[News in focus] Seeing failure as an ‘incomplete success’

Helixmith has vowed to soldier on with its gene therapy candidate even though it obtained nothing but statistically meaningless data on the drug’s efficacy during a nine-month clinical trial in the United States.

The company remains hopeful, even if its schedule has been delayed up to 15 months as a result of the shockingly amateurish mix-up, as it believes approval for its drug candidate is a matter of when rather than if or how.

It is seeing the glass as half full.

Investors aren’t so sure. They see a pattern of failure in the Korean biotech industry and have started to question whether the companies even have the basic capabilities needed.

Helixmith announced Thursday, in yet another emergency bio sector press conference, that VM202-DPN was still shown to be safe and demonstrated some level of efficacy despite the failure of the clinical trial for the gene therapy, which treats diabetic peripheral neuropathy (DPN).

“Our data became corrupt, but our own analysis showed that VM202-DPN is still effective and definitely ahead of other competitor drugs,” said Helixmith CEO Kim Sun-young.

“We are seeing this recent result as an incomplete success rather than a straight-up failure. It is a learning step for the company and helps us better strategize and execute future trials.”

The efficacy data for VM202-DPN became statistically meaningless when, according to company analysis, 36 patients in the placebo group were found to carry VM202-DPN’s DNA, while 32 of those who were grouped to receive the gene therapy were found to carry suspiciously lower concentrations.

It seems some in the control group received the therapy while some in the experimental group didn’t.

VM202-DPN, considered within the industry as a strong rival to Pfizer’s blockbuster drug Lyrica, works by alleviating diabetic nerve pain and regenerating damaged nerve cells for those injected.

When the corrupted data is excluded, VM202-DPN showed that it did reduce pain in the trial group, the company claims. It added that the gene therapy completely cured DPN for 14 patients according to daily pain diaries composed by each VM202-DPN-injected patient tested.

Even though Helixmith has tried to appease its shareholders by remaining confident about gaining approval from the U.S. Food and Drug Administration for VM202-DPN, investors are heading for the doors.

After the announcement of the data mix-up in a regulatory filing on Monday night, Helixsmith’s shares nosedived the daily limit of 30 percent for two consecutive days through Wednesday’s close. It dropped another 9.52 percent to close at 76,000 won ($63.37) by the end of Thursday.

The company, once ranked as second largest on the secondary Kosdaq in terms of market capitalization, lost a total of 2.03 trillion won of value in just three trading days.

Business losses were inevitable as the opportunity for Helixmith to get any return on investment on VM202-DPN has been delayed for at most 15 months.

The company added it has five more drug candidates based on the same technology in the pipeline, saying it has enough to start making profits on gene therapies in the near future.

“Kolon Life Science’s Invossa, SillaJen’s Pexa-Vec and our VM202-DPN are the most well-known disappointments in the Korean bio industry,” Kim admitted.

“This series of events show that there are a lot of walls in front of us all that have to be overcome.”

Until recently, the local biopharmaceutical industry has been touted as one of the major growth engines for Korea, and even the government was behind it, selecting the Korean biopharmaceutical and health industry as one of the three major pillars for the future.

President Moon Jae-in announced in May this year that the government will devote more than 4 trillion won per year for research and development (R&D) support so the country achieves a 6 percent market share in the global drug and medical equipment market and exports of more than $50 billion.

But the industry as a whole failed to live up to the promised investment, especially in clinical trials for its companies’ candidate drugs.

Some even commented that Helixmith’s recent crisis is just another SillaJen scandal.

SillaJen halted clinical trials for its Pexa-Vec liver cancer therapy last month after it was told by an independent data monitoring committee that the treatment does not seem to work.

Earlier this month, HLB reported that it could not achieve satisfactory results on its gastric cancer treatment Rivoceranib during a clinical trial.

Invossa, a gene therapy drug for knee osteoarthritis from Kolon Life Science, was found in April to contain a different cell line from what was approved for sale in Korea and for clinical trials in the United States.

The injectable drug is no longer on the shelves in Korea, and U.S. clinical trials remain suspended.

According to the Korea Exchange, the total market capitalization of the Korean biopharmaceutical industry dropped a total 28.9 trillion won, or 21.9 percent, to 102.9 trillion won by Thursday’s close from 131.8 trillion won posted on the first trading day of the year.

The total value for biopharmaceutical companies listed on the tech- and bio-heavy Kosdaq dropped 26.4 percent during the same period.

But hope still remains for the industry, as the latest announcement from Helixmith has cleared some uncertainties for the sector and may serve as a turning point for the remainder of the year.

On the very same day as Helixmith’s bombshell announcement, some companies in the sector reported good news.

Celltrion Healthcare, the subsidiary of Celltrion in charge of the company’s global business, announced Thursday it won the bid in the second quarter this year to sell its anticancer antibody biosimilar Herzuma in a governorate of Iraq.

Herzuma is the second biosimilar for Celltrion, after autoimmune disorder treatment Remsima, to be launched in the region. Remsima is monopolizing the Tunisian infliximab market and has an 80 percent share of the Moroccan market, Celltrion said.

It is a win for the company that has been trying to increase its presence in the Middle East. The company said Hikma, its regional partner, started marketing the drug in the third quarter.

Medytox, another major player in the local biotech sector, is awaiting approval from Chinese regulators for its botulinum toxin Neuronox after the examination was completed last week, according to a report from NH Investment & Securities released Thursday.

Market watchers are confident Neuronox will be approved for manufacturing and sale in the country within the next couple of months.

The company’s shares jumped 8.59 percent to 381,900 won by Thursday’s close.

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