Medifron said Friday that it would increase its capital by issuing new stocks worth 10 billion won ($8.8 million) to boost its presence as a new drug developer by investing in research and development.

According to the securities report submitted by the company, Medifron 메디프론 will use the money raised by the new shares issuance on R&D, from 2018 to 2020.

The company plans to use the funding in clinical trials for the treatment of dementia, preclinical trials for two non-narcotic analgesic drugs, production of the early diagnosis kit for dementia and excavating new drug candidates for dementia and analgesic.

“Although we have been able to eliminate the risks of the new drug development process and secure our technology, we could not attain as many results as we wanted due to the limitations of collaborative research,” said Kim Young-ho 김영호, CEO of Medifron.

As shown in the company's semiannual results, the IT distribution division is playing the role of a cash cow for the company, Kim said.

Also, the establishment of the National Dementia Research and Development Committee and the creation of a favorable environment for the company, such as the U.S. FDA regulation for narcotic analgesic, made the company believe the conditions are ripe to take the risk and execute the investment, he added.

A total of 2.86 million shares will be issued (10.7 percent in capital ratio increase), and after old shareholders subscribe to buy the new shares on Dec. 13, the payment is due on Dec. 21.

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