[Reporter Reading Securities Report] Excel Therapeutics Going Public... "Concern Over Dilution of Major Shareholder Stake"

Major Shareholder's Stake Decreases from 18% to 15% After IPO
Most IPO Funds Invested in R&D... Accelerating Badge Development

Excel Therapeutics, a specialized company in culture media for cell gene therapy (CGT), has submitted a securities registration statement and entered the KOSDAQ public offering process. The company plans to invest most of the raised funds into research and development (R&D) to produce various media. However, the reduction of the largest shareholder's stake to the mid-15% range after listing is a concern.

Excel Therapeutics develops and manufactures media, an essential material in the advanced biopharmaceutical industry. It was established in September 2015. Media serves as nutrients necessary for cell growth.

Excel Therapeutics developed the world's first GMP-grade chemically defined serum-free media for stem cells. They established the XPorT (Xcell's Platform; optimized media recipe for Therapeutics), a cell-customized media development platform technology.

Based on this, they launched chemically defined media dedicated to mesenchymal stem cells (MSC), dermal papilla cells (DPC), keratinocytes, and exosomes. Currently, they are expanding their pipeline to include media for natural killer (NK) cells and T cells.

The total number of shares offered by Excel Therapeutics is 1,618,000. The desired offering price per share ranges from 6,200 to 7,700 KRW. Through this offering, they aim to raise approximately 10 to 12.5 billion KRW. Daishin Securities is the lead underwriter.

The desired offering price was calculated using the price-earnings ratio (PER). Comparable companies selected were BioFDNC and Caregen, whose last year’s PERs were 21.04 and 28.97 times, respectively, averaging 25.01 times. Since Excel Therapeutics is currently operating at a loss, future earnings projections were used. However, the impact of the Pado incident still seems to linger, as the estimated income statement includes a note stating it was prepared based on a 'neutral sales scenario.'

In any case, Daishin Securities and Excel Therapeutics forecast this year’s estimated sales at 3.519 billion KRW and an operating loss of 5.96 billion KRW. The turnaround to profitability is expected in 2026, with projected sales of 11.866 billion KRW and operating profit of 542 million KRW. Conversely, under a conservative scenario, sales are expected to be 2.8 billion KRW this year and 8.58 billion KRW in 2026.

Based on the 2026 projected performance, the underwriter and Excel Therapeutics calculated a per-share valuation of 10,000 KRW. Applying a discount rate of 23?38%, they proposed the desired offering price. However, this discount rate is relatively low compared to the average of companies recently listed via special cases. Since 2022, companies listed through the KOSDAQ technology special listing system have had average discount rates ranging from 27.39% to 40.14%.

The largest portion of the funds raised at the lower end of the offering price will be used for R&D. A total of 4 billion KRW will be spent to commercialize new products such as media dedicated to natural killer (NK) cells and T cells. Additionally, 2.5 billion KRW will be invested in commercialization funds to enhance sales. The remaining funds will mainly be invested in facility maintenance, process improvements, and factory equipment.

The significant dilution of the largest shareholder’s stake after listing is a concerning issue. Currently, the largest shareholder, CEO Lee Ui-il, holds 18.75%, which is relatively low. After the offering, this will decrease to 15.88%.

Through the securities registration statement, the company explained, "It is judged that the stake held on a sole ownership basis is somewhat low," and added, "CEO Lee Ui-il, the largest shareholder, plans to comply with the KOSDAQ market listing regulations by undertaking a mandatory holding period of one year plus a voluntary holding period of two years, totaling three years."