Jinwon Saenghwal Science Surges 60% in Five Days

[Asia Economy Reporter Koh Hyung-kwang] The market capitalization of GeneOne Life Science, a company specializing in genetic vaccine development, has surpassed that of the major pharmaceutical company Chong Kun Dang. This is interpreted as reflecting expectations for the development of a novel coronavirus disease (COVID-19) vaccine. Since the stock price trend shows signs of overheating, cautious investment is required.

According to the Korea Exchange on the 23rd, GeneOne Life Science closed at 42,400 KRW on the KOSPI market the previous day, up 8.7% from the previous trading day. It reached a 52-week high and rose 64.6% over the past five days. On the 21st, it even hit the upper price limit.

The sharp rise in stock price appears to reflect expectations for COVID-19 vaccine development. On the 21st of last month, at the 5th meeting of the 'Government-wide Support Committee for COVID-19 Therapeutics and Vaccine Development' hosted by the government, GeneOne Life Science was preliminarily selected as a company eligible for clinical trial support for COVID-19 vaccines, along with Genexine and SK Bioscience. The final selection will be confirmed through a re-evaluation of the preliminarily selected companies.

Earlier, on the 13th of last month, the Central Disease Control Headquarters (CDCH) announced that clinical trials could start within the year for three COVID-19 vaccine candidates being developed domestically. According to the CDCH, Genexine is conducting Phase 1 and 2a clinical trials for a DNA vaccine, SK Bioscience is developing a synthetic antigen vaccine, and GeneOne Life Science is working on an additional DNA vaccine.

From the 20th to the 26th of last month, when these positive developments were announced, GeneOne Life Science recorded the upper price limit for four out of five trading days, and during this period, its stock price surged 214% from 9,820 KRW to 30,850 KRW. Compared to the annual low of 2,235 KRW on January 8, the closing price of 44,500 KRW the previous day represents a staggering 1,797% increase.

As the stock price surged, market capitalization also increased significantly. Based on the closing price the previous day, the market cap was 1.8947 trillion KRW, surpassing Hanwha (1.8814 trillion KRW) and Chong Kun Dang (1.7852 trillion KRW). It is only about 60 billion KRW less than Doosan Infracore’s market cap (1.9459 trillion KRW), which has risen due to expectations of a sale.

As the stock price shows signs of short-term overheating, experts recommend refraining from chasing the stock. A financial investment industry official said, "In a situation where it is still uncertain whether therapeutics and vaccines will be developed, the stock prices of some pharmaceutical and bio companies are already soaring as if success is guaranteed. Investors should make a rational judgment about the stocks and invest only when they are confident they can endure even if the stock price falls."