[Edaily Reporter KIM SAE-MI ] Large-scale domestic capital is flowing into proven platform-based biotech companies, evolving into long-term growth funding for global new drug development.

BioTech Companies

Attracting Hundreds of Billions in Cash… The “Quality” of Funding Has Changed

Following AprilBio Co.,Ltd.(397030)’s recent securing of 346.8 billion won in investment from IMM Investment and T. K. CORPORATION, LigaChem Biosciences(141080)is set to receive 500 billion won from the National Growth Fund. Including the case from early last month where Olix Pharmaceuticals, Inc.(226950)raised 110.7 billion won from L’Oréal Group’s venture fund and a U.S. asset management firm, there is a growing trend of substantial external capital flowing into domestic biotech companies.

The biotech industry is noting that the nature of the capital inflows has changed from the past. The assessment is that not only has the scale of capital inflows increased, but the quality has also improved. In particular, the investment horizon has lengthened as strategic investors (SIs), policy-based financial institutions, and long-term financial investors (FIs) have participated, rather than relying on funding centered on convertible bonds (CBs), which can be liquidated in the short term. Given that the nature of new drug development inevitably requires large-scale capital investment over an extended period, securing long-term growth capital is crucial.

In fact, through this funding round, AprilBio Co.,Ltd. has secured the resources to move beyond its previous approach of developing one pipeline at a time and is now able to advance multiple pipelines simultaneously. Previously, AprilBio Co.,Ltd. could only conduct development on a limited basis according to priority using its existing cash reserves alone; however, with the inflow of 346.8 billion won, the company has laid the groundwork to proceed in parallel with entering clinical trials, securing preclinical data, and building packages for technology exports.

The fact that foreign capital is beginning to flow in is also a positive sign. In early June, Olix Pharmaceuticals, Inc. raised 110.7 billion won from BOLD, the L’Oréal Group’s venture fund, and U.S. asset manager Weiss Asset Management, thereby gaining recognition for the global commercialization potential of its RNA interference (RNAi) platform. More recently, the company expanded its RNAi-based R&D efforts by signing a new pipeline collaboration framework agreement with the L’Oréal Group (hereinafter “L’Oréal”). ABL Bio Inc. also received a 22 billion won equity investment from Eli Lilly last year. This is a rare instance of a big pharma company directly acquiring a stake in a domestic biotech firm.

This influx of capital was underpinned by confidence in the biotech company’s platform technology. A biotech industry insider analyzed, “When tens of billions of won flow into a single biotech company, it implies a foundation of trust in its technology and management,” adding, “Unlike convertible bond (CB)-style funding aimed at short-term gains, recent deals involve both strategic investors (SI) and financial investors (FI), making them distinct in that they represent more long-term capital.” The source added, “Ultimately, external funding serves to separate the wheat from the chaff among biotech companies.”

Conditions for Biotech Companies to Attract Solid Funding

So, what do these biotech companies, which are attracting such substantial funding, have in common? The biotech industry points to the following as common factors: △possession of platform technology, △a track record of numerous technology exports, and △ample cash reserves. Ultimately, the key factor cited was their possession of the technological scalability and capital-raising capabilities necessary to undertake global new drug development.

There are numerous examples overseas of companies with platform technologies successfully developing new drugs on a global scale.

Alnylam possesses a siRNA delivery platform consisting of GalNAc conjugates and lipid nanoparticles (LNPs). Building on this, Alnylam developed “Onpattro” in 2018, received approval from the U.S. Food and Drug Administration (FDA), and launched the world’s first RNAi drug. Since then, six RNAi therapeutics discovered by Alnylam—including Onpattro—have been commercialized, demonstrating the platform’s reproducibility.

Seagen, which has accumulated expertise in monomethyl auristatin E (MMAE)-based ADC linker-payload technology, is also recognized as a leading ADC platform biotech company with multiple FDA approvals to its credit. Seagen’s vedotin-class ADC technology utilizes the cytotoxic payload MMAE and a protease-cleavable linker, and has been applied to commercialized drugs such as “Adcetris,” “Padsev,” and “Tivdak.” Recognized for the competitiveness of its ADC platform, Seagen was acquired by Pfizer in 2023 for $43 billion (approximately 56 trillion won).

The recent trend in South Korea of large-scale capital flowing into platform-based biotech companies aligns with these overseas success stories. LigaChem Biosciences possesses an ADC platform, AprilBio Co.,Ltd. has a SAFA- and REMAP-based protein and antibody platform, and Olix Pharmaceuticals, Inc. holds an RNAi platform. It appears that the appeal to investors lies in the fact that these companies are not structured to bet on a single drug candidate but can scale across multiple pipelines.

A biotech industry insider explained, “For companies with a single pipeline, the likelihood of recouping investment drops sharply in the event of failure, whereas platform-based companies can expand a single technology across multiple candidates and indications.” They added, “From an investor’s perspective, companies with platform technologies find it easier to chart a path to value creation following an infusion of capital.”

Another commonality is that these companies have undergone repeated external validation through numerous technology export deals. Ligacem has accumulated a track record of 15 technology transfer deals totaling approximately 9.6567 trillion won (excluding undisclosed upfront fees). AprilBio Co.,Ltd. has also successfully exported technology to Lundbeck and Evomune, with cumulative contract value reaching 1.2 trillion won. In the case of Olix Pharmaceuticals, Inc., following a technology transfer agreement with China’s Hanso Pharmaceutical, it signed a deal with the big pharma company Eli Lilly, bringing its cumulative contract value to 1.4485 trillion won.

Based on this track record of technology transfers, these companies share a common characteristic: they have clear paths to monetization and are well-funded. At the end of the first quarter, LigaChem Biosciences’ cash and cash equivalents (including 380.2 billion won in other current financial assets) totaled 452.2 billion won. During the same period, Olix Pharmaceuticals, Inc. also had cash and cash equivalents (including short-term financial instruments) of 98.8 billion won, while AprilBio Co.,Ltd. (including short-term financial instruments) had 82.9 billion won, indicating that neither company was short on cash.

A biotech industry insider noted, “Ironically, funds are flowing more toward companies that already have ample cash,” adding, “From an investor’s perspective, platform-type biotech companies with strong cash reserves inevitably appear to be relatively more proven investment opportunities.”