[Analysis+] Bridge Biotherapeutics' management rights go to Parataxis…"Bitcoin investment firm"

KRW 25 billion investment secured as a 'lifeline for management rights' to maintain listing

Largest shareholder is Parataxis, a Bitcoin investment firm with no ties to biotech

Back-to-back failed trials, BBT-877 efficacy not demonstrated

Bridge Biotherapeutics announced on the 20th that it has signed an agreement to change its management control through a capital raise totaling KRW 25 billion. The capital increase will be in the form of a third-party allocation of new shares worth KRW 20 billion and a KRW 5 billion convertible bond issuance.

Upon completion of the capital raise, Bridge Biotherapeutics' largest shareholder will change from founder and CEO Jeong Kyu Lee to Parataxis Korea Fund 1 LLC, an affiliate of Parataxis Holdings LLC.

The company stated, "Based on Parataxis' extensive experience in digital asset investment, we plan to establish a Bitcoin treasury platform focused on institutional investors. Through this, we aim to strengthen our competitiveness in new business areas with high future growth potential."

CEO Lee will continue to lead the biotech business and remain on the board. The company also added, "Through the capital raise and close future collaboration with Parataxis, we expect that major issues related to maintaining our listing, including the concern of continued operating loss before income tax (CO loss), can be resolved. Core clinical development projects, including the ongoing development of BBT-877, will continue to be promoted by CEO Jeong Kyu Lee and key personnel in the biotech business unit."

Bridge Biotherapeutics was placed under administrative supervision in March after failing to meet the CO loss requirements, as CO loss exceeded 50% of its equity for two consecutive business years. According to KOSDAQ listing rules, failing to resolve this requirement can lead to designation as an administrative issue, followed by an eligibility review for substantive delisting a year later. With this funding, the company expects to not only be removed from the administrative oversight list but also to avoid the risk of delisting.

However, Parataxis is an investor with little connection to the pharmaceutical or biotechnology industry. It is a multi-strategy investment management firm specializing in digital assets (including cryptocurrencies), established in 2019 with headquarters in New York and New Jersey and operating a wide range of hedge and investment funds.

Edward Chin, the co-founder and CEO of Parataxis, worked as an investment banker at Galaxy Digital, a digital asset-focused investment bank, before founding the company in 2019. Prior to that, he spent over a decade as an investment banker covering technology, media, and telecom at institutions including Lehman Brothers, and he is a former U.S. Army officer.

Edward Chin is set to join the board of Parataxis Korea, and partner Andrew Kim will assume the role of CEO and also join the board.

Commentators attribute Bridge Biotherapeutics’ failure to attract investors in its industry to consecutive unsuccessful clinical trials. In February 2023, its BBT-401 ulcerative colitis therapy performed worse in the treatment group than in the placebo group in a global phase 2a clinical trial. The anticipated idiopathic pulmonary fibrosis (IPF) therapy BBT-877 also disappointed. BBT-877 had been licensed out in 2019 to Germany's Boehringer Ingelheim in a deal worth up to KRW 1.5 trillion, but rights were returned in 2020 due to toxicity concerns. Even after Bridge Biotherapeutics continued with its own clinical trials, topline results from a global phase 2 trial announced last month showed the placebo group fared better than the treatment group, failing to establish efficacy.

After disappointing clinical results, Bridge Biotherapeutics investors suffered heavy losses due to stock price collapse. In particular, in March, DS Investment Securities had named Bridge Biotherapeutics its "Top Pick" in the pharmaceutical and biotechnology sector on the back of BBT-877's projected clinical success. This fueled expectations, pushing the stock from around KRW 5,000 to KRW 8,800 in a month. However, the actual trial results ran counter to forecasts, and the stock price plummeted by more than 90%.

Reporter Yurim Kim youforest@hankyung.com