[Market Focus] Kangstem Biotech Drops on Announcement of Large-Scale Paid-In Capital Increase

As of 9:20 a.m. on June 10, Kangstem Biotech was trading at 1,679 won on the KOSDAQ market, down 19.47% from the previous day's closing price. This appears to be due to the announcement of a large-scale paid-in capital increase equivalent to two-thirds of the company's total outstanding shares.

On this day, Kangstem Biotech announced that its board of directors had resolved to carry out a paid-in capital increase worth 49 billion won through a rights offering to existing shareholders, followed by a public offering of forfeited shares. The company plans to invest approximately 20 billion won in domestic and international clinical trials for its knee osteoarthritis treatment, and about 17 billion won in research and development costs for new businesses such as domestic and international regenerative medicine and organoids. The remainder will be used for operating expenses and other purposes.

This paid-in capital increase will result in the issuance of 38 million new common shares, which is approximately 67.8% of the current total outstanding shares. The planned issue price has been set at 1,295 won per share, applying a 25% discount to the reference price. The record date for the allocation of new shares is July 11. Existing shareholders will be able to subscribe for new shares over two days, from August 14 to August 18. The allocation ratio is 0.6779159202 new shares per existing share. If there are any forfeited shares after the rights offering to existing shareholders, a public subscription for the general public will be held on August 20 and 21. Both existing shareholders and general investors who participate in the subscription must pay for their allocated shares by August 25. The new shares from the paid-in capital increase are scheduled to be listed on September 4, after the completion of the public offering of forfeited shares. The lead underwriters are Samsung Securities and NH Investment & Securities.

Kangstem Biotech stated that its largest shareholder, Sejong Co., Ltd., has expressed its intention to subscribe for 100% of its allocated shares. A representative from Sejong said, "We have high expectations for the results of Kangstem Biotech's domestic phase 2a clinical trial for its knee osteoarthritis treatment, and we have strong confidence in the differentiated competitiveness of its globally unique skin organoid technology," adding, "We decided to make a bold investment as we expect the company's corporate value to grow significantly."