Korea Rise: New Strategies Transforming Korean Biopharma Landscape

Special Report I


Issue10_July 2016




Korea Rising


BY ERIN MCCALLISTER, SENIOR EDITOR


The Korean biopharma industry is mainly known for biosimilars and me-too products. But a cohort of innovator biotechs in Korea is coming of age, bolstered by an infusion of cash from the government and by the clinical and business success of bellwether Hanmi Pharmaceutical Co. Ltd.


As government investment and partnering money have begun to flow into the sector, a virtuous circle has been set in motion in which Korean biotechs are deploying a larger proportion of their revenues to R&D. That in turn is expected to lead to innovative products that could attract more multinationals to the partnering table.


VCs are also coming on board. In 2015 alone, venture investors poured $270-$360 million into Korean life sciences, compared to $197 million in 2014 and $166 million in 2013, according to an analysis by Citi Asia Healthcare.


B. Christopher Kim, managing partner of the Korea-Seoul Life Sciences Fund, started the fund four years ago because he said he could find science that was just as innovative as that in Boston, but was considerably cheaper (see “Korea Comps”).


Additionally, Korea has the largest concentration of clinical trial facilities in the world, making it more efficient and cost-effective for companies to conduct clinical studies. And a few of the nation’s large pharmas are starting to adopt some of the open innovation models used by U.S. and European companies to tap early stage discoveries (see “Korea Opens Up”).


Seven Korean biotechs that spoke to BioCentury are working on programs with the potential to be first- or best-in-class in diseases including cancer, ophthalmology and infectious disease.


Three U.S. companies that have partnered with Korean biotechs told BioCentury it’s not only the programs that are impressive, but also the Korean companies’ expertise and efficiency in executing clinical trials.


However, the Korean market is small, and the domestic biotechs recognize that to become players on the global stage they will have to get drugs approved and on the market in the U.S. and Europe. Achieving this milestone would demonstrate to international biotechs and pharmas that science discovered and developed in the region can pass muster with Western regulatory agencies.


The Korean companies are taking a variety of routes. Some are out-licensing rights in China and using the revenue stream to support early clinical trials in Korea or elsewhere in the Asia-Pacific region. Others are going directly to trials in the U.S. with the hope that early Phase I data, coupled with the relationships they build with U.S. KOLs, will facilitate a partnership.


In the meantime, the government is opening up parts of the global market through recently enacted regulatory reciprocity, which will allow drugs approved in Korea to be marketed in countries such as Brazil and regions including the Middle East without additional clinical work or regulatory review.


One hope has not yet been realized: that the focus on innovative drug development will grow the pool of drug discovery and development experts who know how to prioritize preclinical and clinical programs that could be differentiating on a global scale (see “Baby Steps”).


STIMULATING INNOVATION


For decades, Korea’s economic mainstays have been automobile manufacturing, shipbuilding and IT. But in 2012, with growth in those sectors declining, the Korean government set its sights on a new growth driver — biopharmaceuticals. The Ministry of Health and Welfare outlined a strategy to make the nation home to one of the largest global biopharma industries by 2020.


The plan includes three funds that will invest a total of $1 billion in Korean companies to develop innovative drugs and promote expansion of the Korean biotech industry globally. Recipients are expected to raise matching funds.


A fourth fund called the Korea Drug Development Fund (KDDF) is awarding $1 billion in translational and clinical research grants (see “Korea Funds”).


Kiyean Nam, CEO of Qurient Co. Ltd., said the structure of the three investment funds reflects the government’s understanding that drug development takes time. Qurient has received two grants from KDDF.


“They understand that this is the kind of area that you need to invest in and wait, and you need to have good science behind it,” he told BioCentury.


R&D investment in Korea is growing and outpacing that of other developed nations. The compound annual growth rate (CAGR) for the Korean pharmaceutical industry is 10% over 2009-13, higher than four of the five largest countries by GDP (see “R&D Growth”).


Nam noted that Hanmi has helped demonstrate that patience and R&D investment can pay off.


Hanmi, founded in 1973, began to invest in discovery platforms for biologics and novel small molecules about 15 years ago.


Hanmi’s LAPSCOVERY technology, short for long-acting protein/ peptide discovery, achieves weekly or monthly dosing by conjugating a biologic drug to an aglycosylated monomeric Fc region via a flexible linker. The most advanced program is eflapegrastim (SPI-2012), a long-acting G-CSF analog that is in Phase III testing to treat chemotherapy-induced neutropenia. Hanmi is co-developing eflapegrastim with Spectrum Pharmaceuticals Inc.

