Genexine: "U.S. Subsidiary Undergoing Intensive Restructuring for Early Normalization"

Genexine announced on November 28 that the recent production halt and litigation issues involving its U.S. subsidiary VGXI are part of a process to address accumulated deficits caused by the previous management’s lax operations, and that the company is implementing emergency management measures to improve its fundamentals.

According to the company, Genexine’s U.S. CDMO (Contract Development and Manufacturing Organization) subsidiary temporarily suspended operations at its Texas plant and carried out workforce reductions due to liquidity issues. Foreign media have reported that the company is facing financial difficulties, including lawsuits filed by some suppliers over unpaid invoices.

A Genexine representative stated, “The current cash flow problems and operational disruptions are the result of aggressive facility investments and lax organizational management carried out by the previous management without regard for market conditions. The temporary suspension of plant operations and workforce adjustments, which took effect on October 15, were unavoidable measures to prevent further losses and to streamline the cost structure.”

The representative added, “To overcome this crisis, we have designated the current situation as an ‘emergency management’ phase and have initiated rigorous restructuring. We are currently eliminating all unnecessary expenditures and reorganizing the workforce, which previously numbered 107, to focus on 47 core personnel and essential facilities as part of a drastic overhaul.” The representative further noted, “Sales activities to secure new orders and essential maintenance for plant operations are continuing.”

This restructuring had been anticipated, as Genexine has been posting annual losses amounting to tens of billions of won. The appointment of new management in August led to a comprehensive restructuring of the company’s overall business structure.

Regarding the lawsuits over unpaid invoices, the company explained, “The supplier in question was actually responsible for delays in delivery. We are preparing a counterclaim for damages, and the two parties have differing positions on the matter.”

Through these emergency management measures, Genexine aims to restore VGXI’s financial soundness and resume production lines that were temporarily halted by December. As VGXI passed the FDA’s GMP regulatory inspection in May, its technical capabilities have already been verified, and the company expects that it can quickly return to normal operations once management efficiency is achieved.

In addition, the company is preparing to raise funds through a rights offering worth 10 billion won, which it expects will improve liquidity. It is also reported that negotiations are underway to sell part of the plant to global pharmaceutical companies both domestically and internationally.

A Genexine representative said, “We sincerely apologize to our shareholders and investors for causing concern. The current management is taking responsibility for resolving the crisis caused by the previous management’s mistakes. We will use this restructuring as a turning point to become a stronger and more sustainable biotechnology company.”

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