이 기사는 2019년 12월 11일 08:00 thebell 에 표출된 기사입니다.

The 2019 is the first year that the Korea Exchange (KRX) opened the door of secondary Kosdaq market to foreign biotech companies, revising Kosdaq listing requirements. Foreign biotech companies who have prepared to be listed on the Korean market are expected to rush into the market from next year.

◇ KRX allows foreign companies to use the technology exception rule

The KRX began to allow foreign companies to benefit from the technology exception rule to go public on the secondary Kosdaq market as of July 1, on the condition that they undergo stricter reviews on technological competitiveness.

The KRX revised the policy as foreign biotech companies who are willing to be listed on the Kosdaq market have increased continuously. These companies chose to go public on the Korean market, tempted by the Kosdaq bio sector’s strong valuations. Before the revision, foreign biotech companies had to go public through other special tracks, such as ‘Tesla standard.’

U.S.-based Psomagen is likely to be the first overseas biotech company to be listed on the secondary bourse Kosdaq under the technology exception policy. Through the Kosdaq listing, Psomagen aims to broaden its share in the direct-to-consumer (DTC) genetic testing and microbiome market. The firm submitted a preliminary review application to the KRX last month and is waiting for the approval.

Foreign biotech firms are queuing up to list on the Kosdaq bourse after Psomagen. NeoImmuneTech (U.S.), Prestige Biopharma (Singapore), Avelliono Lab (U.S.) and Contera Pharma (Denmark) will follow suit. They all hired domestic securities firms as lead managers for their IPO and are working to be listed under the technology exception rule. The IPO of NeoImmuneTech and Prestige Biopharma are expected to be around one trillion won in size.

◇ Foreign companies’ IPOs are considered a half success

Most of foreign biotech companies that plan to be listed on the Kosdaq market are related to South Korea directly or indirectly. Psomagen is a U.S. subsidiary of Kosdaq-listed Macrogen. NeoImmuneTech is co-developing Hyleukin-7 with Korean company Genexine. Singapore-based Prestige Biopharma’s owner and key developers are Koreans.

Considering such IPOs are not done by ‘pure’ foreign companies, their listings on the Kosdaq are considered a half success. However, if their listings on the Kosdaq using the technology exception rule hit the jackpot, pure foreign biotech firms may shift eyes toward the Kosdaq market.

Up until now, Cognate BioServices and PeproMene Bio are two of the very few pure foreign firms that have signed contracts with domestic brokerages for their IPOs. But there is room for the Kosdaq bourse to become the main pillar in the global biotech market, depending on future IPO results.

Accordingly, securities firms’ investment banking (IB) divisions are recently focusing on foreign biotech firms that have little connection with Korea. Domestic companies that have built their networks with foreign affiliates are now approaching actively to pure foreign biotech companies. Those who are in charge of biotech firms’ IPOs visited overseas markets very often this year.

Their main targets are foreign biotech companies that domestic venture capital firms have already invested in. Despite no direct connection with Korea, the foreign biotech companies have high understanding of Korean capital markets.

◇ The KRX raised technological hurdles

The KRX began to allow foreign companies to use the technology exception rule on the condition that they undergo stricter reviews on technological competitiveness. Foreign firms must receive 'A' rating from all two rating agencies designated by the KRX. Korean companies must receive ‘A’ and higher than ‘BBB’ rating from two rating agencies designated by the KRX. It is burdensome that receiving a good rating in the technology assessment is getting more difficult lately.

Despite higher hurdles, foreign biotech firms are expected to keep tapping the Kosdaq market. Lower listing expenses and the higher premiums are among the other attractions of the Kosdaq market.


(By reporter Yang Jung-woo)