This article was published on April 15, 2025, at 4:49 p.m. on the ChosunBiz MoneyMove site.
Genosco, known as the original developer of the global anti-cancer drug 'Lecraza', is once again under review for listing on the Korea Exchange. Although it received a notice of non-approval for listing due to controversy over 'revenue duplication and dual listing' with its parent company Oscotec, it is understood to have set an internal policy for a review by the market committee.
Genosco believes it may be able to overturn the outcome as it received the highest rating (AA) from two specialized institutions during a prior technical evaluation. In particular, it is reported that financial investor MERITZ Securities actively urged Genosco to challenge the review. This is because funds become difficult to recover in the event of a failed listing.
According to the financial investment industry on the 15th, Genosco has decided to undergo a re-evaluation for listing by the market committee of the Korea Exchange. It intends to get approval for listing after being placed on the review list by the market committee, as Genosco decided to contest the non-approval notice from the listing committee delivered on the 11th.
Typically, a company receiving a non-approval notice opts for a withdrawal of evaluation in preparation for a future listing; however, if the withdrawal is postponed, it can receive a re-evaluation by the market committee. The market committee is known to be the superior body of the listing committee of the Korea Exchange.
Genosco is expected to emphasize that it is pursuing a listing on the KOSDAQ through a technical special listing system that is largely unrelated to its revenue structure. This is because the reason the listing committee did not approve Genosco's listing is reportedly due to the so-called dual listing issue, with a revenue structure similar to that of its parent company Oscotec.
Genosco, headquartered in Boston, U.S., has been sharing revenue with Oscotec, its parent company, in Korea during the process of transferring the lung cancer treatment new drug material, Rayzotin, to Yuhan Corporation in 2015. Oscotec accounts for 90% of total revenue, while Genosco accounts for 100% from Rayzotin.
The company believes that there is also a possibility that the market committee will reach a conclusion approving the listing. The purpose of the technical special listing is to support the growth of innovative corporations, and Genosco was the first among biotech companies pursuing this to secure an AA rating from both specialized institutions in the initial technical evaluation, thereby recognizing its technical capabilities.
Most importantly, it has been reported that financial investor MERITZ Securities actively requested the re-evaluation process. MERITZ Securities participated in the approximately 10 billion won Series C funding that Genosco pursued as a pre-IPO (pre-listing capital raise) in 2023, anticipating the recovery of its investment after the listing this year.
Following the Korea Exchange's holding of the listing committee, MERITZ Securities was also present. In fact, it is reported that the Korea Exchange recommended a withdrawal as a method to delay the review. Although this was a consideration not to officially announce a non-approval decision, MERITZ Securities pressured for a continuation rather than a voluntary withdrawal.
The demand from MERITZ Securities to proceed with the listing stems from the point that listing is the most efficient way to generate revenue. In fact, Genosco and MERITZ Securities are said to have hoped for a valuation of 600 billion won after the listing, which is about three times the corporate value set during the Series C funding in 2023.
The case of Aprilbio, a developer of antibody drugs entering the KOSDAQ market, is also seen as a factor encouraging Genosco's request for a re-evaluation by the market committee. Aprilbio was listed on the KOSDAQ after going through a re-evaluation by the market committee despite non-approval by the listing committee after applying for preliminary review in November 2022.
However, the market does not expect a high likelihood of Genosco accepting the approval from the market committee. This is because Genosco is facing shareholder backlash in addition to the controversy over dual listing. Minor shareholders of Oscotec filed a lawsuit for damages, claiming that Genosco's listing would harm shareholder value.
It has been reported that Genosco is also keeping the possibility of listing on the U.S. NASDAQ open if the final listing in the KOSDAQ fails. Indeed, former Oscotec CEO Kim Jeong-geun appeared at a corporate presentation related to Genosco in November and said, 'Since it is a company in the U.S., we considered NASDAQ listing.'
However, even this is expected to be difficult. The prevailing opinion is that for a listing on the New York Stock Exchange, the company's value must exceed at least 2 trillion won. This is largely due to the fact that the total costs of listing, including fees for foreign securities firms that manage the initial public offering (IPO), would be significantly higher.
For instance, the commission that the lead underwriter receives as a success fee is typically around 0.5% to 1% of the public offering amount. To earn 5 billion won, the public offering amount would need to be at least between 250 billion won and 500 billion won. Considering that companies going for IPO typically offer 15% to 30% of their equity, it should be more than 1.5 trillion won.
It is also not easy to attract investors' attention. Corporate values in the range of 1 trillion to 2 trillion won are classified as 'penny stocks' in the U.S. stock market. Mirae Industries, a semiconductor inspection equipment manufacturer, became the first domestic company to be listed on NASDAQ in 1999, but chose to delist voluntarily after 9 years of trading in 2008 due to sluggish transaction volume.
Oscotec stated, 'It is true that we did not withdraw the listing after Genosco's non-approval,' but added, 'Nothing has been finalized yet.' Meanwhile, if Genosco does not withdraw its listing, it will automatically proceed to the market committee. If a non-approval arises, final disqualification from the review will be confirmed.