The small molecule platform produces targeted NCEs for cancer and autoimmune disease. HM61713 is the most advanced program. The EGFR mutation-specific tyrosine kinase inhibitor is in a global Phase II trial to treat non-small cell lung cancer (NSCLC).


In 2011, Hanmi invested W84 billion ($72.5 million) in R&D, or 14% of its sales. Its R&D investment reached 20% of sales in 2014 at W153 billion ($140.3 million). The proportion dropped back down to 14% in 2015 with W187 billion ($159.9 million), but the dip was driven by recordhigh revenues of W1.318 trillion ($1.1 billion) and the transfer of some of its clinical programs to its new partners.


Hanmi’s R&D investment culminated in six deals announced last year worth $656 million in upfront payments. The deals were with multinational companies including Johnson & Johnson, Sanofi and Eli Lilly and Co.


“Hanmi is one of the cases demonstrating that investment in R&D pans out — if you invest, you will get something out of it,” said Nam.


Qurient’s KDDF grants were for preclinical and clinical studies of its Q203. The first-in-class inhibitor of Mycobacterium tuberculosis cytochrome bc1, a bacterial enzyme complex needed for respiration, is in Phase I testing to treat multi-drug resistant and extensively drug-resistant TB.


Qurient was founded in 2008 to develop compounds discovered by and licensed from the Institut Pasteur Korea and other research facilities. Q203 was discovered at the institute and licensed to Qurient.


Qurient’s most advanced program is Q301, a topical leukotriene inhibitor that has completed Phase IIa testing to treat atopic dermatitis. Other novel programs in development include Q-4, an AXL inhibitor in preclinical testing for cancer. Qurient licensed the compound from the Max Planck Institute in 2013.


POOL OF POTENTIAL


Other companies that have received government funding include PharmAbcine Inc., Genexine Co. Ltd. and CrystalGenomics Inc.


PharmAbcine has received more than $3 million from the Ministry of Health and was founded in 2008 based on research at the Korean Research Institute of Bioscience and Biotechnology (KRIBB).


The company’s lead program is tanibirumab, a human mAb against VEGF receptor 2 (KDR/Flk-1; VEGFR-2) in Phase II testing for triple-negative breast cancer.


Tanibirumab is cross-reactive with other species, which allows the biotech to test it in different animal models prior to putting it in the clinic, making design and execution of clinical trials more efficient. Cyramza ramucirumab, a marketed human IgG1 mAb VEGFR-2 antagonist from Lilly, does not have the same cross-reactivity.


“We learn every tumor it might be sensitive to based on the tumor angiogenesis. And we can use that to design better and more sophisticated clinical trials,” said CEO Jin-San Yoo.


Lilly markets Cyramza for gastric cancer in the U.S. and Europe. The drug is also approved in the U.S. to treat metastatic colorectal cancer (mCRC) and NSCLC. It is in a Phase III trial in HER2-negative breast cancer, and multiple Phase II and Phase III studies in other solid tumors.

PharmAbcine suggested that tanibirumab may have a larger therapeutic window based on Phase I data. According to Yoo, there was no doselimiting toxicity for the mAb at 24 mg/kg. In Phase I studies, dose-limiting toxicity of Cyramza was reached at a16 mg/kg dose. Additionally, Yoo said that PharmAbcine hasn’t yet seen the hypertension and hemorrhage side effects that are common with other VEGF inhibitors and have also been reported for Cyramza.


PharmAbcine also has a bispecific antibody technology and has outlicensed lead candidate DIG-KT, which targets VEGFR-2 and tyrosine kinase receptor 2 (Tie2). DIG-KT is in preclinical testing for solid tumors.


China’s 3SBio Inc. has exclusive rights to develop, manufacture and market the antibody in Taiwan, Korea and China, including Macau and Hong Kong. Triphase Accelerator Corp. has rights elsewhere, and Celgene Corp. has an option to acquire the program from Triphase.


CrystalGenomics received W13 billion ($10.4 million) from the Ministry of Health in 2014 to support commercialization of Acelex polmacoxib and global clinical trials of the biotech’s clinical programs. The company uses structure-based biology to develop small molecules, with a focus on cancer, inflammation and infectious disease.


