ABVC Acquires $2.96 Million Worth of Land in Asia with Stocks Priced at $3.50 per Share

Rhea-AI Summary

ABVC BioPharma, Inc. has signed a definitive agreement to acquire real estate in Taoyuan City, Taiwan, estimated at approximately $2.96 million. The acquisition aims to develop plant factories for ABVC’s botanical pipeline and establish a base for Good Agricultural Practices fields. The company will issue shares of common stock and a warrant to purchase up to 1,000,000 shares of common stock in consideration for ownership of the property. The acquisition is expected to raise shareholders' equity and facilitate ABVC’s drug development plan, generating future revenue.

Insights

Financial Analyst

ABVC BioPharma's decision to acquire real estate for the development of plant factories marks a strategic investment aimed at vertically integrating their supply chain. By investing in property estimated at $2.96 million, the company is signaling a commitment to control the cultivation of raw materials for its botanical drug pipeline. This move could potentially reduce costs and reliance on external suppliers, which may improve margins over time. However, it's important to note that the transaction involves a related party, which could raise questions about valuation fairness and conflict of interest.

The equity transfer at $3.50 per share represents a significant premium over the current market price, which could be seen as beneficial for the seller but raises concerns about the dilution of current shareholders' equity. Investors should closely monitor the execution of this strategy to ensure that the long-term benefits justify the short-term costs and potential dilution. Additionally, the issuance of a warrant for up to 1,000,000 shares could further dilute existing shareholders but also provides additional capital for the seller to potentially reinvest in the company.

Given the recent interest in life sciences real estate in Asia, this acquisition could position ABVC favorably in a growing market. However, the success of this initiative will depend on the company's ability to effectively manage agricultural operations and integrate them into their drug development process.

Legal Expert

The acquisition of real estate by ABVC BioPharma involves a related party transaction, which is a significant legal and regulatory consideration for the company and its shareholders. The seller, being a director and significant shareholder of ABVC, as well as the spouse of the Chief Strategic Officer, introduces potential conflicts of interest that must be managed according to fiduciary duties and securities regulations.

Transparency and fair dealing are critical in such transactions to maintain investor confidence and comply with legal standards. The company's disclosure that the transaction was valued by a third-party valuation company is a step towards ensuring fairness and compliance. Still, shareholders and regulators will likely scrutinize the process to confirm that it aligns with industry norms and corporate governance best practices.

Additionally, the issuance of stock and warrants as consideration for the property purchase will require careful documentation and adherence to securities laws, particularly given the premium price and potential impact on shareholder value.

Market Research Analyst

The strategic acquisition of real estate by ABVC BioPharma reflects a broader industry trend in the life sciences sector, where companies are increasingly seeking to secure their supply chains and production capabilities. The Asia Pacific region, in particular, has seen a surge in demand for life sciences real estate, driven by an aging population, supportive government policies and a growing pharmaceutical market.

ABVC's investment in GAP fields and their aim to establish an integrated platform for collaboration with researchers and industry leaders can be seen as a proactive approach to capitalize on these market dynamics. By focusing on the Asian healthcare business and the medical, pharmaceutical and biotechnology industries, ABVC may gain a competitive edge in a region that is poised for continued growth.

However, the company's ability to leverage this real estate investment into tangible outcomes, such as cost savings, enhanced drug development capabilities and ultimately revenue generation, will be critical in determining the long-term impact of this acquisition on the company's market position and shareholder value.

FREMONT, CA, Feb. 08, 2024 (GLOBE NEWSWIRE) -- via NewMediaWire – ABVC BioPharma, Inc. (NASDAQ: ABVC) ("Company"), a clinical-stage biopharmaceutical company developing therapeutic solutions in Oncology/Hematology, Neurology, and Ophthalmology, announced today that it signed a definitive agreement to acquire real estate in Taoyuan City, Taiwan. The acquisition of real estate assets, estimated at approximately $2.96 million via an equity transfer of $3.50 per share, is to develop plant factories for ABVC’s botanical pipeline strategically; ABVC hopes the property will ultimately be used as an integrated platform for the global development of the Asian healthcare business and the medical, pharmaceutical, and biotechnology industries.

The acquisition aims to establish a base for Good Agricultural Practices (GAP) fields and an integrated platform for collaboration between researchers and industry leaders. ABVC will issue the current landowner shares of ABVC common stock at $3.50 per share and a warrant to purchase up to 1,000,000 shares of common stock in consideration for ownership of the property, which is estimated at $2.96 million by a third-party valuation company. This is a related party transaction since the seller is one of ABVC's directors who owns approximately 10% of ABVC's issued and outstanding shares of common stock and is married to ABVC's Chief Strategic Officer.

