Aprogen completes 20 billion won CB issuance funded by affiliates, securing capital for new biotech businesses

Aprogen has completed a private placement of convertible bonds (CBs) worth 20 billion won. According to the Electronic Disclosure System (DART) on the 23rd, payment for the 35th series of registered, unsecured private placement convertible bonds was completed that day. The entire issue was acquired by three affiliates, rather than outside investors: Entutec took 10 billion won, Aptochrome 7 billion won and Aprogen Pharma 3 billion won. All proceeds are slated to go toward a third-party allotment of new shares in subsidiary Aprogen Biologics.

Financing structure strengthens control through cross-investment among affiliates

Under the detailed terms of the CBs, the conversion price is 2,396 won per share. If all the bonds are converted, approximately 8,347,245 new shares will be issued, equivalent to 24.55% of the total shares outstanding. The coupon rate is 0%, the maturity yield is 4%, and the maturity date is Sept. 11, 2031. The issuance was approved at an initial board meeting on the 3rd, and the company filed related disclosures in sequence on Sept. 3, 11 and 21.

Notably, the large-scale financing was carried out solely through transfers of funds among affiliates, without outside capital. The structure secured funds for new growth drivers while addressing concerns about dilution of existing shareholders’ stakes. Domestic financial investment industry sources described the transaction as “a sophisticated financial strategy to secure funding for new businesses while maintaining control close to 85% without an infusion of outside capital.”

Following the CB issuance and the affiliates’ acquisition, the combined stake held by largest shareholder Gbase and 11 specially related parties rose 0.90 percentage points, from 84.08% to 84.98%. Their total holdings amount to 97,413,334 shares, further consolidating management control.

Building a global supply chain hub around the Osong CDMO plant

The 20 billion won flowing to Aprogen Biologics is expected to be used immediately as key funding for mergers and acquisitions (M&A) to acquire control of other companies, including Benotienal, and for business expansion. Aprogen, described as Korea’s “first biotech unicorn,” plans to use the funds to maximize the capabilities of its hybrid CDMO (contract development and manufacturing organization) plant in Osong, North Chungcheong Province. The Osong plant is a facility equipped with the world’s only 2,000-liter perfusion technology. It is emerging as an alternative hub amid a global supply chain realignment in which the United States and Western countries seek to reduce their reliance on specific countries, including China, for biopharmaceuticals.

The timeline for global commercialization is also expected to gain momentum. In the first half of this year, Aprogen achieved the unusual outcome of receiving waivers from Phase 3 clinical trials for its Herceptin biosimilar AP063 from the U.S. Food and Drug Administration (FDA) and the European Medicines Agency (EMA). With the financing expected to facilitate expansion of commercial production infrastructure, applications for marketing authorization in the U.S. and European markets, global licensing agreements and large-scale CDMO contracts with overseas pharmaceutical companies are expected to move forward in earnest.