Crystal Genomics said that it has acquired Hwail Pharmaceutical as its subsidiary after obtaining additional shares through a third-party allotment.
A third-party allotment is a method of offering shares in a joint-stock company under which the board of directors determines the parties to whom the newly authorized shares will be allotted.
Under the method, Crystal will acquire about 2.28 million new shares by participating in the rights offering of Hwail Pharmaceuticals, raising its stake in the company from 22 percent to about 35 percent.
The total amount of new shares acquired is about 17 billion won ($14.5 million), and the payment is due on Dec. 26. After Crystal Genomics completes the process, Hwail, which was a related company until now, will be incorporated as a subsidiary of Crystal Genomics.
The acquisition comes after Crystal Genomics established Crystal Bioscience on Nov. 11 and announced that it is conducting an in-depth review of new biotech companies in the U.S., Europe and China for global cooperation.
Realizing its limits in growing additional pipelines and mergers and acquisitions (M&A) due to limited human resources and infrastructure, however, the company said it would to seek to maximize the value of its affiliates through strategic cooperation.
According to Crystal Genomics, Hwail Pharmaceutical is Korea's leading pharmaceutical company specializing in producing and distributing raw medicines with more than 40 years of experience and know-how for finished drugs and health functional raw materials. The company owns a research institute and three factories.
Crystal Genomics plans to introduce new projects and M&As of Hwail with the acquisition fee.
"Crystal Genomics is the only bioventure company with the experience of developing, licensing, producing and selling new drugs through the successful development of Acelex, the nation's 22nd novel drug treating degenerative arthritis," Crystal Genomics CEO Cho Myung-joong said. "Therefore, the company knows that the experience and know-how of all processes from clinical development, licensing, production, and sales are very important."
The company has already cut down the cost of producing Acelex's raw materials by combining Crystal's innovative new drug candidate development technology and Hwail Pharmaceutical's rich infrastructure, and mass production know-how of raw material pharmaceuticals, he added.
Cho stressed that the company plans to maximize the corporate value of the two companies by synergistically collaborating for new drug and biobetter development while conducting additional M&As.