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Amid bio rally, unlocked SK Biopharma shares in spotlight

Aug. 2, 2020 - 15:32 By Kim Young-won
Market listing ceremony of drugmaker SK Biopharmaceuticals on July 2 in Seoul (Yonhap)

Shares of SK Biopharmaceuticals held by institutional investors will be up for sale Monday after a lockup period, drawing attention to its impact on bio equities that are zooming.

According to South Korea’s sole stock securities operator Korea Exchange on Sunday, the lockup banning investors from trading shares after the initial public offering of the company will be lifted.

Some 13.2 million shares were allotted to institutional investors right after the drug company was listed on the main bourse Kospi on July 2.

Of the total, some 6.3 million shares were immediately available for trading while the rest 6.9 million could not be for up to six months. A company going public or its underwriter imposes such an IPO lockup to prevent drastic price fluctuations of stocks.

With the end of the 30-day lockup period scheduled on Monday, 262,500 shares will be newly available for trading. The shares account for 2.56 percent of the firm’s 10.24 million stocks that are currently being traded in the market. Last month, 13,700 shares were unlocked for sale.

The newly unlocked shares could depress the stock price as they amount to an average daily trading volume of the company’s shares, some market analysts said.

“Some 260,000 shares are not a small volume,” said Jeong Myeong-ji, researcher at local brokerage Samsung Securities, adding “The price depends on investment sentiment for biotechnology firms, but the volume is big enough to affect the stock price, which has recently remained flat.”

SK Biopharmaceuticals stocks -- with IPO price came of 49,000 won -- doubled on the first trading day and hit price ceilings in the following two sessions. Its price now stands at 182,000 won.

High demand for biotech firms was a new trend in the stock market earlier this year, according to the exchange operator.

Data collected from Jan. 20 -- when the first coronavirus outbreak took place in Korea -- to July 31 showed that biotech companies dominated the top 20 list of companies showing highest growth in share price.

Nearly 18 biotech firms were included in the list of the 20 companies traded on the Kospi or secondary Kosdaq market. Anti-malaria drugmaker Shin Poong Pharm, for example, saw its preferred stock rise 2,589 percent in value — the highest growth rate during the period. Its common stock grew 887.12 percent, the third-highest after respirator manufacturer MEK ICS whose stock price increased 889.9 percent.

Some market watchers have expressed concerns about heated market sentiment toward biotech companies, especially those who have fallen short of rolling out positive business results.

Seegene, a maker of diagnostics devices, and SK Chemicals were the only companies that have received buy recommendations and target prices three or more times from local stock brokerages, meaning the other companies are being relatively neglected by investors.

By Kim Young-won (