Clinomics, Capital Increase Reduced from 35 Billion KRW to 27 Billion KRW... "Only Debt Repayment"

Excluding Facility Investment and Operating Funds... All Allocated to CB Repayment
1st CB Conversion Price Set at Twice the Current Stock Price

The issuance price of new shares by Cliniomics has significantly decreased, causing disruptions in the use of funds. Initially, the company planned to raise 44.6 billion KRW to use as operating funds for convertible bond (CB) repayment, facility investment, and early cancer diagnosis projects. However, with the fundraising amount shrinking to 27 billion KRW, the original plan has been changed to allocate all funds solely for debt repayment.

According to the Financial Supervisory Service's electronic disclosure system, Cliniomics is raising 27.612 billion KRW through a rights offering followed by a general public offering of forfeited shares. This is a 38.11% decrease compared to the 44.616 billion KRW initially planned when the capital increase was first resolved on May 19. The issuance price per new share also dropped from 5,720 KRW to 3,540 KRW. Subscription for existing shareholders will be conducted from the 1st to the 2nd of the coming month.

Cliniomics is an early diagnosis and big data platform company formed in 2018 by the merger of Cliniomics, a liquid biopsy specialist, and Zeromics, a genome analysis specialist, to integrate technologies. The company operates core businesses including next-generation multi-omics based products and services beyond the first-generation genome, as well as cancer diagnosis and screening based on liquid biopsy.

The company’s main products include ▲ multi-omics product lines that analyze medical, clinical information, and lifestyle data as big data to predict diseases and physical characteristics ▲ liquid biopsy product lines that build cancer-related early diagnosis, companion diagnostics, and monitoring solutions using a non-invasive high-speed liquid biopsy platform.

When the capital increase was first decided, Cliniomics planned to invest 1.8 billion KRW in subsidiary facility investments and expansion of manufacturing and quality control standards (GMP) facilities, and to use 12.816 billion KRW for early cancer diagnosis business and health functional food operations. Additionally, 30 billion KRW was planned for repayment of the first CB.

However, after the capital increase decision, the stock price continued to fall, reducing the amount of funds that could be raised compared to the original plan. Ultimately, the company decided to forgo facility and operating funds and use the entire 27.6 billion KRW solely for debt repayment.

The reason the company is abandoning other areas and allocating funds only to debt repayment is that it is difficult to repay the CB on its own. Cliniomics recorded sales of 55.4 billion KRW and operating profit of 23 billion KRW in 2021. However, within a year, sales dropped to 23.1 billion KRW, nearly half, and the company turned to a loss with an operating loss of 10.8 billion KRW. In the first quarter of this year, sales were 4.5 billion KRW with an operating loss of 3.7 billion KRW.

The financial structure is also deteriorating. Cliniomics’ debt ratio, which was 9.62% in 2020, rose to 106.83% in the first quarter of this year, and during the same period, reliance on borrowings jumped from 1.87% to 42.55%. Furthermore, cash and cash equivalents shrank from 16.8 billion KRW in 2021 to 8 billion KRW in the first quarter of this year.

The debt Cliniomics must repay is the first CB. In July 2021, the company issued a 30 billion KRW first CB for clinical costs, overseas market expansion, and operating funds. The conversion price at issuance was 15,629 KRW but has fallen to 10,912 KRW, reaching the minimum adjusted price. However, since the current stock price (closing price on July 31 was 4,890 KRW) is well below the conversion price, CB investors are in a position where requesting repayment is more advantageous than converting to shares.

The company also explained in its securities registration statement, "Since the market price of the stock is below the conversion price, early redemption requests for the outstanding CB balance are expected to occur."

This content was produced with the assistance of AI translation services.