Earnings Lift Osteonic; CHA Vaccine Up 13% [K-bio pulse]

[Kim Jinsoo, Edaily Reporter] On May 15, Osteonic drew market attention in the pharmaceutical and biotech industry by announcing remarkable earnings. Meanwhile, CHA Vaccine Institute saw its stock price rise on expectations for future growth following its acquisition by Ssolux. ToolGen, on the other hand, plummeted to the daily lower limit after announcing a 70 billion won paid-in capital increase following the close of the regular session.



◇Osteonic’s earnings growth leads to 5% rise

According to KG Zeroin's MP Doctor (formerly Market Point), Osteonic shares surged more than 10% during intraday trading to reach 6,350 won. However, the gains narrowed, and the stock closed at 6,030 won, up 5.24%.

The stock's upward momentum is attributed to significant growth in sales and profitability, indicating that its business initiatives are now yielding tangible financial results.

On May 14, Osteonic disclosed its consolidated first-quarter earnings, reporting 12.9 billion won in sales, 2.3 billion won in operating profit and 2.7 billion won in net profit. Sales increased 35.4% year-over-year, while operating profit and net profit jumped 55.7% and 248.4%, respectively.

The growth was largely driven by the sports medicine division, which posted 5.6 billion won in sales in the first quarter, more than doubling from the same period last year. Specifically, domestic sales grew by 18%, while exports skyrocketed by 729%.

In 2020, Osteonic signed an exclusive global supply agreement for its sports medicine products with Zimmer Biomet, the world's second-largest orthopedic medical device company. Full-scale supply to the U.S. market commenced in May last year.

An Osteonic official stated that the expansion of U.S. exports drove the earnings growth. "It is particularly meaningful that we achieved sales and operating profit comparable to the fourth quarter, which typically records the highest annual performance, despite the first quarter being a traditional off-season," the official said.

CHA Vaccine Institute's stock Trend. (KG Zeroin's MP Doctor)

◇CHA Vaccine Institute up 13% on future growth expectations

CHA Vaccine Institute's stock price soared up to 25.34% to 4,650 won during intraday trading compared to the previous day's close. It later pared some gains to close at 4,195 won, up 13.07%. The surge is largely linked to Ssolux, which recently acquired the institute's management rights.

In March, the market paid close attention when CHA Biotech transferred CHA Vaccine Institute's management rights to Ssolux, a lighting specialized company. Beyond a simple equity acquisition, Ssolux is executing a strategy to strengthen its existing lighting business and secure a new growth engine by leveraging synergies between CHA Vaccine Institute and AriBio.

Notably, CHA Vaccine Institute announced a plan to issue convertible bonds (CB) worth approximately 4 billion won on the same day. While CB issuance is generally considered a negative factor due to concerns over equity dilution, the market viewed the move positively. For the newly acquired institute, the fundraising was interpreted as securing capital for future growth to fund clinical trials for its new drug pipeline and build synergy with AriBio.



◇ToolGen hits daily limit down on Nextrade following massive capital increase

ToolGen shares plunged 22.97% to 96,600 won during the regular session and further plummeted 29.97% in the ensuing Nextrade (NXT) after hours market. This steep drop is attributed to the company's disclosure of a 70 billion won paid-in capital increase after the regular market closed.

ToolGen disclosed on May 15 that it decided to carry out a paid-in capital increase of 70.08 billion won. Through this offering, 8,997,629 common shares will be issued at an expected price of 90,200 won per share. The payment date is set for Aug. 11 and the new shares are scheduled to be listed on Aug. 24.

The capital increase will be conducted through a shareholder allocation followed by a public offering of forfeited shares. This method allocates new shares to existing shareholders first, and any unsubscribed shares are then offered to general investors.

ToolGen announced plans to use the entire proceeds for operational funds, emphasizing in a statement that the capital increase is a "strategic decision." The company explained that the patent landscape for CRISPR gene editing technology is shifting, and the move is intended to secure a strategic advantage.

Specifically, the prolonged patent interference proceeding over the CRISPR-Cas9 technology between the Broad Institute and CVC has concluded. The focus has now narrowed to a direct showdown between ToolGen and the Broad Institute to determine the true owner of the gene-editing technology, making financial resources essential. The company also judged that securing these funds will be advantageous for future technology export contracts.

"As the interference proceeding has resumed sooner than initially expected, we need to preemptively inject the necessary resources to minimize market uncertainty and bring the dispute to an early end," ToolGen stated. "To gain a technological edge in fierce negotiations with global companies based on our unrivaled patent portfolio, we must demonstrate unshakeable financial resilience in any situation. This capital increase will be instrumental in that regard."

Regarding the capital increase ratio, ToolGen added, "This is a highly conservative ratio set to minimize the dilution of shareholder value. We ask for your understanding as this represents our sincere effort to reduce the burden on shareholders by requesting only strictly necessary funds."