[THE INVESTOR] US drug maker Biogen Therapeutics has exercised its option to purchase additional shares of Samsung BioEpis, according to a regulatory filing by Samsung BioLogics on June 29.

In a widely expected move by Biogen, the US company said it is raising its stake in the drug making unit of Samsung BioLogics from 5.4 percent to 49.9 percent. Biogen will pay approximately 746.9 billion won (US$667 million) for the transaction, which is scheduled to complete on Sept. 28.

The move came on the due date of the call option signed back in 2012 while the country’s financial watchdog is reviewing the legitimacy of accounting standards that Samsung BioLogics applied to categorize its drug developing unit as a subsidiary in 2012 when the company established the 85:15 joint venture. 

Samsung BioLogics headquarters in Incheon
Samsung BioLogics

From 2015, Samsung BioLogics treated the JV as an affiliate, not a subsidiary and thus switched to fair market valuation, because it could lose control of the unit due to the possibility of Biogen exercising a call option to up its stake to nearly 50 percent.

Through the process, the value of loss-making Samsung Bioepis jumped 18 times, resulting in Samsung BioLogics swinging to a profit before its listing on the benchmark KOSPI in 2016.

The Securities and Futures Commission will announce its final result on July 4.

“We are very pleased with the progress made to date at Samsung Bioepis and believe exercising this option is an opportunity to create meaningful value for our shareholders,” Biogen CEO Michel Vounatsos said in a statement. “This option allows us to increase our ownership in a leading biosimilar company on attractive terms. We look forward to building an important relationship with Samsung BioLogics.”

“The two companies will cooperate closely so that Samsung’s biosimilar business can leap forward in the global market,” said Samsung Biologics CEO Kim Tae-han.

Following the news, shares of KOSPI-listed Samsung BioLogics rose more than 3 percent in morning trading before closing up 1.96 percent to 417,000 won. 

By Park Ga-young (gypark@heraldcorp.com)