[Reading Securities Registration Statements] Oreum Therapeutics Lowers Valuation and Reattempts IPO

Maximum Discount Rate Raised from 57% to 72%
IPO Market Uncertainty as a Risk Factor

New drug development company Orum Therapeutics is lowering its valuation and reattempting an initial public offering (IPO). It is making a market-friendly reattempt by reducing the previously hoped offering price by about 20%. The concerning factor is that the public offering market has not yet recovered. Most companies that went public in December last year failed to maintain their initial upward trend and have continued to see their stock prices decline.

Orum Therapeutics was established in 2016. It possesses antibody-degrading drug conjugate (DAC) technology that combines targeted protein degradation (TPD) technology with antibody-drug conjugates (ADC). DAC is gaining attention as a next-generation modality (therapeutic approach) that selectively delivers targeted protein degraders (TPD) to target cells via antibodies and degrades target proteins within the cells.

Orum Therapeutics is aiming to enter the KOSDAQ through a special technology growth exception. However, unlike other companies using the technology exception, it has secured a relatively stable financial structure.

The reason is its success in technology exports. In October 2023, it signed a technology transfer agreement with global pharmaceutical company BMS for the chronic myelomonocytic leukemia drug candidate 'ORM-6151'. Additionally, in July 2024, it signed a platform usage option technology transfer agreement with Vertex Pharmaceuticals. Due to such technology exports, as of the third quarter of last year, it recorded a current ratio of 2203.09% and a debt ratio of 22.25%.

As mentioned earlier, Orum Therapeutics conducted institutional investor demand forecasting in November last year. However, due to the IPO market downturn and weak demand, it withdrew its listing plan on the 29th of the same month.

The change this time is that it lowered the hoped offering price and reduced the amount to be raised. The previous hoped offering price was 30,000 to 36,000 KRW, but this time it is about 20% lower at 24,000 to 30,000 KRW.

The reason is that a larger discount rate was applied. When the initial securities registration statement was submitted, the per-share valuation was 69,595 KRW, but this time it is 86,388 KRW, which is higher than before.

However, a higher discount rate of 65.27% to 72.22% was applied compared to the previous 48.27% to 56.89%. Because a larger discount rate was applied, the hoped offering price was lowered despite the higher per-share valuation.

Also, the number of shares offered was reduced from 3 million to 2.5 million. As a result, the amount to be raised decreased from 90 billion KRW to 60 billion KRW based on the lower end of the offering price. Orum Therapeutics plans to use 16.4 billion KRW of the raised funds for operating expenses and 40.8 billion KRW for other purposes.

Most of the funds allocated to other purposes will be used for research and development (R&D). It will invest 30.1 billion KRW in substances such as the breast cancer treatment 'ORM-5029', small cell lung cancer treatment 'ORM-1023', and blood cancer treatment 'ORM-1153', and the remaining 10.7 billion KRW will be spent on reagents, materials, and outsourced experiments.

However, the fact that the public offering market is still in a downturn remains a risk factor. In December last year, companies such as Vect, MNC Solution, Oncocross, Oncogenic Therapeutics, Duchem Bio, Three A Logics, and Fine Medix went public. However, most of them saw their stock prices fall compared to the closing price on the first day, and some are trading below their offering price.