Recently, there have been a series of cases where the stock prices of bio-listed companies have plummeted due to the suspension or failure of clinical trials. As many of these companies entered the Korea Securities Dealers Automated Quotations (KOSDAQ) market through the technology special listing system, investor sentiment has sharply contracted, as it appears they lack the capacity to challenge again with their main pipelines (the drugs under development).
On the 28th, Orum Therapeutics, a venture company developing new drugs, announced that it will voluntarily suspend clinical trials for its core pipeline, a breast cancer drug candidate. Following this announcement, the stock price plunged immediately.
Over the past two years, the company signed technology export contracts with global pharmaceutical corporations, attracting investor expectations. However, as the main pipeline faced setbacks, investor sentiment deteriorated sharply. This corporation entered the stock market through a technology special listing, stating a goal to achieve annual sales of 93 billion won by next year.
However, the point that Orum Therapeutics voluntarily announced the suspension of clinical trials for its core pipeline and that there is no impact on other substances under development has been highlighted, as the stock price partially recovered on the 29th. On that day, Orum Therapeutics' stock price rose by 8% compared to the previous day.
Pharmaceutical corporation Bridge Biotherapeutics also set a painful record of hitting the lower limit for five consecutive trading days due to the failure of its global phase 2 clinical trials for a new drug candidate this month. As a technology special listing company, it must generate sales of over 3 billion won this year; failing to meet the sales requirements could result in it being designated as a controlled company and delisted. Bridge Biotherapeutics has already been designated as a controlled company for not meeting the ratio requirement for the loss before income tax expenses relative to equity.
Another bio venture company, SCM Lifescience, has also not escaped the brutal reality of new drug development this year. The phase 2 clinical trial for the graft-versus-host disease treatment, which was expected to generate revenue in January, has been abandoned. With the loss of research and development (R&D) momentum, the stock price, which was in the 2,000 won range at the beginning of the year, has not exceeded the 900 won range since that day.
Adding to the troubles, the company was designated as a controlled company this month for failing to meet the loss ratio requirement relative to equity. SCM Lifescience is also in its fifth year of the technology special listing, meaning it must exceed 3 billion won in sales this year.
Given the situation, the stock prices of KOSDAQ-listed companies that have recently experienced clinical suspensions and failures have plummeted, showing that in situations where there are essentially no sales, the failure of a single pipeline leads to a direct hit to the stock price. Developing new drug substances incurs enormous expenses, and there is a significant risk of facing funding shortages in the event of clinical failure. In fact, SCM Lifescience conducted a capital increase worth 8 billion won for operational funds this year.
With this situation, there are criticisms that the lax listing system, which only allows technology special listings based on the primary pipeline, poses a problem. In particular, small and medium bio corporations that depend on a single pipeline lack the capacity to challenge again in the event of failure, suggesting that they must exercise greater caution during the listing review process.
An expert in the pharmaceutical industry noted, "The field of new drug development, which invests in future growth potential regardless of domestic or foreign markets, inevitably bears high risks (high-risk)," but added, "However, there must be a corporate culture established that reduces reliance on a single pipeline and has the financial capacity and research and development capabilities to challenge again even in the event of clinical failure.