Market players are paying keen attention to whether the National Pension Service (NPS) will participate in the initial public offering (IPO) of SK Biopharmaceuticals, the drug development unit of Korea’s third largest conglomerate SK Group. 

If NPS decides to take part in the IPO it will ultimately guarantee success for IPO as expectations will grow that NPS, as a mid- and long-term investor, is likely to support the stock prices of the company, analysts said. 

Until recently, NPS has mostly invested in the IPOs indirectly through external funds to which it commits its investment funds while showing lukewarm interest in direct participation in the IPO. This is the main reason NPS has directly participated in the IPO only several times; IPOs of blue-chip affiliates of large companies like Cheil Industries and Samsung Biologics are a few of them. Cheil Industries is a Samsung affiliate that produces textiles, fashion, chemicals and electronic chemical materials. Samsung Biologics, top pharmaceutical firm, is an affiliate of Cheil Industries.

NPS, as a mid- to long-term investor, is renowned not only for strictly selecting blue-chip stocks but also holding them for a long time. Foreign investors, who tend to trade stocks with medium- and long-term investments like NPS, think that the stocks NPS buys are stable yet profitable investment targets, analysts said.  

“There is a high possibility that NPS will directly participate in SK Biopharmaceuticals’ IPO, which is expected to lead SK Group’s future new business,” a market source said. “If that happens, domestic and foreign investors will be more enthusiastic about the IPO.” 

According to investment banking sources on June 16, SK Biopharmaceuticals has been hosting roadshows for 40 domestic institutional investors to sell its plan to float 19.6 million shares on Seoul’s main stock market KOSPI on July 2. The firm plans to raise almost 959.3 billion won ($790 million), making it the biggest IPO since Celltrion Healthcare’s listing in July 2017. The IPO is expected to help SK Biopharmaceuticals expand its global presence. 

“The reception for SK Biopharmaceuticals’ IPO is very upbeat, so much so that it is bewildering that the anticipation should be this high,” SK Biopharmaceuticals’ CEO Cho Jeong-woo said on June 15, The Korea Herald reported. 

SK Biopharmaceuticals first began researching and developing novel drugs with unmet medical needs in the central nervous system in 1993. Recently, its efforts have produced two wins in the form of solriamfetol and cenobamate receiving sales permits from the US Food and Drug Administration. Solriamfetol, known under the brand name Sunosi, treats obstructive sleep apnea, a condition that can cause cardiac arrest. Cenobamate, with the brand name Xcopri in the US, is an alternative treatment for adults with partial-onset seizures.

SK Biopharmaceuticals is now reportedly pursuing early-stage clinical trials of carisbamate to treat Lennox-Gastaut syndrome, relenopride for rare neurological diseases, SKL13865 for attention deficit disorder, SKL20540 for schizophrenia, SKL-PSY for bipolar disorder and SKL24741 for epilepsy. (Reporting by Gyeongjin Jun)