Acelex, a dual-acting cyclooxygenase-2 (COX-2) and carbonic anhydrase (CA) inhibitor, was approved in Korea in February 2015 to treat osteoarthritis and is marketed there by Dong-A Socio Holdings Co. Ltd.


CrystalGenomics designed-in the molecule’s CA inhibition, because competitive binding to CA reduces COX-2 inhibition in tissues where that mechanism causes side effects, such as the GI tract, blood and kidneys.


The company’s next-most advanced program is CG400549, a potential first-in-class compound in Phase II testing to treat complicated acute bacterial skin and skin structure infections and to treat vancomycinresistant Staphylococcus aureus infections. CG400549 is an antibiotic targeting fabI enoyl-(acyl carrier protein) reductase.


Genexine received W7 billion ($5.6 million) from the government to develop its DNA vaccine platform. Its GX-188E is an HPV DNA therapeutic vaccine in Phase II testing to treat cervical cancer. The vaccine expresses the E6 and E7 proteins of HPV16 and HPV18.


CLINICAL PROS


Domestic innovators and multinational companies developing medical products in Korea have access to one of the largest clinical trial hubs in the world. According to an analysis by the Ministry of Health, in 2012, Seoul was home to 545 industry-sponsored clinical trials — more than any other city in the world.


In 2014, 652 clinical trials were approved across all of Korea, a 7.4% increase compared to 607 in 2013, according to Korea National Enterprise for Clinical Trials (KoNECT).


“The quality of physicians and their clinical trial experience makes it easier to do clinical trials here, particularly certain therapeutic areas like oncology,” said H. Michael Keyoung, president and CEO of Genexine. He noted that multinationals run clinical trials in Korea from Phase I through Phase III because of the efficiency with which local physicians are able to execute the trials.


Dong Wu, head of J&J’s Asia Pacific Innovation Center, likened Korean clinical research facilities to those of University of Texas MD Anderson Cancer Center and Johns Hopkins University.


“Korea could be another serious drug discovery and development player. Not only in the Asia-Pacific region, but also globally,” Wu told BioCentury.


He added that Korean facilities have generations’ worth of medical records for families, which is of particular interest for the U.S. pharma company’s disease interception research.

“If you can go back all these generations and build a family tree on that and see certain patterns like Type I or Type II diabetes and how to prevent that, it could be valuable,” Wu said.


He said the Asia Pacific center is evaluating potential collaborations with the 10 top research hospitals in Korea.


J&J has also been impressed with the level of academic and research talent and last November announced a partnership with the KDDF to put out a call for grant proposals for Type II diabetes programs. The goal of the program is to identify and co-invest in first- or best-in-class assets, he told BioCentury.


EFFICIENTLY SURPRISED


The efficiency of development and the quality of the data are beginning to attract U.S. companies to partner their own programs with Korean biotechs.


For instance, in 2015 RegeneRx Biopharmaceuticals Inc. formed a JV with G-treeBNT Co. Ltd. to develop and commercialize RegeneRx’s RGN-259 to treat dry eye and neurotropic keratitis in the U.S.


G-treeBNT has a majority stake in the JV and is responsible for development.


“One of the key components of their development process was to do CMC work because we had done very little. They took that on as part of their obligations and really got it done within a year, which was certainly sooner than we expected,” said J.J. Finkelstein, president and CEO of RegeneRx.


RGN-259 is a topical eye drop formulation of thymosin beta 4 (TB4), a naturally occurring 43-amino acid peptide. The compound is in Phase IIb testing for dry eye in the U.S., with data expected by early April.


Sorrento Therapeutics Inc. has had similar experiences. On March 2, Sorrento announced a JV with Yuhan Corp. to develop immuno-oncology therapeutics.


Yuhan will contribute $10 million to the JV and will receive rights outside the U.S., EU and Japan to one immune checkpoint antibody against an undisclosed target, plus global rights to two additional Sorrento antibodies selected by the JV. Yuhan will have a 51% stake in the JV.


Yuhan declined to be interviewed. According to Sorrento CEO Henry Ji, Yuhan has a “strong R&D team that is clinically experienced and have developed quite a few programs now in-house.”


The company markets Pruvel prulifloxacin for bacterial infection and Revanex revaprazan, an acid pump antagonist, for gastric ulcers. Pruvel is a fluoroquinolone antibacterial agent.


