[Bio Shaking the Market] ⑤ Aprogen Group Initiates Simplification of Governance Structure

Aprogen to Surpass 1 Trillion KRW in Sales by 2026 through Biosimilar Development
Sales Surge in 2024 with Herceptin US Approval
Aprogen, KIC, and H&G Merge to Strengthen Control over GBase

[Asia Economy Reporter Hyungsoo Park] Aprogen Group is undertaking structural reforms to efficiently advance its biosimilar business. The bio unicorn Aprogen will enter the stock market by merging with Aprogen KIC and Aprogen H&G. Aprogen Pharm, which is promoting new businesses using domestic distribution rights for biosimilars, will expand its biosimilar production facilities through a large-scale capital increase.

According to the Financial Supervisory Service on the 27th, Aprogen KIC, a listed company on the KOSPI market, will absorb Aprogen and Aprogen H&G through a merger.

Upon completion of the merger, existing Aprogen shareholders will receive 16.38 new shares for every one old share. Aprogen H&G shareholders will receive 0.34 new shares for every one old share.

Samduk Accounting Corporation, which was responsible for the corporate valuation for the merger, valued Aprogen’s old shares at 32,603 KRW per share. This is lower than the conversion price of 34,031 KRW when Lindman Asia Fund invested in convertible bonds on May 31 last year.

Based on separate financial statements last year, Aprogen recorded sales of 17.9 billion KRW, an operating loss of 15 billion KRW, and a net profit of 18.6 billion KRW. The performance forecast used for corporate valuation expects sales to reach 1.1779 trillion KRW by 2026. It is estimated that sales of 416.7 billion KRW and 458.3 billion KRW will be generated through biosimilars of Herceptin and Humira, respectively.

Herceptin is currently in the preparation stage for Phase 3 clinical trials in the United States. It is expected to receive U.S. product approval in 2024. Considering past sales trends through external sales channels, sales are anticipated to begin from the year immediately preceding the approval. Humira is at the completion stage of Phase 1 clinical trials in the U.S., with product approval expected around 2027.

The sales scale that Aprogen expects to achieve in 2026 is similar to the 1.1576 trillion KRW sales recorded by Celltrion Healthcare last year.

After the merger, Aprogen KIC will become a large corporation with capital of 531.7 billion KRW and a total of 1,063.34 million shares issued. The shareholding ratio of the largest shareholder, Gbase, and its related parties will increase to 64.2%. Excluding treasury shares of 5.3% and Nichi-Iko Pharmaceutical’s 8.2% stake, the freely tradable shares account for 22.3% of the total issued shares.

The Aprogen Group expects that through the merger, Aprogen KIC will be reborn as a biosimilar and bio-new drug company. Aprogen is developing five types of biosimilars including Remicade, Herceptin, Rituxan, Humira, and Avastin. Additionally, it is developing five new drugs: a degenerative arthritis treatment, immune checkpoint inhibitors, bispecific antibodies for acute leukemia treatment, bispecific antibodies for solid tumor treatment, and bispecific antibodies for triple-negative breast cancer treatment.

Upon completion of the merger, the Aprogen Group’s governance structure will be simplified into three companies under Gbase, which acts as the holding company: Aprogen KIC responsible for research and development, Aprogen Pharm responsible for sales, and Aprogen Biologics responsible for production. Aprogen Pharm is conducting a rights offering capital increase worth 308 billion KRW to secure the cGMP infrastructure necessary for role division.