[Reporter Reading Securities Report] "GI Innovation to Raise 80 Billion KRW for R&D via Rights Offering... Major Shareholder Participates Only Half"

"Most of the 80 Billion Won Capital Increase Proceeds to Be Used for Clinical Trials and R&D"
"President Jang Myeongho Participated in Only Half of His Allotted Capital Increase Shares"
Shareholding Expected to Decrease from 6.76% to 6.07%

GI Innovation is conducting a large-scale paid-in capital increase worth 80 billion KRW. Most of the funds raised will be spent on research and development (R&D) to focus on new drug development. However, Jang Myung-ho, the largest shareholder and Chief Strategy Officer (CSO) of new drug development, plans to participate in only half of the allocated shares in this capital increase. Since the current largest shareholder's stake is 6.7%, a decline in the shareholding ratio is inevitable.

According to the Financial Supervisory Service's electronic disclosure system on the 24th, GI Innovation plans to proceed with the paid-in capital increase through a rights offering followed by a general public offering of unsubscribed shares. The company will issue 11,644,800 shares at 6,870 KRW per share, raising a total of approximately 79.99977 billion KRW.

GI Innovation was established in 2017. It is a bio-venture company conducting R&D on next-generation immune therapeutics based on bispecific fusion proteins. At the core of its business is the innovative drug platform 'GI-SMART™.' This is a highly efficient screening system that enables early discovery of optimal bispecific fusion protein candidates and is considered GI Innovation's core technology. Since its establishment, the company has signed technology transfer agreements for three new drug candidate substances and one joint research and development contract.

The company plans to use most of the funds raised for new drug development. Specifically, 24.6 billion KRW will be used for clinical trial costs of GI-101, GI-102, and GI-108. GI-101 and GI-102 are vesicles that induce strong immune cell proliferation and activation within tumors through immune cell and tumor targeting, promoting cancer cell death. GI-108 is regarded as a next-generation metabolic immune anticancer agent and has been selected for the National New Drug Development Project's preclinical support task.

Additionally, GI Innovation aims to introduce or conduct preclinical studies for a total of three projects from the second quarter of next year through the first quarter of 2027. It will allocate 26.6 billion KRW for preclinical research related to the development of these new candidate substances. Furthermore, 14.1 billion KRW will be invested in related labor costs. The company also plans to spend 14.6 billion KRW on office staff labor costs.

The company's goal for this capital increase is clear: to accelerate R&D on the substances under development and proceed with technology transfers. Hong Jun-ho, CEO of GI Innovation, stated, "As clinical data for GI-101A and GI-102 accumulate, we are negotiating technology transfers with global pharmaceutical companies," adding, "GI-301, currently being developed by Yuhan Corporation, is also expected to be transferred early next year." He further noted, "Securing stable operating funds will enhance our negotiating power for technology transfers with global pharmaceutical companies."

A concerning aspect is the dilution of the largest shareholder's stake. Currently, Jang Myung-ho, the largest shareholder and Chief Strategy Officer (CSO) of new drug development at GI Innovation, holds 6.76%. Mr. Jang plans to subscribe to 50% of the shares allocated to him in this capital increase. The company explained in its securities report, "After the paid-in capital increase, the largest shareholder's stake is expected to decrease by 0.69 percentage points to 6.07%."