Yuhan has 23 programs in its pipeline, many of which are undisclosed. Novel programs that are disclosed include a preclinical G protein-coupled receptor 119 (GPR119) agonist for diabetes.


Yuhan also has YH14618, a transforming growth factor (TGF) beta 1 (TGFB1) antagonist in Phase I/II to treat degenerative disc disease.


Sorrento also has in-licensed programs developed in Korea. In 2013, the company gained rights to Nant-paclitaxel (Cynviloq), an injectable nanoparticle formulation of paclitaxel from Samyang Corp.


Samyang was already marketing the drug in Korea to treat NSCLC and metastatic breast cancer. According to clinicaltrials.gov, the compound is in the pivotal TRIBECA trial to determine bioequivalence to Abraxane nab-paclitaxel in patients with metastatic or locally recurrent breast cancer. Nant-paclitaxel was acquired by NantWorks LLC last May for $90 million up front and $1.2 billion in regulatory and sales milestones.


“They had already done exhaustive clinical studies and we were impressed by the very high quality of the data,” Ji said.


Korean biotechs in general “have very high standards in terms of data quality and management, sometimes even higher than in the U.S.,” Ji said.


He predicted that “we’ll start to see more activity in Korea in terms of U.S. companies looking for assets and collaborations because they do have innovative stuff.”


GOING GLOBAL


All of the Korean biotechs contacted by BioCentury have global ambitions.


“To succeed in this business, we have to focus from A to Z on the global market,” said PharmAbcine’s Yoo.


Some, such as PharmAbcine and LegoChem Biosciences Inc., are conducting early development in the Asia-Pacific region to produce data that will attract global partners.


PharmAbcine is using revenues from its licensing deals for DIG-KT to conduct further development of tanibirumab in the hopes of attracting a global partner. Despite the quality of Korea’s clinical trial infrastructure, the biotech is conducting its Phase II study of the mAb in Australia because it believes the POC data generated there will carry more weight with potential partners.


“When I told potential partners that we were going to do our trial in Korea, they said, ‘Okay, we’ll see,’” said Yoo. “And then when we decided to do the triple-negative trial in Australia, and get proof-of-concept data from Caucasians, they said, ‘Wow, we’re interested. Keep us updated.’”


LegoChem is counting on POC data from its China partner to attract a more global licensing deal. Last year, the company announced a deal with Fosun International Ltd. to develop and commercialize LCB14 in China.


LCB14 is LegoChem’s lead next-generation antibody-drug conjugate. The preclinical candidate targets HER2.

Spokesperson Wooshik Kim said Fosun will conduct development in China, and the preclinical and clinical data will be available to LegoChem to support future worldwide out-licensing opportunities.


Kim said LegoChem has more than 10 ongoing collaborations with global and local partner companies for its ADC technology, including a 2015 partnership with Theranyx to co-develop ADCs based on targets selected by the French company. Upon candidate selection, the partners plan to jointly out-license the ADCs to a third party.


CrystalGenomics aims to keep Korean rights to get its feet wet in commercialization.


“The first stage is to do an alliance with an MNC outside of Korea to penetrate other countries and do Korea by ourself. Then eventually we will take on commercialization in other countries to become an integrated global biopharma company in Korea,” President and CEO Joong Myung Cho told BioCentury.


Qurient is starting in the U.S. “We are working with new chemical entities and KOLs in the U.S., as well as regulators in the U.S., who have a good amount of experience in working with NCEs,” Nam told BioCentury. “It’s much easier having a KOL on board and in our Phase II trial in the U.S. because we are able to get direct comments from the KOL field much more easily than showing them data we generated in Korea and trying to convince them,” Nam said.


G-treeBNT is hoping its JV with RegeneRx will give it some early experience in the U.S. commercial market that will help it launch its other programs.


“This is our initial approach to developing a pipeline in the U.S. and then commercialize. We hope to build on that,” said CEO Won Yang.


In addition to its ophthalmic program, G-treeBNT also has OKN007, a disulfonyl derivative that targets sulfatase 2 (SULF2) that is overexpressed on cancer cells. The program has completed Phase Ib testing in glioblastoma.


Green Cross Corp., which markets its IVIG-SN IgG in more than 30 countries in Asia, South America and the Middle East, will use distributors for the product in the U.S.


