[NEWS IN FOCUS] Covid-19 cure may be out of reach for Korean firms

The coronavirus outbreak served as the opening gun for a slew of Korean pharmaceutical companies that have not jumped into the race for a cure and a vaccine, with punters expressing optimism that has translated into skyrocketing share prices in recent weeks.

But it’s becoming clear that may not be the case. Promises have been made by companies that clearly lack the funds and technology required to target the deadly virus. Investors have rushed to pour funds into the local pharmaceutical industry, raising share prices on the back of misplaced hopes that their chosen firm will cough up the cure.

At the moment, more than 20 biopharmaceutical companies in Korea are working to develop a coronavirus treatment or vaccine. Big names like Celltrion and GC Pharma are in the game, and so are minor players with short histories and small financial bases.

As the virus outbreak spread to all continents and began claiming thousands of lives, investors have been especially sensitive to any report even hinting at the possibility of developing a cure for the virus. Stocks of local pharmaceutical companies skyrocketed in the wake of those announcements.

“Share prices for biopharmaceutical companies, not just diagnostic kit makers, skyrocketed to the daily limit from media reports on their beginning development for coronavirus treatments,” said Seo Keun-hee, an analyst at Samsung Securities. “Diagnostic kit companies had certified, proven technological background, so they are in a different game. But drug developers saw their shares rise to limits just on the news of them developing Covid-19 treatments, even though they didn’t get any approval from the Ministry of Food and Drug Safety to start clinical trials.”

On March 31, Bukwang Pharmaceutical, listed on the Kospi, reached the daily limit of 30 percent on the company’s announcement that its already-marketed product showed signs of treating Covid-19 in an in vitro test. The same went for Ilyang Pharmaceutical on March 13, when the company claimed to have confirmed the efficacy of its leukemia treatment in treating the coronavirus.

SillaJen, better known for its failed Phase 3 trial of the liver cancer therapy Pexa-Vec, similarly saw its share price rise 30 percent to 12,400 won ($10.25) on March 26 after its CEO announced plans to develop a Covid-19 vaccine.

The aggregate market capitalization of 165 biopharmaceutical and life sciences companies in Korea had risen 6.6 percent to 129.8 trillion won by Tuesday’s close, from 117.2 trillion won at the start of February.

Yet the hard reality is that successfully marketing a treatment is far different from coming up with a plan, and knowing this, even large-sized global pharmaceutical companies have made conservative estimates as to when they will be able to start clinical trials or earn approvals for their treatments.

Foster City, California-based Gilead Sciences, which is probably well ahead of most others in the treatment race, is reading its data on the first clinical trial results for remdesivir later this month. The company is conducting four other clinical trials for remdesivir at the moment, and their initial results will be out next month. Theoretically, if remdesivir does work and proves safe, the experimental antiviral therapy could be out on the market by this summer.

Other global big names like Roche, Regeneron, Johnson & Johnson, Moderna Therapeutics and Sanofi Pasteur are also pursuing treatments for the coronavirus.

For vaccines, the timeline is much longer, and experts are expecting anywhere from one to five years. Global authorities have stepped up and cleared some room in regulatory boundaries for companies to test and market Covid-19 vaccines faster.

Even with all these efforts in the pipeline, the vast majority will not turn out successfully.

According to the Massachusetts Institute of Technology Laboratory for Financial Engineering, only 13.8 percent of drug programs make it from start of clinical trials to actual approval from health authorities.

Some organizations play down that figure to as low as one in 1,000 pipelines. But whatever the success rate actually is, it shows that few of the Covid-19 treatment and vaccine programs that kicked off in Korea, if any, will lead to actual products on the market.

“It is premature to link the notice of starting development on a treatment or vaccine with higher value for a company,” said Heo Hye-min, an analyst at Kiwoom Securities. “The competition is intensifying, with more than 200 Covid-19 clinical study projects around the world, so initiating a treatment development project doesn’t directly lead into profitability.”

Simply getting clinical trials off the ground is already creating difficulties for local companies.

The Ministry of Food and Drug Safety recently said it asked Komipharm to revise its application to start emergency clinical trials with its investigative drug. The company filed its application in late February, but has been asked to turn in more supplementary data before the agency gives it the green light to start trials.

As of Tuesday, the ministry has reviewed a total of 12 clinical trial applications for Covid-19 treatments, and only six of them earned approval to start trials. And all of those are products from foreign companies - Kaletra, remdesivir, Alvesco, oxychloroquine and Haloxin.

History tells us that a successful outcome from a local company is not likely.

In 2015 during the Middle East respiratory syndrome (MERS) outbreak, a number of companies, including Celltrion, GC Pharma and Ilyan Pharmaceutical, announced they had started developing a treatment, but GeneOne Life Science was the only company that made it as far as clinical trials for a treatment candidate. The candidate ultimately got no further.

Companies also stepped up in the wake of other infectious diseases, but their efforts met similar fates.

Still, the government has been offering help to companies and medical institutions to accelerate the timeline and likelihood of a Covid-19 treatment in the local market, with some positive news upping the probability of success.

The Korea Centers for Disease Control and Prevention (KCDC) and related authorities are following up on a research paper published Monday in the Journal of Korean Medical Science. The research detailed the successful treatment of two patients through a convalescent plasma therapy, which injects blood from recovered patients to transfer antibodies.

Many countries around the world have reported using convalescent plasma treatment in helping patients infected with the coronavirus, but rarely have successful cases been announced.

The disease control authority is planning to announce plasma therapy guidelines in the coming days.

The Ministry of Health and Welfare announced last week it will pour out 215.1 billion won over the next decade, starting in July, to run a national research-and-development program on vaccine development for infectious diseases, including the coronavirus that causes Covid-19.

Late last month, the KCDC also picked Celltrion and SK Bioscience as partners to develop a Covid-19 treatment and vaccine with a target to start clinical trials within this year.

The medical authority has set aside a total of 700 million won in funding for coronavirus projects. The KCDC has already agreed to fund six partnerships and is searching for six more partners in coming weeks for additional research projects to tackle the coronavirus.

BY KO JUN-TAE [ko.juntae@joongang.co.kr]