[Reporter Reading Securities Report] Shaperon Raises 35 Billion KRW in 1 Year 6 Months Since Listing... "Major Shareholder Not Participating"

Unexecuted Balance Takeover Contract... "If Many Rights Offerings Occur, Desired Funding Cannot Be Secured"
Performance Forecast and Deviation Rate Increase Due to Technology Transfer Delays... '↑'

Bio company Shaperon is set to raise a large-scale fund of up to 35 billion KRW about one and a half years after its KOSDAQ listing. The company plans to use most of the raised funds for clinical trials. However, investors are expected to have many concerns about the subscription. The existing largest shareholder does not plan to participate in the rights offering. Additionally, the technology export expected last year did not occur, resulting in a significant gap between the initially anticipated performance and the actual sales.

According to the financial investment industry on the 23rd, Shaperon plans to conduct a rights offering through a public subscription. A total of 13,182,000 common shares will be newly issued, with the expected issue price per share set at 2,655 KRW. The company aims to raise a total of 34.99821 billion KRW.

Out of the 34.4 billion KRW, excluding issuance costs, Shaperon plans to allocate 26.8 billion KRW to research and development (R&D). Specifically, 9.8 billion KRW will be used for the Phase 2 clinical trial of Nuegel, an atopic dermatitis treatment, and 500 million KRW for the Phase 1 clinical trial of NuCerin, an Alzheimer's treatment. Additionally, 12.4 billion KRW will be spent on preclinical and Phase 1 clinical trials of Papiliximab, a bispecific nanobody.

Founded in 2008, Shaperon is developing new drugs based on its inflammasome inhibitor platform and nanobody antibody development platform. It holds various pipelines based on inflammasome inhibitor technology. The company was listed on KOSDAQ in October 2020, raising 13.7 billion KRW at that time. The desired public offering price band was 8,200 to 10,200 KRW per share, with plans to raise up to 28 billion KRW. However, the offering price was set at 5,000 KRW, below the lower band, resulting in insufficient capital raised. In a way, this rights offering seems essential for Shaperon.

However, it is uncertain whether Shaperon will be able to secure the desired funds through this rights offering. This rights offering will be conducted via a public subscription. Since public subscriptions target an unspecified number of investors, the possibility of forfeiture is relatively higher. Moreover, the company has not signed an underwriting agreement with the lead manager. If forfeited shares occur, they will be treated as unissued. In other words, the more forfeited shares there are, the less likely the company will raise the desired funds.

Furthermore, the delayed technology transfer is a burden. Shaperon entered KOSDAQ through the technology special case system. As a deficit company, Shaperon presented performance forecasts at the time of listing, but sales did not meet the projections. The 2022 forecast was 4 billion KRW, but actual sales were only 2 billion KRW. Last year, the company expected sales of 17.2 billion KRW but achieved only 2.2 billion KRW.

This was because contracts were not signed for NuSepin, a COVID-19 pneumonia treatment, and Nuegel, which were expected to succeed in technology transfer. The large gap between sales forecasts and actual results itself can be a burden for investors.

It is also concerning that the largest shareholder, CEO Seong Seung-yong, will not participate in this rights offering. Shaperon explained in its securities report, "The largest shareholder is expected not to participate in the public subscription rights offering," adding, "The largest shareholder's stake is expected to decrease from 19.90% to 12.66%, a drop of 7.23 percentage points."