Kolon TissueGene will receive additional funds through a capital increase to be participated in by the Kolon Group and its Chairman Lee Woong-yeol.
According to TissueGene, the company issued a capital increase of about 38.8 billion won ($29.6 million) last Friday. The number of shares issued following the capital increase is 12,984,010 shares and 117,647 other shares, with an issuance price of 48,865 won per share.
Kolon Group will invest about 35 billion won and Chairman Lee about 3.8 billion won.
The recent investment follows a capital increase of about 35.5 billion won, also participated in by Kolon Group and its Chairman Lee in December. At that time, Kolon Group invested 29.1 billion won, and Chairman Lee 6.4 billion won.
A local analyst explained that both capital increases seem to be aimed at continuing its U.S. clinical trial for Invossa-K (TG-C), cell-mediated gene therapy for osteoarthritis, to treat knee osteoporosis and secure operating capital and financial stability.
“It is nearly impossible for Kolon TissueGene to raise funds as the company’s stocks are suspended from trading and face delisting risks from the Kosdaq market,” said Lee Jun-soo, an analyst for Prophet Asset Management, to Korea Biomedical Review. “Therefore, it seems that the company has received urgent funding from Kolon Group and its chairman to carry out its U.S. 3 trial of Invossa-K.”
The KRX granted a one-year grace period for Kolon TissueGene, delaying the decision on whether to delist the company from the Kosdaq market on Sep. 1, 2021.
The company will have to submit a report to the KRX that it had implemented its improvement plan and an expert’s verification of the report within 15 business days from Aug. 31. The KRX will then hold a corporate review committee within 20 business days from the document submission date and assess whether to delist the company regarding former executives’ embezzlement and breach of trust.
Despite the negative outlook, Lee stressed that the company has recently shown some positive signs, such as signing a technology export contract for Invossa with Juniper Biologics, a Singapore-based biopharmaceutical firm.
“Kolon TissueGene managed to license out Invossa again, a positive sign. However, it will take more time to restore investor trust in the company,” Lee said. “Therefore, a successful progress of phase 3 clinical trials in the U.S. is essential as the KRX stressed that it would decide whether to delist the company after observing the progress of the U.S study.”
Lee added that the phase 3 clinical trial results would determine the treatment’s future.