Will the Korean Version of Wegovy, an Obesity Treatment Drug, Emerge?... IPO Third-Time Applicant Passes First Hurdle [Securities Registration Statement Reading Reporter]

Passed KOSDAQ Preliminary Screening After Third Attempt
Profit Turnaround Expected in 2026
Achievement of Technology Transfer Is the 'Key'

D&D Pharmatech is making a third attempt to list on the KOSDAQ. As a bio company, D&D Pharmatech is developing an oral obesity treatment. This treatment has a similar main ingredient to the obesity drug 'Wegovy.' It suggests that a Korean version of Wegovy could emerge. Through this listing, D&D Pharmatech plans to raise funds for clinical trials and research and development (R&D).

D&D Pharmatech's Third Challenge on KOSDAQ

Recently, D&D Pharmatech submitted a securities registration statement and started the KOSDAQ public offering process. They are offering 1.1 million new shares. Founded in 2014, D&D Pharmatech specializes in developing chronic disease treatments using glucagon-like peptide-1 (GLP-1) based peptides. They are developing multiple GLP-1 based new drugs, including △oral obesity treatments △injectable NASH treatments △degenerative brain disease treatments.

GLP-1 is a type of hormone secreted in the small intestine during food intake. It functions to increase insulin synthesis and release, suppress glucagon secretion, and delay digestive absorption processes. Obesity treatments developed by overseas companies such as Eli Lilly and Novo Nordisk also belong to the GLP-1 class.

This is D&D Pharmatech's third attempt to list on the KOSDAQ. After passing the technology evaluation in 2020, they applied for preliminary listing review at the Korea Exchange but were not approved. They reapplied in 2021 but ultimately failed again. The first failure was due to insufficient technology transfer and management stability, and the second was influenced by difficulties in proving the efficacy of the pipeline under development.

The difference in this third attempt lies in business viability. A company representative explained, "In the past, obesity and brain disease treatments were the focus, but brain disease had a higher proportion. This time, the brain disease part was completely excluded from the corporate evaluation, and since actual results were achieved in the obesity sector, it seems approval was granted."

In April last year, D&D Pharmatech signed a technology transfer agreement for oral diabetes and obesity treatments with the U.S. company Metsera. The contract included an upfront payment of 13 billion KRW and a total contract value of 550 billion KRW.

Conservatively Estimated Future Performance... Actual Results Remain a Challenge

D&D Pharmatech's desired public offering price is between 22,000 and 26,000 KRW per share. The market capitalization after listing is expected to be between 229.5 billion and 271.2 billion KRW. Although there were past projections of reaching 1 trillion KRW, this is interpreted as a result of the market's lowered evaluation of biotech and changes in D&D Pharmatech's situation.

The lead underwriter, Korea Investment & Securities, used the price-to-earnings ratio (PER) method to set the offering price. They selected four comparable companies: Chong Kun Dang, JW Pharmaceutical, Ilyang Pharmaceutical, and HK Innoen. The average PER of these companies is 31.47%. Based on this, D&D Pharmatech's per-share valuation was 48,640 KRW, and the enterprise value was 536.496 billion KRW. Applying a discount rate of 46.55% to 54.77%, they arrived at the desired offering price.

Korea Investment & Securities used estimated net income for 2026 to set the offering price. Since D&D Pharmatech is a loss-making company, future performance estimates had to be used. The underwriter projected that D&D Pharmatech would continue to incur losses until 2025 and turn profitable in 2026. Based on technology transfers and milestones, they expected sales of 59.994 billion KRW and operating profit of 33.556 billion KRW. Net income was estimated at 33.297 billion KRW.

The non-alcoholic steatohepatitis (NASH) treatment 'DD01' is the core of the performance. In 2026 alone, sales of 37.435 billion KRW are expected, accounting for 62.39% of total sales. However, Korea Investment & Securities took a conservative stance on 'DD01.' This is interpreted as being mindful of controversies over inflated performance by technology-special listing companies. The securities registration statement explains, "DD01 plans technology transfer after Phase 2 clinical trials. Although the upfront payment ratio for substances completing Phase 2 is 19%, for conservative estimation, the upfront payment ratio was set at half that figure, 9.5%."

Even though the underwriter made conservative estimates, whether D&D Pharmatech can actually achieve these results remains uncertain. Due to the nature of the biotech business, various variables such as clinical trial failures or delays in technology transfer can arise at any time. The company also stated in the securities registration statement, "New drug development is a representative high-risk, high-return, long-term investment business with a very low probability of success in final commercialization despite long periods and huge investments." They added, "Although the basis for estimating net income by item is considered reasonable, uncertainties remain regarding the success of clinical trials and commercialization of key pipelines and the stable increase of sales."

D&D Pharmatech's public offering size is between 24.2 billion and 28.6 billion KRW. Most of the funds will be used for clinical trials and R&D. 15.6 billion KRW will be invested in the Phase 2 clinical trial of 'DD01,' and 6.2 billion KRW will be spent on the Phase 1 clinical trial of the fibrosis candidate substance 'TLY012.'

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