed.
A G2GBIO official said, "Company executives have also signed joint-purpose holding commitments for their equity," and added, "Even after the lockup is lifted, executives are unlikely to sell their equity."