[Reporter Reading Prospectus] '50% Discount Rate'... Will 'Selbion' with a Friendly IPO Price Succeed?

Maximum Discount Rate of 51% Applied to Valuation Amount
Prostate Cancer Treatment 'Lu-177-DGUL' Also Lowers rNPV

Selbion, a company specializing in the development of new radioactive pharmaceuticals, has submitted its securities registration statement and officially embarked on the initial public offering (IPO) process for listing on KOSDAQ. When selecting the desired offering price, Selbion applied a discount rate of up to 51% on the per-share valuation. This appears to reflect the technology special case and the uncertainties associated with biotech companies.

According to the financial investment industry on the 22nd, Selbion, established in 2010, operates in the development of radioactive pharmaceutical therapeutics and diagnostics, as well as the production of radioactive pharmaceuticals. Through its Seoul headquarters equipped with a Good Manufacturing Practice (GMP) pharmaceutical manufacturing facility and its Bundang research center, the company has established a systematic new drug development and production system.

The new drugs under development are theranostic radioactive pharmaceuticals targeting prostate-specific membrane antigen (PSMA) for prostate cancer, utilizing the prostate cancer therapeutic 'Lu-177-DGUL' and the diagnostic agent 'Ga-68-NGUL.' The therapeutic 'Lu-177-DGUL' is currently in Phase 2 clinical trials domestically, with patient recruitment completed.

'Lu-177-DGUL' was selected as a clinical-stage new drug project by the Korea Drug Development Fund (KDDF). Notably, it was designated as an orphan drug in the development stage by the Ministry of Food and Drug Safety in 2021 and as a Global Innovative Fast Track (GIFT) product in 2023. The company aims to launch the drug domestically next year through conditional approval after completing Phase 2 clinical trials.

Selbion's desired offering price ranges from 10,000 to 12,200 KRW per share. Reviewing the process of determining the offering price confirms a conservative evaluation.

Since the company is listing under the technology growth enterprise special case and has yet to generate earnings, the lead underwriter, Daishin Securities, used projected earnings for 2026 and 2027. The expected sales and operating profit for 2026 are 38.891 billion KRW and 18.123 billion KRW, respectively. Net income is projected at 14.158 billion KRW. For 2027, these figures are 65.53 billion KRW and 37.268 billion KRW, with net income at 29.091 billion KRW.

Most of the revenue is expected to come from Lu-177-DGUL. The company anticipates that the therapeutic will complete Phase 2 clinical trials in the first half of 2025 and obtain conditional approval in the fourth quarter. Accordingly, sales from Lu-177-DGUL are expected to be 3.321 billion KRW in 2025, 37.179 billion KRW in 2026, and 42.93 billion KRW in 2027.

Additionally, in 2027, the company expects to receive a contract payment of 20.8 billion KRW from successful technology transfer of Lu-177-DGUL. Notably, the risk-adjusted net present value (rNPV) of Lu-177-DGUL was initially 479 million USD but was conservatively adjusted down to 400 million USD. The rNPV is a method of discounting the value of somewhat risky future assets to their present value and is used to measure the valuation of biotech new drug companies.

The price-to-earnings ratio (PER) was used to determine the offering price, with comparable companies including Hanmi Pharmaceutical, Yuhan Corporation, Boryung, JW Pharmaceutical, CMG Pharmaceutical, and HK Inno.N. Their average PER was 25.57. Based on this, the per-share valuation was 20,449 KRW.

Selbion and the lead underwriter Daishin Securities applied a discount rate of 40.50% to 51.00%. This exceeds the average discount rate of 27.00% to 39.87% for new KOSDAQ technology evaluation track listings since 2022.

Selbion plans to offer 1,911,000 shares, raising approximately 19.11 billion KRW at the lower end of the offering price. Of the funds secured, 12.598 billion KRW will be used for research and development (R&D), including the completion of Phase 2 and Phase 3 clinical trials for Lu-177-DGUL. The remaining 5.996 billion KRW will be allocated for operating expenses such as personnel costs.