Kolon Pharma plans Oct. 1 new-drug development split

Kolon Pharma plans to spin off its new-drug development business into a separate research company on Oct. 1, retaining pharmaceutical manufacturing and sales in the existing entity.

Kolon Pharma described the move as a business restructuring that will place its existing operations and new-drug development work in distinct legal entities rather than keep both within the same company. The new entity will be Tionex Bio, while Kolon Pharma will remain the surviving company.

Kolon Pharma's main business will remain pharmaceutical manufacturing and sales. Tionex Bio's main business will be pharmaceutical research and development.

The new-drug development unit being transferred has net assets with a book value of 38.9 billion won ($27.5 million). That value applies to the operation moving to Tionex Bio rather than the manufacturing and sales business Kolon Pharma will retain.

The plan assigns a split ratio of 0.46 to Kolon Pharma and 0.54 to Tionex Bio in the planned transaction. It also includes a 54.4 percent capital reduction. Sept. 30 is the record date for allocating new shares in Tionex Bio.

A shareholder meeting is included as part of the proposed division's timetable. The business split is scheduled for Oct. 1, and registration of Tionex Bio is planned for Oct. 2.

After the split, the surviving Kolon Pharma entity, which will retain manufacturing and sales, is set to have capital of 5.59 billion won ($3.95 million). The newly established Tionex Bio entity, which will focus on pharmaceutical research and development, will have capital of 6.66 billion won ($4.7 million).