Yuhan Subsidiary Immun'Oncé Stock Plunges 20% After Surprise Rights Offering

Immun'Oncé, a drug development subsidiary of Yuhan Corporation (000100.KS), saw its stock price plunge after announcing a rights offering exceeding 20% of total outstanding shares. Rights offerings are typically viewed as negative news in the market because they dilute existing shareholders' stakes. Pharmaceutical development companies often conduct such offerings to secure operating funds, as bringing drugs to regulatory approval requires substantial costs and time.

According to NexTrade on January 6, Immun'Oncé (443060.KQ) closed at 8,160 won, down 18.73% from the previous trading day. The stock was still at 9,700 won at the regular market close of 3:30 p.m., but plunged after the large-scale rights offering was disclosed. The current after-market price of 8,160 won represents a 49.3% decline from its 52-week high of 16,110 won recorded on December 12 last year.

According to the filing, Immun'Oncé plans to raise 120 billion won ($88 million) through a rights offering with a subsequent public offering of unsubscribed shares. The 16.83 million new shares to be issued represent 22.7% of the current 74.165 million outstanding shares. As this inevitably leads to significant dilution, many investors appear to have sold at lower prices after the regular market close. Immun'Oncé plans to use all proceeds from the rights offering as operating funds.

Biopharmaceutical companies developing new drugs often resort to rights offerings for funding, given the substantial time and costs required for product commercialization. In September last year, biotech firm GemVax announced a 248.6 billion won rights offering, after which its stock declined for an extended period. Other companies including Bukwang Pharmaceutical, NeoImmuneTech, Kangstem Biotech, and Shaperon also conducted rights offerings last year, resulting in stock price weakness. Immun'Oncé listed on KOSDAQ through the special technology listing system last year and conducted this rights offering just 10 months after its debut.

"If the investment secured through rights offerings is used to develop future growth drivers, it could have a positive impact on stock prices in the mid-to-long term as fundamentals improve," a securities industry official said. "However, if the purpose is short-term fundraising, stock weakness may continue, so frequent rights offerings do not appear desirable."