"I'd Rather Be No.1 on KOSDAQ Than Join KOSPI"... Why Alteogen Chose to Stay

Expected KOSPI 200 Weighting Falls Short of Projections
Estimated Net Outflow of 360 Billion Won in Passive Funds
SC Platform Competitiveness and Select Policy Also Strengthen Case for Staying

With concerns over the competitiveness of its subcutaneous (SC) injection platform leading to a sharp decline in its stock price, interest is growing in the background behind Alteogen's decision not to pursue a transfer listing to the KOSPI for the time being, instead opting to remain on the KOSDAQ. Compared to the potential supply-and-demand benefits of switching to the KOSPI, the company determined that maintaining its position as the largest-cap company on the KOSDAQ offers greater advantages. Analysts say this confidence is based on Alteogen's belief that it can enhance its corporate value through technological achievements without changing its listing market.

Alteogen Exterior. Alteogen

According to the bio industry on July 21, Alteogen’s recent decision to temporarily suspend its plans to transfer to the KOSPI is closely related to supply and demand issues that could arise after inclusion in the KOSPI200 index. The company estimates its expected weighting in the KOSPI200 would be around 0.3%, representing a 69% drop from earlier projections at the time the transfer listing was first considered. An external analysis presented by Alteogen suggested that, if you combine expected sell-offs due to its removal from the KOSDAQ150 with potential purchases from its addition to the KOSPI200, about KRW 360 billion in passive funds would be net outflows.

While total funds tracking the KOSPI200 are greater than those tracking the KOSDAQ150, the market capitalization of large-cap stocks on the KOSPI has grown, which has reduced Alteogen’s expected inclusion ratio. The company believes remaining as the number one market-cap stock on the KOSDAQ is more beneficial in terms of index weight and market influence than becoming just another large-cap stock on the KOSPI after transferring.

Traditionally, companies that have grown on the KOSDAQ have been expected to move naturally to the KOSPI, but recent changes in policy environment are altering this trend. Notably, financial authorities are considering a system to divide KOSDAQ companies into upper-tier blue chips, general companies, and management segments, and to implement a promotion and relegation system. The plan is to develop an index consisting of the leading companies in the top segment (Select), launch exchange-traded funds (ETFs) tracking the index, and thereby attract long-term funds from institutional investors.

Although specific criteria for Select index inclusion have yet to be finalized, Alteogen is considered a strong candidate. If institutional funds actually flow into the new indices and ETFs, the company could achieve some of the supply-and-demand improvement once expected from a KOSPI transfer while remaining on the KOSDAQ. In addition, with 5% of the KOSDAQ150 now included in the annual benchmark rate for public fund management performance since this year, institutional investors have more incentive to increase their portfolio allocation to the KOSDAQ.

Confidence in the SC platform business is also cited as one of the main reasons for this decision. After its KOSDAQ listing in 2014 via the technology-based special listing system, Alteogen has signed technology licensing deals with global pharmaceutical companies using ALT-B4, its recombinant hyaluronidase that converts intravenous drugs to SC formulations. Keytruda Qurex from MSD in the United States, using ALT-B4, was launched in the U.S. last year, recording sales of USD 128 million (approximately KRW 18.97 billion) in just the first quarter of this year.

Min-Yong Um, a researcher at Shinhan Securities, commented, "A leading KOSDAQ stock is not just a small- or mid-cap growth stock, but can be seen as an independent asset class with both scarcity and representation. In the past, transfer to the KOSPI was a natural choice for growth companies, but now the environment allows representative companies to expect independent valuations and institutional fund inflows while remaining on the KOSDAQ."

This content was produced with the assistance of AI translation services.