1. DOES KOREAN BIOTECH HAVE A CHANCE? Case Study of Two Small Bioventure Companies Grown from a University: Lessons and Implications SUNYOUNG KIM Seoul National University www.sunyoungkim.com

2. Contents  ViroMed Co. Ltd.  PanGenomics Co. Ltd.  Lessons and Implications

3. Gene Transfer IN VIVO EX VIVO Culture Selection Injection GENE THERAPY Cells Chemotherapy : Chemical = Drug Gene Therapy : Gene = Drug Gene

4.  Founded in 1996.  Goal: Development of Gene-Based Therapeutics and Related Technologies for the Treatment of Human Diseases ViroMed Co. Ltd. (Science, 1997)

5. Early Stage of ViroMed (1997 -1998) Paid-in capital Venture capitals Research grants from MOST -Established Pharmaceutical companies in Korea  They want risk-free investments.  To them, gene therapy is too futuristic, too long term, and too risky. TechnologyCapital People Seoul National University ViroMed High quality scientists Patents Scientific publication

6. Major Turning Point TaKaRa Bio (then-TaKaRa Shuzo) became the largest shareholder of ViroMed with an investment of US $6 million in March 2000 Dr. Ikunoshin Kato President TaKaRa Bio “ We believe that their vectors are superior to any others currently available in the field, but what we are really impressed by are in their speed of progress, competitiveness and strong determination for making better vectors.”

7. Milestones achieved since the year 2000 Performing Korea’s first KFDA approved clinical trial together with Dong-A pharmaceutical. Development of gene-based drugs for ischemic diseases, cancer rheumatoid arthritis, and genetic diseases. Licencing (out) to companies in U.K, Japan, and China. Establishment of Gene Therapy Clinic for Immune Deficiency and Metabolic Disorders. (Children’s Hospital, SNU) Signing of an international collaborative clinical trial agreement with Genethon (France). Many patents filed and issued. A number of scientific publications in major academic journals.

8. China US Clinical trial Beyond Korea Retronectin  The alliance led to the consolidation of resources and eventually to the powerful creation of an internationally competitive gene therapy organization. Oxford Biomedica Molmed Europe Genethon

9. 회사설립 동기 1994 유전자치료 G7 프로젝트시작 ( 참여기업 N 사 ) 긍정적인 실험결과 N 사 접촉, 15 억원 규모 투자 제안 국제학회에서 발표 외국기업들이 접촉 해옴 영국기업, 라이센싱 (in) 약속 ㈜ 바이로메드 설립 NO 1996

10. 1999 년 국내 VC 들 투자 동아제약과 제휴 2000 년 일본기업 (TaKaRa) 6 백만불 투자 C, D, N, L 사등 접촉 ( 제휴, 투자유치 ) 유럽 임상시험 협약 불란서 Genethon 라이센싱 (out) 중국 NL 사 ㈜ 바이로메드 설립 국내 대기업 접촉, 투자 유치 노력 ( C, L, S 사등 5 개 기업 ) 일본 VC 투자 유치 해외투자 유치와 국제협력 국내 최초의 KFDA 허가 임상시험 2003 년 2004 년 영국, 라이센싱 (out) NO

11. Problems with Domestic Companies Technology evaluation Lack of confidence in home-grown domestic technology/product Decision-making process Compensation scheme

12. Dilemma of Biotech Start-Up Companies in Korea Aiming at Developing Innovative Drugs. 1. Investors want both high return and minimum risk. 2. Investors want EXIT within the earliest possible time. 3. It takes minimum 5-7 years to place the actual products into the market. We have to look for partners in the US or Japan where the shear volume of capital is big enough to tolerate the long term, high risk investment.

13. A short-term cash generation program must be implemented that can help the company sustain itself until the actual products are licensed with a reasonable level of compensation or placed into the market. Lesson from ViroMed Experience Creation of PanGenomics. Co. Ltd

14. Molecular Biology and Pharmacology of Nutraceuticals & Oriental Herbal Medicines (MOM) Major R&D and Business Domains

15. 후보 물질 ▣ 개발 완료 제품 PG102: 알레르기 치료제 (Pilot 생산 시작 ) PG201: 관절염 및 관절 기능 (Pilot 생산 시작 ) PG202: 위장관 운동 ( 생산 준비중 ) PG101: 면역 조절 ( 생산조건 최적화중 ) ▣ 1 년 내 개발 완료 제품 PG105: 비만 치료제 (Pilot 임상 연구중 ) PG106: 치매 치료제 PG203: 스트레스 / 우울증 (formulation 개선중 )  향후 5 년간 매년 1- 2 개 신제품을 개발할 예정

16. 항알레르기 물질을 미국 기업에 라이센싱 우리나라 전체 기술 수출액 = 2 억 달러 수준 우리나라 전체 기술 도입액 = 30 억 6 천 2 백만 달러  약 28 억 달러의 적자 국내 제약업계의 기술 수출액 = 2350 만 달러 ( 한국제약협회, 2000 년 조사 자료 ) ㈜팬제노믹스의 이번 기술이전계약을 통한 수익 : 정액 기술료 = 210 만 달러 (2 년간 ) 로열티 = 매출액 대비 12.5 % (10 년간 5 천 ~1 억불 수준 ) (2004.5)

17. 1. Manpower: PanGenomics consists of 5 workers and 3 graduate students. 2. Budget: Less than $1 million was spent on the PG102 project over the 3 year period. 3. Leadership: The MOM project was formed and carried out under strong oppositions from all interested parties. 4. International networks: PanGenomics, though small, has built up strong international networks with world renowned institutions and individuals. 5. Intellectual property: PanGenomics filed a number of patents at the international level, very rare in the field of herbal medicines and nutraceuticals. 6. Korean discount: All Korean companies have shown virtually no understanding of high level science and technology and have always requested unacceptable package discounts and reductions during negotiations. Points that deserve to receive attention:

18. LESSONS FROM OUR EXPERIENCE 1. 설립자 : Scientific Capability, Motivation, Business Mind, International Network 2. 지적재산권 3. 국내에서 전략적 제휴의 어려움 ( 기술 평가, 모험분석, 보상 ) 4. 해외 진출과 국제 네트웍의 구축 5. Cash flow 6. Business model 7. 실험실 벤처의 虛와實

19. Y E S Y E S Give a chance to Korean biotech, but with sophisticated guidance.