D&D Pharmatech Decides to Issue Convertible Bonds Worth 226.5 Billion Won

D&D Pharmatech, a company specializing in the development of new drugs in the GLP-1 (glucagon-like peptide-1) class, announced on April 15 that its board of directors held a meeting and resolved to issue convertible bonds worth 226.5 billion won through a third-party allocation. This fundraising exceeded the originally planned amount amid keen industry interest, reaffirming the market’s trust in the company’s technology and growth potential.

The funds raised through this convertible bond will primarily be allocated to cover the remaining clinical development costs for DD01, a MASH (Metabolic Dysfunction-Associated Steatohepatitis) treatment, which is about to complete a 48-week biopsy in Phase 2 clinical trials. The capital will also be used for U.S. Phase 1 and 2 clinical trials of TLY012, a next-generation core pipeline fibrosis treatment. In addition, the proceeds will support the development of follow-up pipelines based on the company’s oral peptide platform ORALINK, as well as operating funds for the South Korea headquarters and its wholly-owned U.S. subsidiary, Neuraly Inc.

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The coupon rate and maturity yield of the convertible bonds to be issued have both been set at 0% after negotiations with investors. The conversion price to common stock was determined to be 77,736 won, calculated based on the closing price on the day before the board resolution. The total issuance amount represents 6.65% of the market capitalization as of the day prior to the board resolution. As the conversion of these bonds into common stock will be restricted for one year from the issuance date, the impact on the company’s short-term share circulation will be limited.

This issuance was led by DS Investment Partners, a firm with a strong track record in bio-investment, which invested a total of 74.5 billion won together with its affiliates. The U.S.-based global asset manager Weiss Asset Management followed with a 50 billion won investment. Domestic asset management companies arranged by Korea Investment & Securities collectively invested 60 billion won, with Korea Investment & Securities itself committing an additional 6 billion won. Furthermore, 10 billion won worth of convertible bonds were subscribed by a bio-health private equity fund co-managed by Daily Partners and NH Investment & Securities, both recognized for their bio-investment expertise.

Additionally, Tybourne Capital Management (HK) Ltd., an overseas private equity firm that participated in the perpetual convertible bond issuance ahead of the announcement of the 12-week primary endpoint of DD01 Phase 2 clinical trial in June last year, and domestic Lofty Rock Investment executed further investments of 16 billion won and 10 billion won, respectively, once again validating their confidence in the company’s future value. Notably, foreign investors Weiss Asset Management and Tybourne Capital together accounted for about 30% of the total capital raised, demonstrating the high level of global investor interest in D&D Pharmatech and its growing international profile.

This CB issuance was completed as D&D Pharmatech is about to announce the results of the 48-week biopsy for its core pipeline, the DD01 MASH treatment in Phase 2 clinical trials. In particular, the inclusion of a one-year lock-up period restricting resale and conversion into common stock for the entire amount acquired by investors is interpreted as reflecting strong investor expectations for the upcoming clinical results and the company’s potential for technology transfer.

The funds raised will be primarily allocated to the U.S. clinical development and follow-up R&D of TLY012, a first-in-class fibrosis treatment that has already received Investigational New Drug (IND) approval from the U.S. Food and Drug Administration (FDA). The company has selected TLY012 as its next core growth driver following DD01 and is aiming to initiate first-in-human (FIH) clinical trials for liver fibrosis as early as the beginning of next year. Additionally, the proceeds will be used for the discovery of new pipelines utilizing the ORALINK platform, the development of next-generation obesity treatments, and as operating funds for both the Korean and U.S. entities.

Seulgi Lee, CEO of D&D Pharmatech, commented, "Despite the unstable macroeconomic environment and high market volatility, we were able to raise a substantial amount of capital that exceeded our original target, reflecting strong investor expectations for our technology and the potential success of DD01 as a MASH treatment." She added, "Based on the positive Phase 2 clinical results for DD01 expected at the end of May, we will do our utmost to deliver meaningful achievements in the global market."

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