It has been confirmed that Gencurix, a cancer diagnosis solution corporations that developed Asia's first breast cancer prognosis test, "GenesWell BCT," is seeking to sell its management control. Although its flagship product has taken hold at major hospitals in Korea and sales continue to grow, some analysts say standalone survival has become difficult due to accumulated losses, severe liquidity pressure, and weakened investor sentiment in the diagnostics industry.
According to the investment banking (IB) industry on the 2nd, Gencurix has been exploring a sale of management control since early this year. The merger and acquisition (M&A) teaser shows that the acquirer would secure control by investing a total of about 12 billion won, including 4.65 billion won to purchase existing shares and 7.5 billion won for newly issued shares.
Samjong KPMG initially served as the sell-side advisor, but the process was halted after it failed to find a suitable buyer, and the company is now said to be contacting potential investors without a separate advisor. The sale effort, which began at the end of Jan., has thus continued for more than half a year. Depending on negotiations, the transaction structure and acquisition price could change.
◇ "No. 1 domestically prescribed" breast cancer diagnostic kit developed, but losses and liquidity crisis
Gencurix is a cancer molecular diagnostics corporations founded in 2011. Its flagship product is "GenesWell BCT," the first breast cancer prognosis test approved by the Ministery of Food and Drug Safety in Korea and the first in Asia, in 2016. Based on data from patients of various ages and pre-/post-menopause, it distinguishes between high- and low-risk groups to reduce unnecessary chemotherapy.
It has been adopted by more than 100 major medical institutions nationwide, ranking No. 1 in domestic prescriptions, and is also targeting markets in Asia such as Japan and Southeast Asia. The company listed on the KONEX market in Oct. 2015 and, based on this product, transferred to the KOSDAQ market in June 2020. Its current market capitalization is about 51 billion won.
The problem is that, unlike top-line growth, financial strength has deteriorated quickly. Gencurix's sales edged up from 2.6 billion won in 2022, 2.6 billion won in 2023, 5.1 billion won in 2024, to 7.5 billion won in 2025, but operating losses during the same period steadily continued at 11 billion won, 11.2 billion won, 8.5 billion won, and 6.6 billion won, respectively. In the first quarter of this year, it also posted 2.1 billion won in sales and a 1 billion won operating loss.
Gencurix shares have also remained sluggish. In March, after it announced research results with Penetrum Bioscience (formerly Hyundai ADM Bio) that identified a new cause of pancreatic cancer resistance, the stock jumped about 20% to 7,320 won. However, it has since given back most of those gains and has been declining.
The liquidity situation is even more serious. According to the Financial Supervisory Service electronic disclosure first-quarter report, as of the end of the first quarter this year, cash and cash equivalents stood at only 169.89 million won, while repayment of short-term borrowings maturing in Aug. amounts to 10.42 billion won.
To secure liquidity, the company has moved to prepare self-rescue measures, including selling asset. In April last year, it sold its entire stake of about 1.5 million shares in subsidiary NGeneBio to raise 8 billion won and stepped down from the position of largest shareholder, and in Dec. of the same year it disposed of its entire stake in Nanobiolife to secure 5.6 billion won. In Feb. this year, it sold HLB Panagene shares for 1.3 billion won and ABION shares for about 2 billion won, respectively.
Chief executive Cho Sang-lae, the largest shareholder, also directly injected funds. Last year, the company conducted a third-party allotment capital increase of 8.8 billion won to Cho, and Cho effectively used personal funds to support liquidity. In the process, the equity ratio rose from 14.7% to 35.5%.
◇ Controversy over subsidiary investment and absorption-type merger, a "burden" for potential buyers
However, after the company spent 7 billion won to acquire convertible bonds (CB) of its subsidiary Genobio, criticism emerged in the market that the hard-won funds were used to support an affiliate rather than the core business.
Following this investment, the company's available cash dwindled to a level that made it difficult to even cover working capital, which observers say is a major concern among potential acquirers.
More recently, questions in the market have grown after the company decided to carry out an absorption-type merger of Genopix, a biotech venture founded by outside non-executive director Jeong Jin-gu, a member of the board. Genopix currently has no sales and, as of the end of last year, was in a state of complete capital impairment with total assets of 300 million won, liabilities of 2.6 billion won, and total equity of minus 2.3 billion won. Jeong is currently the only employee.
Gencurix says that after the merger it plans to leverage Genopix's medical expert network to enhance core business competitiveness, including clinical validation of liquid biopsy diagnostic products and the discovery of new biomarkers.
The industry also sees severely weakened investor sentiment in next-generation sequencing (NGS)-based genetic analysis as a factor making the sale effort difficult. An IB industry official said, "With investor sentiment across the diagnostics industry cooled, it is not easy for corporations that continue to post losses to raise new funds."
Some also interpret the move as an attempt to complete the sale of management control before CEO Cho's term ends on Sept. 20. However, a company official said the sale of management control was groundless.
Meanwhile, Gencurix was recently selected as a joint research institution for a pan-ministerial advanced medical device research and development project worth about 29.4 billion won and plans to carry out, from this year through 2032, the project "development of a next-generation digital polymerase chain reaction (PCR) integrated platform for early screening of major cancers."