South Korea’s JW Pharmaceutical Corp. is expected to raise as much as 120 billion won ($106.7 million) to cover the cost of drug development and improve its financial health.

According to investment bank sources on Friday, JW Holdings, JW Pharmaceutical’s holding company, is considering issuing 80 billion won worth of exchangeable bonds that will be exchanged with JW Pharmaceutical shares it holds. At the same time, JW Pharmaceutical is said to be reviewing to raise 120 billion won by issuing redeemable convertible preference shares (RCPS), and of the total amount, 80 billion won will be covered by JW Holdings’ EB sale and the remaining 40 billion will be raised from external investors. RCPS holders can claim for payment on maturity or exercise the rights to convert them into the seller’s common shares.

Mirae Asset Daewoo Co. is said to be leading the sale, and KDB Capital and other hedge funds are reportedly mulling participation.

JW Holdings and JW Pharmaceutical plan to use the proceeds for the development of several investigational drugs. JW Pharmaceutical, which has focused on oncology drugs, is due to announce phase I study results of CWP291, the company’s investigational targeted drug to treat acute myeloid leukemia, around September. Depending on the results, the company will consider a license deal with a foreign pharmaceutical company.

In addition, a phase II trial of URC102, an investigational gout drug, is underway at four large hospitals, including Seoul National University Hospital.

The financing plan also aims to improve the company’s financial health, according to sources. With the proceeds, JW Pharmaceutical’s debt ratio will fall to below 100 percent from 170.7 percent at the end of March, and its financial costs should be reduced. The company currently pays interest of more than 14 billion won a year on bank loans and bonds.

By Kang Doo-soon and Jeon Kyung-woon

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