[Exclusive] Genome&Company Pursues Acquisition of US CMO Worth 100 Billion KRW... Full-Scale Microbiome Market Entry

Hantupa Pursues Acquisition After Additional Investment from DSC Investment and Others
Establishing a Foothold to Aggressively Target the Next-Generation Microbiome Market

[Asia Economy Reporter Minwoo Lee] Genome & Company is planning to acquire a contract manufacturing organization (CMO) factory in the United States with an investment of approximately 100 billion KRW. Through this, the company aims to establish a foundation for large-scale production of microbiome products and launch a full-scale market attack.

According to the investment banking (IB) industry on the 7th, Genome & Company, which develops microbiome-based pharmaceuticals and cosmetics, is pursuing the acquisition of a CMO factory in the U.S. through its American subsidiary. This plan is intended to establish a foundation for large-scale production of microbiome-utilizing products. The acquisition fund is estimated to be between 100 billion and 120 billion KRW. An IB industry official explained, "There are only about 10 to 20 companies worldwide capable of large-scale microbiome production," adding, "Once the acquisition is completed, with full-scale expansion, the company will be able to take a leading position in the microbiome market."

The microbiome is a term that collectively refers to various microorganisms such as bacteria and viruses residing in the human body. As it is known that over 90% of diseases are related to the gut microbiome, it is regarded as the next-generation growth engine in the fields of cosmetics, health foods, and pharmaceuticals. According to market research firm Frost & Sullivan, the global microbiome market size is expected to grow from $81.1 billion (approximately 94 trillion KRW) in 2019 at an average annual growth rate of 7.6% to reach $108.7 billion by 2023. Interest in this sector is increasing to the extent that in July, CJ CheilJedang and Amicogen acquired domestic microbiome specialist companies, Cheonlab and Bifido, respectively.

Due to this growth potential, Korea Investment Partners and DSC Investment, which invested in Genome & Company from the early stages, plan to each invest an additional approximately 10 billion KRW for the acquisition of the U.S. CMO factory. It is reported that internal discussions regarding the investment feasibility were held last week. Previously, Korea Investment Partners invested a total of 4 billion KRW starting from the end of 2016, one year after Genome & Company was established. DSC Investment also invested about 4 billion KRW from the early stages. While many financial investors (FIs) who invested in Genome & Company during its transition from the KONEX market to the KOSDAQ market have sought to recover their funds, these two firms have made another 'bet' as long-term partners of Genome & Company. Genome & Company plans to raise acquisition funds by attracting additional investments along with its own capital.

If this acquisition is successful, Genome & Company’s scale could grow significantly at once. Last year, the company acquired the U.S. company Scioto Biosciences and secured the microbiome-based autism treatment candidate substance ‘SB-121,’ which is currently in Phase 1 clinical trials in the U.S. This means the company is prepared to proceed with large-scale production immediately after passing clinical trials. An industry official said, "Investor interest is surging regarding Genome & Company’s acquisition of the CMO factory," adding, "If a mass production system is established, the company’s performance scale could be greatly increased."

Meanwhile, at a pharmaceutical bio forum hosted by a media company held on the same day, Genome & Company CEO Jisoo Bae stated, "There will be no equity dilution through the company’s rights offering."