'Medipost Raises 120 Billion Won in Capital Increase Just One Year After Securing 140 Billion Won'

Stem Cell Cartistem... Fully Invested in US Phase 3 Clinical Trial
Issued as New Shares Representing 50% of Total Outstanding Stock

Medipost is conducting a paid-in capital increase worth 120 billion KRW to proceed with the Phase 3 clinical trial of Cartistem in the United States. This comes just one year after raising over 140 billion KRW through a change in the largest shareholder last year. Concerns over stock dilution are growing due to the large-scale issuance of new shares.

According to the Financial Supervisory Service's electronic disclosure system on the 27th, Medipost will raise 119,999,999,720 KRW through a rights offering followed by a general public offering of unsubscribed shares. The planned issue price is 9,080 KRW, and a total of 13,215,859 shares are expected to be issued. The scheduled confirmation date is October 6.

Medipost will use all the raised funds to acquire securities of its subsidiary, MEDIPOST America INC. The purpose is to conduct the Phase 3 clinical trial of the stem cell therapy product "Cartistem" in the United States. Specifically, 98,771,000,000 KRW will be invested in the Cartistem Phase 3 clinical trial from 2024 to 2026. Additionally, 14,520,000,000 KRW will be used to secure Korean RWE (Real-World Evidence), and 6,727,000,000 KRW will be allocated for operating expenses.

This large-scale fundraising by Medipost is the second since last year. Last year, the largest shareholder changed to a consortium of domestic private equity firms Skylake Equity Partners (hereafter Skylake) and Crescendo Equity Partners (hereafter Crescendo).

At that time, Skylake and Crescendo invested 140 billion KRW through a third-party allotment funding method. They each invested 70 billion KRW in convertible preferred shares (CPS) and convertible bonds (CB), respectively. In addition, 400,000 old shares held by CEO Yang Yoon-seon were acquired for 20 billion KRW.

However, it is expected to be difficult for Medipost to raise the desired funds. Recently, Crescendo and Skylake exercised their conversion rights on Medipost's CBs. As a result, the total number of shares increased from 20,004,508 shares at the end of last year, including 16,264,194 common shares and 3,740,314 preferred shares, by 4,737,732 common shares to 24,742,240 shares. This represents a 23.68% increase compared to the end of last year.

Moreover, the shares to be issued through this paid-in capital increase are also a burden. The total number of shares to be issued this time is 13,215,859, accounting for 53.41% of the total shares. Existing shareholders inevitably face dilution of stock value due to the large-scale capital increase. This concern is also reflected in the stock market.

On the 26th, Medipost's stock price fell by 4,050 KRW (30%) from the previous trading day to 9,450 KRW, hitting the lower limit. Due to this sharp drop, the stock price fell close to the planned issue price of 9,080 KRW. Especially since the issuance volume exceeds 50% of the total, there is a high possibility of further stock price declines.