[Click eStock] "Expecting Mid-to-Long-Term Synergy from the Merger of Green Cross LabCell and Green Cross Cell"

[Asia Economy Reporter Ji Yeon-jin] Daishin Securities announced on the 19th that although it is expected to take time to create synergy in the new drug research and development stage regarding the merger of Green Cross LabCell and Green Cross Cell, the merger is positive for the expansion of the contract manufacturing organization (CMO) and contract development and manufacturing organization (CDMO) businesses, thus anticipating mid- to long-term merger synergy.

Researcher Lim Yoon-jin of Daishin Securities stated, "Green Cross LabCell's specimen testing service recorded sales of 68.2 billion KRW last year, accounting for 79% of the total, and it is judged that leveraging this stable cash flow to introduce technology in the CMO/CDMO sector and strengthen competitiveness through M&A is worth expecting."

Earlier, Green Cross LabCell and Green Cross Cell announced their merger through a public disclosure on the 16th. Green Cross LabCell will remain as the surviving company, and Green Cross Cell will be dissolved after the merger. The company name is expected to change to GC Cell Corp.

The merger ratio is 0.4023542 shares of Green Cross LabCell per one share of Green Cross Cell, with a total of 5,102,340 new common shares to be issued. After the shareholders' meeting resolution on September 13, the new shares are scheduled to be listed on November 12.

The two companies plan to leap forward as a global cell therapy developer after the merger. They mentioned the organic combination and utilization of Green Cross LabCell’s cell therapy research and process technology with Green Cross Cell’s manufacturing capabilities. In the immuno-cell therapy field, which both companies are developing, it will be possible to secure pipelines across all areas including T, CAR-T, CAR-CIK,

NK, and CAR-NK. Furthermore, it is expected that Green Cross LabCell will focus its capabilities on expanding research based on its Allogeneic platform and developing products in the form of 'Off-the-Shelf' commercial ready-made products.

It is forecasted that by utilizing Green Cross LabCell’s bioreactor mass culture technology, long-term freezing technology, and Green Cross Cell’s largest domestic cell therapy production facilities and commercial production experience, the business will expand into a one-stop CMO/CDMO service.

Due to COVID-19, mass production of gene therapies such as viral vectors and mRNA vaccines has been accelerated, and cell therapy is a highly technically challenging business involving gene recombination, gene introduction, and cell culture technologies. Cell therapy is still in the early stages of research and clinical trials, and the outsourcing ratio is expected to remain above 50%.

The CDMO market size in the cell therapy field is projected to grow from 540 million USD in 2019 at an average annual growth rate of 36%, reaching 4.68 billion USD by 2026.