KainosMed Utilizes Foreign Currency Through US Subsidiary... Reduces Expenditure Funds by 15-20%

Reducing Expenses Due to Exchange Rate Increase Helps Company Operations
Efficient Progress Possible for KM-819 Multisystem Atrophy Treatment Phase 2 Clinical Trial in Korea

[Asia Economy Reporter Kwangho Lee] Kainosmed, a new drug company for brain disease treatment, announced on the 11th that it has decided to secure a $3 million (4.2309 billion KRW) foreign currency short-term loan from its U.S. subsidiary FAScinate and will use it for foreign currency payments related to clinical trial costs for multiple system atrophy.

According to the semi-annual report disclosed by Kainosmed, the cash on hand, combining demand deposits and time deposits, amounts to 13.4 billion KRW in cash equivalents. The subsidiary FAScinate holds 16.4 billion KRW independently. Additionally, through a shareholder-allocated paid-in capital increase on the 16th of last month, it secured 26.3 billion KRW in funds and fully repaid 17 billion KRW in debt.

Although the Q3 financial statements have not yet been finalized, it is expected that the consolidated cash equivalents, including the subsidiary’s cash, will be around 36.6 billion KRW.

A Kainosmed official explained, “New drug developers considering global market entry are proceeding by contracting with overseas manufacturers or overseas CRO companies to meet the new drug development guidelines and standards of advanced countries. The costs incurred at this time are paid in foreign currency, and in the era of the strong dollar reaching up to 1,450 KRW, expenses have increased by 15-20%. Therefore, the purpose is to reduce excessive spending to help company operations.”

He added, “Since the cost of the U.S. Phase 2 clinical trial is paid directly by FAScinate, there is no burden from exchange rate fluctuations. However, for the Korean Phase 2 clinical trial CRO costs, which the company must pay, it was decided to utilize the foreign currency held by the subsidiary with sufficient funds to minimize expenditure. As a result, the multiple system atrophy clinical trial conducted in Korea can proceed efficiently without the burden of cost increases due to exchange rates.”

Kainosmed is advancing a U.S. Phase 2 clinical trial for Parkinson’s treatment and a Korean Phase 2 clinical trial for multiple system atrophy (MSA) treatment with the new drug substance KM-819.