CHA Biotech to split off R&D biz to pump up profit
[THE INVESTOR] Korean stem cell therapy firm CHA Biotech said on April 12 it will set up a new subsidiary to spin off its contract drug manufacturing and basic research business to improve its balance sheet after the Korea Exchange put it on its watch list.
The board of directors decided to establish the new company, tentatively called CHA BioLab, which will be fully owned by CHA Biotech. After the spin-off, CHA Biotech will focus on potential pipeline drugs that are in late stage and product sales.
“We plan to maximize shareholder value through the new revenue model and sharpen our expertise in stem cell treatment business through the spin-off,” the company said.
CHA Biotech is seeking a turnaround by separating the research and development business, the key driver for profit slump. The company has posted operating losses for the past four years, leading the Korea Exchange to issue a warning before a potential delisting.
By Park Han-na (email@example.com)