[Exclusive] ShillaJen Extends Lock-up on Financial Investment Funds... Alleviating Concerns Over Massive Sell-off

400 Billion KRW Investment in 'New ShillaJen Investment Association No.1' Last September
Recent Members' Meeting Decides to Extend Lock-up Period
Payment Method Changed to 20-30% In-Kind Installments
Resumption of Trading to Be Decided by KOSDAQ Market Committee on 12th

[Asia Economy Reporter Lee Gwan-joo] It has been reported that the lock-up period for the 40 billion KRW financial investment (FI) funds injected last year for Shinilajen’s management normalization has been extended. With the Korea Exchange KOSDAQ Market Committee review scheduled for next week, this is interpreted as reflecting expectations for the resumption of trading.

According to the pharmaceutical and bio industry on the 6th, Shinilajen’s financial investor, ‘New Shinilajen Investment Association No. 1,’ recently extended the lock-up period for the 40 billion KRW invested in September last year through a general meeting of members. This association currently holds a 12.15% stake in Shinilajen, making it the second-largest shareholder. The initial lock-up period was set for one year, with the maturity date scheduled for the 9th of last month. There were concerns that if the extension was not made, a flood of shares would be released before the resumption of trading was confirmed, negatively impacting the stock price. This issue has now been resolved.

Shinilajen had attracted this investment not only from the largest shareholder M2N’s 60 billion KRW investment but also for aggressive investments such as introducing new substances. As the lock-up maturity approached, the investment association was requested to extend the period beyond the expected trading resumption date and to change the payment method to a divided in-kind payment method, which prevents bulk selling. After careful consideration, the investment association held a general meeting and abruptly accepted these demands. The newly established method is reported to involve dividing and paying 20-30% of the scheduled shares several times until next year. The detailed schedule for the payment timing has not been disclosed.

The background for the investment association’s acceptance of the lock-up extension and payment method change is analyzed to be due to growing expectations for the resumption of trading following Shinilajen’s successive positive developments. Shinilajen recently introduced the anticancer drug candidate ‘BAL0891’ from the Swiss pharmaceutical company Basilea and completed the patent application for ‘SJ-600,’ regarded as a next-generation pipeline. Unlike the past, which relied on the largest individual shareholder, the presence of a parent company and affiliates with financial mobilization capabilities seems to have contributed to investment stability.

Within the industry, accepting the condition of divided in-kind payments is considered unprecedented. If bulk selling is impossible, investors have no choice but to control the volume of shares sold due to concerns about stock price decline. An industry insider said, “In the case of divided in-kind payments, investors will strive to control the volume of shares sold to maintain the stock price to realize greater profits,” adding, “This can have a positive effect on the stock price.” Regarding this, a Shinilajen official said, “It is difficult to provide detailed explanations as it is the association’s decision,” but added, “We have been notified by the association that the lock-up period has been changed until next year by applying the divided payment method.”

Meanwhile, the Korea Exchange will hold the KOSDAQ Market Committee on the 12th of this month to evaluate Shinilajen’s implementation of its management improvement plan over the past six months. The decision on whether to resume trading of Shinilajen will be made through this review.