Huons to absorb Huons Lab for new-drug pipeline

Huons will absorb biopharmaceutical researcher Huons Lab, citing gaps in its new-drug pipeline and pressure on revenue and profitability from drug-pricing reform.

The companies signed the merger agreement on May 18. Huons will issue 3.825 million new shares at an exchange ratio of 0.43; the new shares will carry a 24.2 percent stake. Huons' corporate value was 408 billion won ($285 million). Huons Lab had total equity of negative 1.8 billion won and recorded a net loss of 10.2 billion won in its most recent business year.

Huons, which manufactures and sells prescription and wellness medicines and contract-produces ophthalmic solutions, said it plans to internalize Huons Lab's biopharmaceutical pipeline and technology, combine them with its research and development infrastructure and pursue commercialization. Huons Lab has a platform that uses human-derived hyaluronidase to change drug formulations and a biopharmaceutical pipeline that includes treatments for obesity and metabolic diseases. Research and development costs will rise in the short term following the merger.

Huons said it is pursuing certification as an innovative pharmaceutical company and preferential pricing benefits for generic drugs under the reform.

"With this merger, Huons will gain integrated capabilities ranging from research and development of pharmaceuticals and new biologic drugs through sales," Song Soo-young, Huons' chief executive, said. "This will be a cornerstone for our goal of becoming a global pharmaceutical and biotechnology company. Ultimately, we will strengthen the company's fundamentals and deliver results that maximize shareholder value."