[비즈한국] Vivozon Pharmaceutical082800 is facing controversy for prioritizing the repayment of debt to its parent company, despite a 30% reduction in the funds raised through a paid-in capital increase due to a decline in its stock price. Concerns are rising that the liquidity crisis will worsen, as the funds allocated for actual company operations have been slashed by more than half.
According to the Financial Supervisory Service's Data Analysis, Retrieval and Transfer System (DART) on the 14th, Vivozon Pharmaceutical announced that the initial offering price for the new shares in its paid-in capital increase for shareholders, scheduled for February 23–24, is 3,295 KRW per share. As the offering price dropped 30% from the originally planned 4,710 KRW, the total expected amount to be raised also shrank from 50 billion KRW to 35 billion KRW.
The decline in the offering price is a result of the sustained drop in the stock price. Although its non-narcotic analgesic 'Opraju' was approved as the 38th domestically developed new drug on December 12, 2024, to manage moderate to severe acute pain in adults after surgery, it did not receive much market attention, as supply to domestic medical institutions only began on October 30 of last year.
With less capital being raised, Vivozon Pharmaceutical's fund management plan has also gone awry. However, the company stuck to its plan to use 23 billion KRW for debt repayment. This debt includes the 20 billion KRW repayment for the 15th series of bearer, unsecured private convertible bonds issued to its parent company, Vivozon. In its amended investment prospectus, Vivozon Pharmaceutical stated that it has reached an agreement with Vivozon to extend the maturity of the convertible bonds by two years from the 31st and repay them in installments, planning to pay 2.5 billion KRW quarterly starting from the first quarter, following the receipt of the paid-in capital increase funds.
Ultimately, only the operating capital was reduced. Originally allocated 25.8 billion KRW, it has been cut by more than half to 11 billion KRW. Specifically, the amount available for payments to partner companies—such as for raw materials, sales commissions, and outsourcing costs—has decreased significantly.
Vivozon Pharmaceutical, which had approximately 11.5 billion KRW in outstanding payables as of the end of last year, announced that it would only resolve 4.4 billion KRW through this capital increase. This means the remaining 7.1 billion KRW cannot be paid immediately, leading to criticism that the company is shifting its financial burden onto its raw material suppliers.
While the immediate crisis of debt repayment has been averted, Vivozon Pharmaceutical, still lacking funds, maintains that it will cover the shortfall through profits from business operations or additional external fundraising. The company is making efforts to regain market interest, such as by recently signing a joint promotion partner contract with Hanmi Pharmaceutical for Opraju. It also claimed that Opraju is settling into the market quickly, surpassing 2.87 billion KRW in sales within two months of its launch.
However, as of the end of the third quarter of last year, Vivozon Pharmaceutical's consolidated current assets stood at only 33.5 billion KRW. Current inventory assets, such as raw materials and products, account for 18.8 billion KRW of this, while cash and cash equivalents that can be used immediately amount to only 2 billion KRW, and short-term financial instruments are also just 2 billion KRW, indicating a severe liquidity crisis. Furthermore, financial pressure is expected to intensify as the company is estimated to spend 18.6 billion KRW on raw material purchases this year.
Ultimately, the company must bring in money from external sources, but industry experts believe attracting investors will not be easy. According to the Korea Exchange, the foreign ownership ratio of Vivozon Pharmaceutical stock is 0.59%, and the average daily total trading value is around 1 billion to 2 billion KRW. Although it sometimes reaches the 4 billion KRW range, a turnover rate of less than 2% for a company with a market capitalization exceeding 200 billion KRW suggests that it is not easy for institutional investors or foreigners to invest. The industry consensus is that, eventually, the company will have no choice but to turn to shareholders again for another capital increase.
Vivozon Pharmaceutical did not respond to questions regarding additional fundraising plans.