"We are pleased to add more value to our shareholders' equity by executing this acquisition and appreciate the recognition of the stock price of 150% higher than the current market price. ABVC aims to build on the fastest-growing Asian market for pharmaceutical products, medical devices, and healthcare services. The Company will use the newly acquired land to serve as the base for plant factories and GAP to grow the raw materials needed to develop the Company's botanical new drugs," said Dr. Uttam Patil, ABVC's Chief Executive Officer. "We will work towards developing the fields to cut costs on raw material purchases and continue cooperating and constructing an integrated platform for the global development of Asian healthcare business and the medical, pharmaceutical, and biotechnology industries. We hope this will provide a new avenue for collaboration between industry, academia, and research and revitalize Asia's promotion of innovation, knowledge exchange, and sustainable development."

ABVC's real estate investment raises the shareholders' equity and facilitates ABVC’s drug development plan, and ABVC believes it will help generate revenue in the future. Following the pandemic, life sciences-related real estate in Asia has been considered a hot spot. [1]According to that same article, “burgeoning demand for pharmaceuticals from a greying population; government policies to support the industry; a steady flow of mergers and acquisitions; a rising number of listings; and the expansion of R&D capacity” has led to a demand for life sciences real estate in Asia Pacific.  

As noted by Erik Hill, Managing Director and National Sector Lead of Healthcare and Life Science at Partner Valuation Advisory, investors have come to appreciate the recession-resistant returns offered by healthcare real estate.[2]

ABVC urges its shareholders to sign up on the Company's website for the latest news alerts. https://abvcpharma.com/?page_id=17707

About ABVC BioPharma
ABVC BioPharma is a clinical-stage biopharmaceutical company with an active pipeline of six drugs and one medical device (ABV-1701/Vitargus®) under development. For its drug products, the Company utilizes in-licensed technology from its network of world-renowned research institutions to conduct proof-of-concept trials through Phase II of clinical development. The Company's network of research institutions includes Stanford University, the University of California at San Francisco, and Cedars-Sinai Medical Center. For Vitargus®, the Company intends to conduct global clinical trials through Phase III.

Forward-Looking Statements
This press release contains "forward-looking statements." The words may precede such statements "intends," "may," "will," "plans," "expects," "anticipates," "projects," "predicts," "estimates," "aims," "believes," "hopes," "potential," or similar words. Forward-looking statements are not guarantees of future performance, are based on certain assumptions, and are subject to various known and unknown risks and uncertainties, many of which are beyond the Company's control, and cannot be predicted or quantified, and, consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. None of the outcomes expressed herein are guaranteed. Such risks and uncertainties include, without limitation, risks and uncertainties associated with (i) our inability to manufacture our product candidates on a commercial scale on our own, or in collaboration with third parties; (ii) difficulties in obtaining financing on commercially reasonable terms; (iii) changes in the size and nature of our competition; (iv) loss of one or more key executives or scientists; and (v) difficulties in securing regulatory approval to proceed to the next level of the clinical trials or to market our product candidates. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the Securities and Exchange Commission (SEC), including the Company's Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. Investors are urged to read these documents free of charge on the SEC's website at http://www.sec.gov. The Company assumes no obligation to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise.

Contact:
Leeds Chow
Email: leedschow@ambrivis.com

[1] https://www.scmp.com/presented/business/topics/apac-life-sciences-opportunities/article/3157871/life-sciences-real
[2] https://www.globest.com/2023/11/13/healthcare-real-estate-opportunities-beyond-medical-offices-and-hospitals/?slreturn=20240105041457

FAQ

What is the estimated cost of the real estate acquisition in Taiwan?

The real estate acquisition in Taiwan is estimated at approximately $2.96 million.

What is the purpose of acquiring real estate in Taoyuan City, Taiwan?

The acquisition aims to develop plant factories for ABVC’s botanical pipeline and establish a base for Good Agricultural Practices fields.

How will ABVC fund the acquisition of the real estate?

ABVC will issue shares of common stock and a warrant to purchase up to 1,000,000 shares of common stock in consideration for ownership of the property.

What is the expected impact of the real estate acquisition on ABVC's shareholders' equity?

The acquisition is expected to raise shareholders' equity and facilitate ABVC’s drug development plan, generating future revenue.

What industries does ABVC aim to develop with the newly acquired land in Taiwan?

ABVC aims to develop the medical, pharmaceutical, and biotechnology industries with the newly acquired land in Taiwan.