Stocks are plummeting as cash-strapped biotechs continue to raise capital.
On the 23rd, CJ Bioscience closed at 27,650 won, down 9.79%. The company announced a capital increase of 65 billion won, or 36 percent of its market capitalization, the day before. Clinomics, which announced a capital increase worth 45 billion won on the 19th, also dropped 5% on the day after plunging 18.27% on the 22nd.
Jinwon Life Sciences (capital increase of 81.8 billion won) and LNK Bio (36.6 스포츠토토billion won) also saw their stock prices plummet after announcing capital increases this month. Selvas Healthcare announced a capital increase worth 34.1 billion won on March 10, and its stock price plunged for seven consecutive trading days until March 18.
The reason why biotech companies are raising capital is that they are facing funding difficulties due to high interest rates and the economic downturn, while drug development results have been delayed. With the exception of Selvas Healthcare, all of these companies posted operating losses last year. The purpose of the capital increase is mostly to finance operations and repay debt.
CJ Bioscience, Clinomics, and Jinwon Life Sciences will use the new investment mainly for working capital. CJ Bioscience said, “The capital increase is a step toward achieving our goal of developing new drugs for the microbiome.” “The capital increase will significantly improve our financial position,” said Clinomics.