Alteogen to absorb biolabs unit in small-scale merger

Alteogen said Tuesday its board approved a small-scale merger under which the company will absorb its subsidiary Alteogen BioLogics, a move aimed at internalising a pipeline and commercial capability now spread across a separate entity.

The two companies plan to sign the merger contract on Wednesday. Under the swap ratio of 1 to 0.1679581, Alteogen will issue a total of 600,477 new shares to shareholders of Alteogen BioLogics when the merger is completed. No new shares will be allotted for the 62.9 percent stake Alteogen already holds in the subsidiary. The merger date is scheduled for Dec. 29.

The subsidiary holds the global Phase 3 completion and European approval of ALT-L9, an Eylea biosimilar sold as Iruxvy and Aizenpy, along with drug sales and marketing operations including Teragaze. It is also developing ALTS-OP01, a candidate treatment for macular degeneration.

"We expect milestones and royalties to continue flowing in through the ALT-B4 business, but we judged it important to secure new growth drivers for the company's future now rather than depend on a single platform," Chief Executive Jeon Tae-yeon said.

A company official said the merger brings in new pipeline assets such as ALTS-OP01 together with the subsidiary's domestic and overseas sales and marketing staff and expertise, cutting the time and burden of building a sales force from scratch when Alteogen commercialises its own developed products. Another official described the deal as a turning point for Alteogen, which has grown on its Hybrozyme platform, to widen its business into developing and commercialising its own products.

Alteogen will combine the subsidiary's global clinical and regulatory experience with its sales and marketing capabilities alongside a production facility investment finalised recently, the company said, to build a business system spanning early research through clinical development, approval, manufacturing and sales.

To review the deal, Alteogen set up a special committee of independent directors and drew on external advisers including legal and financial consultants and a securities underwriter. The committee reviewed the merger's purpose and need, the valuation method and its main assumptions, the impact on the company and all shareholders, and fair treatment among shareholders before recommending the deal.