[IPO Spotlight] SK Bioscience... Rising Expectations for 'K-Bio Strength'

[Asia Economy Reporter So-yeon Park] Vaccine manufacturer SK Bioscience is set to be listed on the Korea Exchange on the 18th of next month. On the 5th, it announced that it will raise 22.95 million shares through an initial public offering (IPO), securing funds between 1.1246 trillion and 1.4918 trillion KRW. The offering price range is 49,000 to 65,000 KRW per share, with a company valuation of 3.75 trillion to 4.98 trillion KRW.

◇ Promising Player in COVID-19 Vaccine Contract Manufacturing and In-house Development

SK Bioscience was spun off from SK Chemicals in July 2018, with SK Chemicals holding a 98% stake. Its main business focuses on vaccine manufacturing and sales. Its self-developed vaccines such as Skycellflu (influenza), Skyzoster (shingles), and Skyvaricella (chickenpox) account for over 40% of total sales. Last year, it gained attention by signing a contract for contract development and manufacturing organization (CDMO) with Novavax and producing AstraZeneca’s vaccine under contract manufacturing organization (CMO). SK Bioscience plans to expand the annual production capacity of its Andong vaccine plant’s L House from the existing 150 million doses (single vaccination) to about 500 million doses, more than triple, to meet the increasing production demand. From sales of 183.9 billion KRW and operating profit of 22.8 billion KRW in 2019, it is expected to achieve record-high performance with sales of 161.9 billion KRW and operating profit of 30.1 billion KRW through the third quarter of last year due to the surge in vaccine demand.

Alongside contract vaccine manufacturing, SK Bioscience is also developing its own COVID-19 vaccine, aiming to complete domestic development by the end of this year. The COVID-19 vaccine candidate 'NBP2001' developed by SK Bioscience induced neutralizing antibodies approximately 10 times higher than those of recovered COVID-19 patients in efficacy tests on non-human primates. In November last year, SK Bioscience received approval from the Ministry of Food and Drug Safety for the phase 1 clinical trial plan of 'NBP2001' and has currently completed patient recruitment.

Furthermore, expectations for in-house vaccine development have increased as SK Bioscience partnered with global vaccine leader GSK. Recently, it began a domestic phase 1/2 clinical trial combining the COVID-19 vaccine candidate 'GBP510' with GSK (GlaxoSmithKline)’s adjuvant 'AS03' (active ingredient aluminum hydroxide). This clinical trial is fully funded by the Bill & Melinda Gates Foundation (BMGF) and the Coalition for Epidemic Preparedness Innovations (CEPI) to develop various types of COVID-19 vaccines.

The difference between SK Bioscience’s COVID-19 vaccine candidates NBP2001 and GBP510 is that GBP510 was co-developed with the University of Washington’s Antigen Design Institute in the U.S., supported by international private organizations such as BMGF and CEPI, whereas NBP2001 received support from the Korea Disease Control and Prevention Agency’s national project 'Development of Synthetic Antigen-Based COVID-19 Subunit Vaccine Candidates' and continues research collaboration with the Korea National Institute of Health. SK Bioscience is developing two different COVID-19 vaccine candidates simultaneously and is likely to select only one for commercialization eventually.

After receiving 3.6 million USD (approximately 4.4 billion KRW) in COVID-19 development support funds from BMGF in May last year, SK Bioscience was selected as a recipient of CEPI’s next-generation COVID-19 vaccine development project, receiving an additional 10 million USD (approximately 10.9 billion KRW) in development support funds.

◇ SK Chemicals to Monetize up to 50 Billion KRW through Sale of 7.65 Million Existing Shares

SK Bioscience plans to newly issue 15.3 million shares through a public offering, which accounts for about 25% of the total issued shares (61.2 million shares), with an issue price of 49,000 to 65,000 KRW per share. In addition to the new issuance, the largest shareholder SK Chemicals will sell 7.65 million existing shares, making the total offering size 22.95 million shares.

Of the 22.95 million shares, 20% (4.59 million shares) will be preferentially allocated to the employee stock ownership association, and the remaining 80% (18.36 million shares) will be allocated to institutional investors and general subscribers. If there are unsubscribed shares in the employee stock ownership association allocation, up to 5% of the public offering shares can be allocated to general subscribers. Depending on the subscription results of the employee stock ownership association, the allocation to general subscribers may vary between 5.7375 million and 6.885 million shares.

The subscription dates are March 9 for the employee stock ownership association and March 9 and 10 for the general public. The allocation announcement date is March 12, and the new shares are scheduled to be listed on March 18. SK Chemicals, the largest shareholder, will sell 7.65 million of its 60 million shares as existing shares. Through this sale, SK Chemicals will monetize between 374.9 billion and 497.3 billion KRW. SK Bioscience will raise a total of 1.2356 trillion to 1.4918 trillion KRW by offering 22.95 million shares, including 15.3 million new shares and 7.65 million existing shares.

Through this listing, SK Bioscience plans to secure sustainable growth capital to leap forward as an innovative technology-based global vaccine and bio company while enhancing shareholder value. In particular, the proceeds will be used to expand research centers and production facilities for additional CMO businesses such as biopharmaceuticals, develop new pipelines, establish partnerships with governments and state agencies worldwide for technology cooperation, and expand the basic vaccine portfolio.