G2GBIO will raise a total of 150 billion won through a rights offering and the issuance of convertible bonds (CB) just six months after its listing. The company said it is a preemptive investment to be used for research and development (R&D), among other things, but the market views it largely as a "defensive transfusion" to cope with poor results and cash-flow pressure that have continued since the listing.
G2GBIO said in a disclosure on the 23rd that it will issue a third-party allotment rights offering and convertible bonds, each worth 75 billion won. Of the 150 billion won secured, 90 billion won will be injected over two years through next year as operating funds for the long-acting drug delivery platform "INOLAMP" R&D and other purposes, and 60 billion won will be used as facility funds for constructing a second good manufacturing practice (GMP) plant.
The company says the investment is for upgrading the platform and expanding production infrastructure, but the market is focusing on why it moved to raise a large sum again right after the listing.
G2GBIO listed in Aug. last year via the technology exception route and secured about 53.2 billion won in public offering proceeds. Cumulative operating losses before the listing were about 116.5 billion won, and with the inflow of offering funds, cumulative losses as of the third quarter of 2024 shrank to about 58 billion won.
The problem is cash generation afterward. Cumulative sales through the third quarter last year came to 200 million won, and cumulative operating losses for the same period were about 9.2 billion won. Technology transfer results have yet to materialize, and contract development and manufacturing organization (CDMO) sales have not occurred. Cumulative deficits amount to about 80 billion won.
In the end, with the funds secured through the IPO failing to lead to a tangible expansion of sales or an improvement in the revenue structure, the company is left to pursue both R&D and plant construction. If annual losses of around 10 billion won continue, cash burn will inevitably accelerate, which is why the 150 billion won raise is being interpreted less as a growth investment and more as a move to buy time.
G2GBIO was founded in 2017 by researchers who left Peptron. Chief Executive Lee Hee-yong, who served as head of the research institute (executive managing director) at Peptron, and Vice President Seol Eun-young, a former senior researcher, were among the founding members.
The industry is watching to see whether the company can leap forward as a "second Peptron," led by the long-acting efficacy platform "INOLAMP," which extends the dosing interval of obesity treatments to once a month.
However, assessments are mixed on the technology's differentiation. Some point out that INOLAMP does not differ structurally from Peptron's existing long-acting microparticle-based platform. There are also evaluations that it uses an approach similar to "SmartDepot," which extends the efficacy of peptides with short half-lives from several weeks to several months.
Based on this technology, G2GBIO signed joint development agreements last Jan. with global pharmaceutical companies including C. H. Boehringer Sohn AG & Co. KG, and its corporate value jumped to about 1.5 trillion won this year. However, most of the current contracts are at the research collaboration and validation stage, and there have been no technology transfer results involving large upfront payments yet.
G2GBIO plans to find a breakthrough by diversifying its pipeline. It is expanding its development scope beyond obesity treatments into the central nervous system (CNS) field, including dementia treatments, and the company expects full-fledged sales to begin after 2028 alongside obesity drugs.
The market ultimately views the 150 billion won raise as a choice that reflects both growth investment and financial defense.
An industry official said, "This fundraising appears to be an unavoidable choice to continue mid- to long-term R&D and production infrastructure investment," but added, "If meaningful technology transfer results and actual sales generation do not become visible, the 'second Peptron' strategy could lose credibility."