[Funding] Kukjeon Yakpum's Bold Move: Large-Scale Capital Increase Just 4 Months After Listing

Listed on KOSDAQ via SPAC merger in December last year
Raised 50 billion KRW through rights offering... Established API Plant 2 and Electronic Materials Plant
CEO Hong Jong-ho raised funds by selling subscription warrants... Participated in 11% of allocated shares

[Asia Economy Reporter Hyungsoo Park] Kukjeon Pharm, a manufacturer of active pharmaceutical ingredients (API), has launched a large-scale fundraising just four months after listing on the KOSDAQ market. The company plans to raise 50 billion KRW through a rights offering to expand production capacity and develop electronic materials.

According to the Financial Supervisory Service on the 6th, Kukjeon Pharm will issue 9.5 million new shares by allocating 0.25 new shares per existing share. The planned issue price of the new shares is 5,300 KRW, and the record date for the new share allocation is July 4.

The funds raised through the rights offering will be used for ▲ advancing the follow-up business of the oral dementia treatment licensed from Shaperon ▲ expanding production facilities for APIs and electronic materials and strengthening research and development.

Hong Jong-ho, CEO of Kukjeon Pharm, explained, "Additional fundraising is necessary to expand production facilities in our core API business and the newly pursued electronic materials business division."

About 28.1 billion KRW of the raised funds will be used to establish a second plant to expand API production capacity. Upon completion of the expansion investment, API production capacity will increase from 140 tons per year to 340 tons. As of the end of last year, the first plant's operating rate was about 71%. The second plant will produce newly developed chronic disease-related products as well as nafamostat mesylate and itopride hydrochloride. To expand export markets, the second plant will be built according to the Good Manufacturing Practice (GMP) standards for pharmaceuticals. 5.3 billion KRW is allocated for purchasing API raw materials.

NuCerin®, a dementia drug candidate developed by Shaperon, is based on inhibiting inflammasome activation. It blocks inflammasome activation at both the initiation and amplification stages. NuCerin strongly suppresses the production of IL-1β and TNF-α by microglia, which are considered major causes of Alzheimer's dementia, thereby alleviating neuroinflammation from the early stages of the disease. Additionally, it enhances phagocytosis to reduce dementia-inducing factors. If it enters Phase 1 clinical trials in the first half of this year, it will be the fastest among global inflammasome inhibitor developers to reach clinical stages for dementia indications.

The remaining 19.4 billion KRW will be used as facility funds for investment in facilities and equipment to produce secondary battery electronic materials. Kukjeon Pharm is developing high-efficiency electrolyte additives for electric vehicle batteries. Through product synthesis and process development of electrolyte additives, the company aims to secure core technology and establish a foundation to become a key player in the battery materials market. The company provided new types of multifunctional additives to secondary battery-related customers and conducted electrochemical tests. The primary evaluation by customers confirmed that the additives suppress gas generation compared to existing additives. The company has set a roadmap to complete the factory construction in 2023 by developing mass production technology.

Hong Jong-ho, the largest shareholder of Kukjeon Pharm, holds 54.51% (21.01 million shares) of the shares. Including shares held by related parties, the friendly shareholder ratio reaches 80.77%. Hong plans to participate in the subscription through the proceeds from selling subscription warrants. Based on the expected ex-rights price, Hong's subscription participation rate is estimated at 11.1%. After the rights offering, the largest shareholder's stake will decrease to 44.93%.

The issue price of the new shares to be issued through the rights offering will be finalized on June 7. The new shares are scheduled to be listed on July 1.

Previously, Kukjeon Pharm merged with Daishin Balance No.6 SPAC in December last year to list on the KOSDAQ market. Through the merger, it raised 9.6 billion KRW, of which 7.1 billion KRW was used for facility funds and raw material purchases.