Form 4: Daewoong Co., Ltd. Acquires $10 Million Convertible Note in AEON Biopharma, Inc.

Daewoong Co., Ltd. acquired a $10 million senior secured convertible note in AEON Biopharma, Inc. on April 11, 2024, which is convertible into Class A common stock under certain conditions.

Summary

• Daewoong Co., Ltd. acquired a $10 million senior secured convertible note in AEON Biopharma, Inc. on April 11, 2024.
• The note accrues interest at an annual rate of 15.79% and matures three years from the funding date (April 11, 2027).
• The note is convertible into shares of AEON Biopharma's Class A common stock, subject to certain conditions.
• If AEON Biopharma completes a qualified financing of at least $30 million in Common Stock or securities convertible into Common Stock, the note will automatically convert.
• The conversion will occur at a rate of 1.3 multiplied by the quotient of the principal amount plus accrued interest divided by the per share price of the Common Stock in the qualified financing, provided the per share price is at least $1.00.
• Daewoong Co., Ltd. indirectly owns the shares through its 52% ownership of Daewoong Pharmaceutical Co., Ltd.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. The investment provides AEON Biopharma with capital, but the high interest rate and dependence on a future financing event introduce uncertainty.

Positives

• AEON Biopharma receives $10 million in funding through the convertible note.
• The convertible note structure allows for potential equity upside for Daewoong Co., Ltd.
• Automatic conversion upon a qualified financing simplifies the conversion process.

Negatives

• The high interest rate of 15.79% on the convertible note increases AEON Biopharma's financial obligations.
• The conversion is contingent on AEON Biopharma achieving a qualified financing of at least $30 million.
• The exact number of shares to be received upon conversion is indeterminate due to the dependence on the qualified financing terms.

Risks

• AEON Biopharma may not be able to secure a qualified financing of at least $30 million, preventing the automatic conversion.
• The value of AEON Biopharma's Common Stock could decline, reducing the potential return on the convertible note.
• The terms of the qualified financing could be unfavorable to Daewoong Co., Ltd.
• There are customary events of default associated with the note.

Future Outlook

The future depends on AEON Biopharma's ability to secure a qualified financing of at least $30 million, which would trigger the automatic conversion of the note into Common Stock. The value of the investment is tied to the performance of AEON Biopharma's stock.

Industry Context

Convertible notes are a common financing tool for biotech companies, allowing investors to participate in potential upside while providing capital. The high interest rate may reflect the perceived risk associated with AEON Biopharma.

Comparison to Industry Standards

• Convertible notes are frequently used in the biopharmaceutical industry to fund research and development.
• Interest rates on convertible notes can vary widely depending on the company's stage, creditworthiness, and market conditions.
• A 15.79% interest rate is relatively high, suggesting that AEON Biopharma may have had limited access to other financing options or that investors perceive a higher level of risk.
• Comparable companies might include other small-cap biopharmaceutical firms that have used convertible notes to raise capital, such as those developing novel therapeutics or undergoing clinical trials.

Stakeholder Impact

• Shareholders: Potential dilution upon conversion of the note, but also potential upside if the financing supports growth.
• Employees: Increased financial stability for the company.
• Creditors: The convertible note adds to the company's debt obligations.

Next Steps

• AEON Biopharma will likely seek to secure a qualified financing of at least $30 million to trigger the automatic conversion of the note.
• Daewoong Co., Ltd. will monitor AEON Biopharma's progress and the terms of any potential qualified financing.

Key Dates

Keywords

convertible note, AEON Biopharma, Daewoong Co., financing, investment, equity, common stock