Green Cross will seek partners in the U.S. and Europe for some of its other pipeline programs, including GC1102 and GC1101C. G1102 is a recombinant HBV immune globulin that is in Phase II testing to prevent the recurrence of HBV infection following liver transplant. The product has Orphan Drug designation for the indication from FDA and EMA.


GC1101C is a recombinant Factor VIII that is in Phase III testing to achieve homeostasis in patients with hemophilia A.


Additionally, the company’s allogeneic NK cell program is moving into a Phase II trial for hepatocellular carcinoma in Korea. “Definitely for global market entry we will need and are looking for global partnerships,” President B.G. Rhee told BioCentury.


Green Cross wants to in-license technologies developed by U.S. companies for unmet medical needs that are predominant in Asian countries, such as hepatitis.

“We want to also bring their technology from the U.S. to the Asian market,” said Rhee.


Companies seeking to globalize could get a leg up from an MOU signed last year by Korea’s Ministry of Health and Welfare, along with South American and Middle East countries. The agreement would allow drugs approved in Korea to be approved and marketed in these other countries without having to do additional testing.


“That’s a good sign for my company because now we can export any new drugs approved by Korea Ministry of Health to some of these other countries, which can help grow our global presence,” CrystalGenomics’ Cho said.


At the end of the day, the mark of success for the Korean industry will be U.S. or European approval and commercial launch.


“For the excitement we’ve seen from investors to last, things have to translate into a successful product. Not only for the domestic market but for the global market,” said investor Kim.


“We need to give our potential partners out there a credential that we can actually make data in a relevant way and that we have integrity in our R&D system,” said Qurient’s Nam.







COMPANIES AND INSTITUTIONS MENTIONED


Catalyst Biosciences Inc. (NASDAQ:CBIO), South San Francisco, Calif.

Celgene Corp. (NASDAQ:CELG), Summit, N.J.

Corestem Inc. (KOSDAQ:166480), Seoul, South Korea

CrystalGenomics Inc. (KOSDAQ:083790), Seongnam, South Korea

Dong-A Socio Holdings Co. Ltd. (KOSDAQ:000640), Seoul, South Korea

Eli Lilly and Co. (NYSE:LLY), Indianapolis, Ind.

Fosun International Ltd. (HKSE:0656), Shanghai, China

Genexine Co. Ltd. (KOSDAQ:095700), Seoul, South Korea

Green Cross Corp. (KSE:006280), Yongin-si, South Korea

G-treeBNT Co. Ltd. (KOSDAQ:115450), Seongnam, South Korea

Hanmi Pharmaceutical Co. Ltd. (KOSDAQ:128940), Seoul, South Korea

Institut Pasteur Korea, Seongnam, South Korea

The Johns Hopkins University, Baltimore, Md.

Johnson & Johnson (NYSE:JNJ), New Brunswick, N.J.

Kangstem Biotech Co. Ltd. (KOSDAQ:217730), Seoul, South Korea

Korea National Enterprise for Clinical Trials (KoNECT), Seoul, South Korea

Korean Research Institute of Bioscience and Biotechnology (KRIBB), Daejon, South Korea

LegoChem Biosciences Inc. (KOSDAQ:141080), Daejon, South Korea

LG Life Sciences Ltd. (KSE:068870), Seoul, South Korea

Max Planck Institute, Berlin, Germany

Ministry of Health and Welfare, Seoul, South Korea

NantWorks LLC, Los Angeles, Calif.

Novartis AG (NYSE:NVS; SIX:NOVN), Basel, Switzerland

PharmAbcine Inc., Daejon, South Korea

Qurient Co. Ltd. (KOSDAQ:115180), Seongnam, South Korea

RegeneRx Biopharmaceuticals Inc. (OTCBB:RGRX), Rockville, Md.

Samyang Corp. (KSE:000070), Seoul, South Korea

Sanofi (Euronext:SAN; NYSE:SNY), Paris, France

Sorrento Therapeutics Inc. (NASDAQ:SRNE), San Diego, Calif.

Spectrum Pharmaceuticals Inc. (NASDAQ:SPPI), Henderson, Nev.

Theranyx, Marseille, France

3SBio Inc. (HKSE:1530), Shenyang, China

Triphase Accelerator Corp., San Diego, Calif.

University of Texas MD Anderson Cancer Center, Houston, Texas

Yuhan Corp. (KSE:000100), Seoul, South Korea


REFERENCES


Cukier-Meisner, E. “Worldwide web.” BioCentury (2016)


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