South Korea’s institutional investors such as KB Insurance Co. and KDB Capital joined hands with Korean private equity fund Medivate Partners to invest 13 billion won ($11 million) in biotechnology company Sillajen Inc. with 1 trillion won in market capitalization in the over-the-counter market.

According to the investment banking industry on Friday, Medivate Partners raised 13 billion won from six to seven local institutional investors, including KB Insurance Co. and KDB Capital Corp., as well as private investors, for fund to invest in convertible bonds (CB) issued by the biotechnology company. Medivate Partners is a private equity fund established in 2014 by Kim Hyun-kook who worked for Posco Bio Venture Fund and Novartis Venture Fund. The private equity fund invested 21 billion won in U.S.-based biotechnology company WCCT Global in May last year.

Convertible bonds generally give holders the rights to change bonds into shares at agreed upon prices, but the Shillajen CB that Medivate Partners invested allows its holders to readjust the price according to the change in the stock price. If the initial public offering (IPO) price of Shillajen shares is set at the level lower than the over-the-counter market price, its CB holders will be able to convert the bonds into the company’s shares at the IPO price. If its share price further declines after the IPO, the CB investors will be also given a right to convert at a price that is 70 percent of the offering price. Sillajen plans to list itself on the Korea’s secondary Kosdaq market in August and NH Investment & Securities Co. is its underwriter.

Established in 2006, Sillajen is a biotechnology firm that specializes in oncolytic virus immunotherapy, Pexa-Vec developed for liver cancer treatment is in a global Phase 3 clinical trial after it obtained approval from the U.S. Food and Drug Administration (FDA). If Pexa-Vec passes the Phase 3 trial, ShillaJen’s market capitalization would jump to 4 trillion won from the current value of 1 trillion won, said market observers. As for now, Nexavar, developed by Germany’s Bayer, is the only available treatment of liver cancer.

By Song Gwang-sup

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]