[비즈한국] Anxiety is growing among shareholders of HLB028300. The US approval of the highly anticipated combination therapy of the liver cancer drug Rivoceranib and Camrelizumab remains indefinite, and there are concerns that the company's already thin cash reserves will be further strained by the exercise of put options (early repayment claims) on convertible bonds (CBs). While some are suspicious that the company might reach out to shareholders under the pretext of continuing new drug R&D, the company has urged shareholders to trust them, stating there is no need for concern.
According to industry sources on the 14th, put options were recently exercised for 36.65 billion won, or 61.08%, of the 60 billion won worth of 38th series CBs issued by HLB in March last year. HLB must pay approximately 38.37 billion won, including early repayment premiums and contractual interest, to the bondholders who exercised their put options by September 8th. Given that HLB held 132 billion won in current assets as of the first quarter, including 60.6 billion won in cash and cash equivalents on a consolidated basis, it appears there will be no significant issue in paying the amount requested by the bondholders.
Nevertheless, the market remains skeptical of HLB’s financial liquidity. With the company's consolidated current liabilities reaching 197.8 billion won as of the first quarter, including 130.3 billion won in short-term borrowings, there are fears that the current put option exercise could impact R&D efforts, which require 40 billion won annually. Some shareholders worry that HLB might carry out a large-scale capital increase, issue new CBs at a lower value, or sell off affiliates to secure long-term funding.
HLB has previously conducted capital increases targeting shareholders to secure large-scale funds. In December 2022, the company raised 241 billion won through a rights offering to shareholders to support R&D for its US-based new drug development subsidiaries, Elevar Therapeutics and Immunomic Therapeutics. Its subsidiary, HLB Life Science067630, also conducted a 73.2 billion won rights offering in June 2024 for debt repayment and operating funds.
HLB has made it clear that it does not intend to place a burden on shareholders. Through its official blog, the company sought to calm shareholders, stating, "We have sufficiently prepared the funds and measures to ensure that ongoing businesses can continue regardless of the put option repayment," and adding, "There will be no slowdown in new drug development due to liquidity issues, as we plan to apply for New Drug Application (NDA) for the cholangiocarcinoma treatment Lirafugratinib as early as the end of this year or at the latest by January next year."
An HLB official also emphasized, "We have conducted various simulations to prepare for the exercise of put options, reviewed multiple possibilities, and prepared countermeasures such as securing necessary funds. While I cannot disclose specific measures as they are non-public information, there will be no capital increase targeting shareholders."
HLB is currently preparing for the US Food and Drug Administration (FDA) NDA process for the combination therapy of Rivoceranib and Camrelizumab. Last May and this past March, the company received consecutive Complete Response Letters (CRL) from the FDA, citing the need for supplementary CMC (Chemistry, Manufacturing, and Controls) for the Camrelizumab production facilities of its partner, Hengrui Pharma, which delayed the US launch. In a Type A meeting with the FDA held last July, there were no major disagreements, and the company announced its plan to proceed with the re-application for product approval once Hengrui Pharma completes the data supplementation.
Additionally, the company aims for domestic approval of Rivoceranib as a treatment for adenoid cystic carcinoma and the US launch of Lirafugratinib. The phase 2 clinical trials for Rivoceranib as an adenoid cystic carcinoma treatment have already been completed in Korea and the US, with efficacy results presented at venues such as the American Society of Clinical Oncology (ASCO). Lirafugratinib has also completed the recruitment of 490 patients required for its US phase 2 clinical trial, entering the stage of preparing documentation for the FDA NDA process.