[Bio Shaking the Market] GTreeBNT, Delay in Fundraising Due to Early CB Repayment ①

[Asia Economy Reporter Jang Hyowon] Investors in GTreeBNT's convertible bonds (CB) are demanding early redemption after the company announced negative clinical trial results for its major pipeline, the dry eye syndrome treatment. Additionally, new fundraising is also being delayed.

According to the Financial Supervisory Service's electronic disclosure on the 22nd, the 9th series CB investors of GTreeBNT exercised their early redemption rights for CBs worth 2.7 billion KRW on the 19th.

The minimum adjusted conversion price for this CB is 15,704 KRW, but since GTreeBNT's stock price fell below this level, investors chose redemption over stock conversion. GTreeBNT repaid about 2.8 billion KRW including interest.

Earlier, on the 18th, GTreeBNT also repaid the 11th series CB worth 10 billion KRW. This CB was issued on January 8 to financial investors (FI) including Suseong Asset Management, and although the early redemption right (put option) could be exercised only after two years, it was repaid just two months after issuance.

GTreeBNT stated, "The acquisition of convertible bonds (CB) was made through consultation with bondholders," and "the bonds will be canceled through the Korea Securities Depository." The conversion price per share for this CB was 29,541 KRW. The minimum adjustment limit was also 20,679 KRW, which is significantly higher than the current stock price of 14,000 KRW.

The reason CB investors are demanding early redemption is analyzed to be due to GTreeBNT's recent announcement of negative results in the Phase 3 clinical trial of its dry eye syndrome treatment.

On the 18th, GTreeBNT announced that its dry eye syndrome treatment 'RGN-259' failed to show statistical significance in the primary endpoints of ocular discomfort and corneal staining scores in the inferior corneal region in the third US Phase 3 clinical trial (ARISE-3).

As a result, the stock price, which had hovered around 20,000 KRW, plummeted to 14,000 KRW. Until early this year, the stock price had been trading in the 30,000 KRW range, buoyed by expectations for COVID-19 vaccine distribution and dry eye syndrome treatment, but it has halved in about three months.

With the early redemption of CBs, GTreeBNT's cash holdings are estimated to have significantly decreased. As of the end of last year, GTreeBNT's consolidated cash equivalents were 13.9 billion KRW. The cash spent on this CB redemption, including interest, was 12.9 billion KRW. About 6.8 billion KRW worth of the 9th series CB remains but is presumed not yet redeemed. Currently, the total outstanding CBs amount to approximately 10.8 billion KRW.

Although the company's cash is drying up, new cash raising is far off. GTreeBNT, whose main business is influenza vaccine distribution, has recorded operating losses and negative operating cash flows on a consolidated basis for the past three years. Operating funds have been secured through capital increases and bond issuance.

However, fundraising is also being delayed. In February, GTreeBNT planned to issue CBs worth 45 billion KRW to its new largest shareholder, GTree Holdings. The original payment deadline was the 18th, but after the dry eye syndrome clinical trial results, it was postponed to April 9. GTree Holdings is an investment purpose company established by Bayside PE for the acquisition of GTreeBNT.