US biotechs line up to list in Korea amid jump in share prices

[SEOUL] US biotech firms are queuing up to list in South Korea, tempted by the promise of strong valuations amid a welcoming base of investors.

At least four such companies are seeking listings in the Asian country, according to NH Investment & Securities Co. and Eugene Investment & Securities Co. That's a significant number given that there are currently only 20 overseas firms listed in South Korea, according to data compiled by Bloomberg.

One of the four is Avellino Labs, which provides testing for genetic ophthalmologic disorders. The company, which was founded in South Korea but relocated to Silicon Valley, was attracted by the idea of a homecoming because it considers investors in Korea to be more likely to have a positive view of biotechnology stocks.

"I feel Korean investors have stronger trust in biotech firms than those in other countries and that's the only reason why I decided to list my company despite so many factors that discount Korea markets," Gene Lee, chairman of Avellino, said in an interview during a visit to Seoul. Avellino plans to list on the Kosdaq electronic market as early as this year.

PeproMene Bio Inc., an Irvine-based firm that develops novel immune-oncology therapies, seeks to raise about US$100 million by listing shares on Kosdaq between 2020 and 2021, the firm said in an emailed statement. Genosco Inc., a Massachusetts-based company working on small-molecule drugs, plans to list on Kosdaq in 2020, its Korean parent company Oscotec Inc. said. Cognate BioServices Inc., based in Tennessee, also plans a Kosdaq listing, according to arranger Eugene Investment.

US firms are opting to list on the Kosdaq as they believe they can get higher premiums than they would on the Nasdaq Composite Index, said Kim Jong Kon, head of the equity capital markets group at NH Investment. The MSCI Korea Health Care Index is trading at over 60 times estimated earnings, compared with 16 times for the MSCI USA Health Care Index.

More relaxed listing rules, lower listing expenses and the Korean government's support for startups are among the other attractions of the US$200 billion Kosdaq market. Some 57 companies have applied for listings on the Kosdaq as of the end of May, up about 40 per cent from a year earlier, said Yi Bu-yeon, an official at Korea Exchange. Retail investors account for about 80 per cent of trading on the electronic market by value.

Shares of newly listed firms in South Korea have jumped 26.4 per cent over the past year, helped largely by gains in Kosdaq-listed biotech issues. That compares with returns of 22.1 per cent for companies listing in the US and 12.5 per cent globally over the same period, according to data compiled by Bloomberg.

Among recent local biotech listings on the Kosdaq, shares of drug development firm ABLBio Inc. have jumped 114 per cent since their debut in December. Cellivery Therapeutics Inc., a drugmaker working on a cure for Parkinson's disease, has also more than doubled since listing in November. Medical information provider ezCaretech Co. has climbed 94 per cent since going public in March.

"Honestly, I had never considered listing shares on Kosdaq until I witnessed the high valuations of some health-care firms," Avellino's Mr Lee said.

BLOOMBERG