S.Korean biotech GI Innovation's IPO draws tepid market interest

South Korean biotech GI Innovation Inc. is slated to debut on the local public market at less than half of its pre-IPO investment value, facing lukewarm investor interest as the collapse of Silicon Valley Bank (SVB) is shaking financial market confidence globally.

GI Innovation, focusing on immuno-oncology drug development, said on Monday its bookbuilding process for domestic and overseas institutional investors on March 15-16 was oversubscribed 26.7 times.

Some 66% of the 563 institutional investors placed bids at prices below the indicative range of 16,000-21,000 won ($12.2-$16) in the bookbuilding. Only 2.5% of the investors signed up for a lock-up period after the IPO.

The bio venture and lead managers have set the final offer price of 13,000 won, around 19% less than the lower price band of the indicative range. Accordingly, they will raise 26 billion won via the IPO, lower than the initially planned 32 billion-42 billion won, aiming for a market cap of 286.1 billion won, less than the previous target of 352.1 billion-462.1 billion won.

The bio venture was viewed as undervalued with a 352.1 billion-462.1 billion won valuation in January, when it kicked off the IPO procedure. Institutional investors were positive about the IPO at the beginning of this year as the stock market was active with small- and mid-sized public offerings. 

The collapse of SVB and Credit Suisse’s banking crisis have rapidly increased global risk aversion, deteriorating investor sentiment in bio IPOs, characterized as providing high risks and returns.

“The recent events, high rates and woes over economic slowdown altogether impacted market sentiment. We will have a clear picture of the IPO market when other bio ventures proceed with listings, after the SVB-triggered turmoil enters a calm phase,” an investment banking source said. 

“Many biotechs will accelerate their listing process aimed at listing in the half of this year as we can’t remain optimistic about the fast recovery of the IPO market,” said another source.

Among the upcoming IPOs is S.Biomedics Co., a stem cell therapy developer which dropped its listing plan in 2020.

It has postponed its bookbuilding for institutional investors from March 8-9 to March 28-29 with a revised report on its equities. The indicative price range is 16,000 won-18,000 won, with the market cap expected to reach 176 billion won-198 billion won.

Other bio ventures in the IPO process include Pharos iBio Co., an artificial intelligence-powered rare diseases drug developer, and Quratis Inc., a vaccine developer. The two companies have passed the preliminary prospectus screening for listing and are preparing for the next steps.

Ensol Biosciences Inc., a new drug developer for musculoskeletal diseases and oncology, and Curiox Biosystems Co., a biomedical equipment maker, are awaiting the result of the preliminary prospectus screening.

Write to Seok-Cheol Choi at dolsoi@hankyung.com

Jihyun Kim edited this article.