With investor sentiment weakening in the KOSDAQ market, the pharmaceutical and biotech initial public offering (IPO) market froze in the first half of this year. Pharmaceutical and biotech corporations that debuted on KOSDAQ in the first half are trading below their offer prices one after another, extending weak share-price performance. As the market chill persists, biotech corporations preparing to list in the second half are increasingly debating whether to enter the market with lower valuations or delay their listing schedules while waiting for a recovery.
According to the industry on the 6th, the share prices of all eight pharmaceutical, biotech, and healthcare corporations listed on KOSDAQ this year are below their offer prices. Even corporations that succeeded at the time of listing with high subscription competition ratios have continued weak share-price performance since listing.
Ingenia Therapeutics, a Boston-founded biotech that recently completed its public offering process for a KOSDAQ listing, also received a report card that fell short of expectations. It drew attention for its track record of licensing out technology to Merck in the United States, but the retail subscription competition ratio was only 3.09 to 1. In bookbuilding for institutional investors conducted earlier, the competition ratio stayed at 50.4 to 1, and the offer price was set at 12,000 won, the bottom of the indicated range.
Those already listed on KOSDAQ, including Kanaph Therapeutics(0082N0), IMBiologics(493280), MEZOO(0088M0), Recens Medical(394420), Inventera(0007J0), Lemon Healthcare(365660), and REMEDI(387690), drew investor interest during the subscription process but are all currently trading below their offer prices.
A representative case is IMBiologics, which drew expectations by out-licensing its lead pipeline to Navigator Medicine in the United States and Huadong Medicine in China before listing, but the closing price on the 31st of last month was 15,310 won, 41.1% below the offer price. Kanaph Therapeutics also drew investor attention on expectations for targeted anticancer drug development, but the closing price that day was 10,750 won, down 46.3% from the offer price.
Inventera fell from the offer price of 16,600 won to 6,880 won, a decline of 58.5%, the largest drop. MEZOO fell 45.4% from the offer price of 21,600 won to 11,800 won, and Recens Medical was transacted at 8,970 won, 18.5% below the offer price of 11,000 won. Lemon Healthcare, which listed in July, also rose to 20,300 won on the first day of listing but then turned downward and is now hovering at 5,350 won, 46.5% below the offer price. REMEDI is also continuing a share-price trend below the offer price.
The industry views changes in the market environment, rather than the technological prowess of individual corporations, as the decisive factor that dampened investor sentiment. As funds in the stock market have recently shifted toward large caps such as semiconductors, overall investor demand in the KOSDAQ market has decreased, and biotech corporations, which are strongly growth-oriented, have been the most affected, analysts say.
An industry official said, "As recently as a few months ago, the heat of the bio IPO market, which had been posting subscription competition ratios in the hundreds-to-one to thousands-to-one, has visibly cooled," and added, "With a large influx of funds into semiconductor-related products, including single-stock leveraged ETFs on Samsung Electronics and SK hynix, the bio sector has been relatively sidelined in terms of supply and demand."
If the market slump is prolonged, the burden on corporations preparing to list is expected to grow further. Observers in the industry say there is a possibility that more cases will either push ahead with listings by lowering offer prices or delay schedules until market conditions improve.
Still, there is also an outlook that the bio sector could rebound in the second half as investor sentiment gradually recovers. Heo Hyemin of Kiwoom Securities said, "If concentration eases in the second half and global competitiveness, clinical data validation, and partnership outcomes are confirmed, the bio sector could establish a floor and continue a trend rebound."
Pharmaceutical and biotech IPOs are expected to continue in the second half. Sky Labs, a developer of patient-monitoring medical devices, will conduct bookbuilding for institutional investors starting on the 14th. MSBIO, a corporation that makes medical implants using human tissue and biomaterial-based medical devices, and MBD, a Precision Medicine corporation based on patient-derived 3D tumoroids, also passed preliminary listing reviews and have begun full-fledged listing procedures.