Bio merger called off as shareholders flee

A key bio sector merger collapsed as too many shareholders opted for a cash payoff.

Genexine, a leading biotechnology firm in Korea, said in a regulatory filing Tuesday that its merger with ToolGen, a local biopharmaceutical company known for its gene editing technology, has been canceled.

The merged unit was to be renamed ToolGenexine and focus on developing CAR-T drugs. CAR-T is a form of immunotherapy designed to fight cancer using specially altered T cells - a part of the immune system.

While Genexine specializes in the commercialization of innovative immunotherapeutics and next generation novel long-acting gene therapy, Toolgen is focused on gene editing technology based on the Crispr system.

Genexine signed an agreement with Konex-listed ToolGen in June this year. But ahead of the merger, the number of shareholders interested in cashing out increased, largely due to the low demand for biotech shares.

In the June agreement, Genexine set a limit on payments to these shareholders at 130 billion won. ToolGen set the amount at 50 billion won. But the payment amount reached 350 billion won for Genexine and 120 billion won for ToolGen.

“Even though both companies worked hard, the local stock market trembled from the ongoing dispute between the United States and China, export restriction from Japan and major catastrophic events to the local bio industry,” ToolGen CEO Kim Jong-moon said in a statement.

“As a result, the merger bill went above our pre-set payment limit, which made us cancel the plan.”

Genexine said it will continue working with ToolGen.

BY KO JUN-TAE [ko.juntae@joongang.co.kr]