[Reporter’s view] Successive large-scale technology exports

There is some good news coming from the pharmaceutical and bio industry.

 

Chong Kun Dang and Orum Therapeutics have signed large-scale technology export contracts with global pharmaceutical companies.

 

On the 6th, Chong Kun Dang signed a technology export contract with Novartis worth a total of $1.305 billion (about 1.7 trillion won).

 

This is a transfer of global development and commercialization rights, excluding Korea, for ‘CKD-510’, a new drug candidate in the HDAC inhibitor class.

 

On the same day, Orum Therapeutic, an unlisted bio venture, signed a contract with BMS to transfer the technology of ‘DRM-6151’, a new drug candidate for leukemia.

 

The total contract size is $180 million (approximately 230 billion won).

 

What attracts more attention than the total contract size is the down payment.

 

Chong Kun Dang received $80 million (approximately 100 billion won) as a down payment, and Orum Therapeutic received $100 million (approximately 130 billion won) as a down payment.

 

The down payment is money that does not need to be returned even if the rights to develop new drugs are later returned.

 

The down payment is evaluated as an appropriate tool to objectively reflect the value of the candidate material.

 

The total contract size is filled with an optimistic outlook.

 

If a candidate material does not meet detailed contract conditions such as development or approval, it will not be received.

 

In general, it is considered a good condition if the down payment ratio is more than 5% of the total contract size.

 

Chong Kun Dang received 6.1% of the total contract size, and Orum Therapeutic received 55.6% as a down payment.

 

In terms of down payment, it is the largest in four years since 2019.

 

In February 2019, SK Biopharmaceuticals received $100 million (total contract size of $530 million) and signed a technology export contract for an epilepsy new drug with AVELOS Therapeutics.

 

Since then, several technology export contracts have been signed with a total contract size in the trillions, but it is true that looking at the contract amount alone, it was disappointing.

 

In some quarters, controversy arose over the discrepancy between the total contract size and the down payment.

 

However, a series of contracts were concluded with a down payment of over 100 billion won.

 

In the pharmaceutical industry, expectations are growing whether large-scale technology export contracts concluded one after another will be able to reverse the recent slump.

 

Recently, the pharmaceutical and bio-industry has been facing an investment cliff due to the high-interest rate situation that has continued since the coronavirus pandemic.

 

In particular, bio ventures that focused on R&D without consistent sales were pushed into crisis as external investment plummeted.

 

In this situation, it is ultimately R&D, the core asset of the biopharmaceutical industry, that leads to a change in the atmosphere.

 

It is time for another R&D performance.

 

We succeeded in revitalizing the atmosphere through a series of technology export contracts.

 

In order to completely change the atmosphere, new R&D results must be released in the near future.

 

I look forward to hitting consecutive hits following Chong Kun Dang and Oreum.