South Korea’s SK Holdings Co. has embarked on a process to go public with its wholly-owned drug developing unit SK Biopharmaceuticals Co. within this year, news that could help reverse the souring sentiment toward bio stocks amid a series of negative reports.

The holding company of Korea’s third-largest conglomerate SK Group held a board meeting last month and gave the green light for the initial public offering scheme of the drugmaker, according to industry sources on Thursday.

SK Biopharmaceuticals in April kicked off its IPO process by picking NH Investment & Securities Co. and Korea Investment & Securities Co. as its underwriters. The preliminary prospectus is expected to be filed with regulators in the coming weeks.

Analysts have valued the company at around 5 trillion won ($4.16 billion), given its growth potential and proven track record for drug development and commercialization.

In 2018, SK Biopharmaceuticals reported an operating loss of 145 billion won and net loss of 143.6 billion won on sales of 1.1 billion won.

SK Holdings said the timing would depend on market conditions, but industry observers believe it could come within the year.

Many think the IPO date could be timed after November 21, when the U.S. Food and Drug Administration (FDA) would announce whether to grant market approval to SK Biopharmaceuticals’ proprietary drug candidate cenobamate.

The FDA review for the company’s new epilepsy treatment candidate started in February. The assessment process usually takes about 10 months.

Experts say the drugmaker won’t likely pursue an IPO until after it gains the FDA certification, given the recent skepticism over Korean bio stocks.

Korean pharmaceutical and bio-tech companies have seen their stocks tank in recent months after some of their most promising drugs failed to pass clinical trials or gain marketing approval.

Shares of SillaJen, a Korean biotechnology company, earlier this month faced a frantic sell-off after it announced to end the clinical trial of its virus-based immune-oncology treatment Pexa-Vec. Its failure triggered concerns about other bio companies, leading investors to dump shares of its peers such as MedyTox Inc., Celltrion Healthcare and Helixmith.

SK Biopharmaceuticals’ other major drug candidate, the narcolepsy drug solriamfetol, was cleared by the FDA in March and started selling in the U.S. last month.

By Noh Hyun and Kim Hyo-jin

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