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South Korean Biotech Ventures Reducing Risks by Focusing More on Technology Exports
A Lesson from Recent Phase 3 Clinical Trial Failures
South Korean Biotech Ventures Reducing Risks by Focusing More on Technology Exports
  • By Choi Moon-hee
  • December 4, 2019, 09:16
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Korean biotech ventures increasingly focus on technology exports rather than phase 3 clinical trials.

This year, South Korea's biotech industry faced a crisis due to a series of phase 3 clinical trial failures. The examples include Kolon TissueGene, Helixmith and SillaJen. The phase 3 clinical trial for Kolon TissueGene’s Invossa had to be stopped due to the use of unapproved cells that can lead to tumors. Helixmith failed to derive a meaningful result due to an inappropriate phase 3 clinical trial management and SillaJen’s Pexa-Vec failed to pass a futility interim analysis due to the lack of commercial viability.

At present, however, biotech ventures are increasingly focusing on technology export rather than phase 3 clinical trials. Technology export is advantageous in that contract money can be anticipated and, at the same time, global pharmaceutical giants’ experience can be shared during clinical trials led by the giants yet requiring previous clinical trial data. In addition, royalty payments can be anticipated once an exported material is turned into a drug and makes a debut. SK Biopharmaceuticals recently obtained an FDA approval for its epilepsy drug Xcopri and the success is based on the export of its sleep disorder drug Sunosi to Jazz Pharmaceuticals.

It is a matter of course that not all exported candidate materials turn out to be successful. The U.S. Biotechnology Innovation Organization recently analyzed 9,985 clinical trials that started between 2006 and 2015 and announced that less than 10 percent of the new drug candidates that entered the first phase during the period have obtained a new drug approval. Still, technology export is much less risky than independent clinical trials in that some money is paid and the money includes contract money that does not have to be repaid.

The change in trend is expected to improve the ecosystem of the industry. According to experts, the industry has been based on an abnormal structure in which underfunded biotech ventures push ahead with phase 3 clinical trials on their own and traditional pharmaceutical companies focus on technology export. “These days, large biotech companies are leading the industry and venture firms are buttressing it at the same time with the former such as SK Biopharmaceuticals and Celltrion obtaining FDA approvals and the latter exporting their technologies one after another,” one of them mentioned, adding, “The virtuous circle is expected to lead to, for example, a large biotech company obtaining an approval for a new drug candidate developed by a biotech venture.”