[Edaily Reporter Kim Jinsoo ] There have been repeated instances of domestic biotech startups building factories even before product development is complete or before signing contracts with global companies. However, contrary to expectations, it is difficult to find success stories.

In particular, some point out that factory construction often serves merely as a pretext for raising funds, given that a significant portion of the capital raised for this purpose is actually used for research and development and operating expenses.

Peptron Expands Plant Site… Main Contract with Lilly Remains Uncertain

To commercialize its SmartDepo-based long-acting formulation technology, Peptron carried out a capital increase in the second half of 2024, raising 120 billion won through a rights offering followed by a public offering of unsubscribed shares. It allocated 65 billion won to its second plant under construction in Osong, North Chungcheong Province, and 55 billion won to working capital. Peptron plans to increase the production capacity of its existing Osong plant—currently at a maximum of 1 million vials per year—by a factor of 10.

However, the plant expansion plan did not proceed smoothly. Due to delays in obtaining building permits, the final construction permit was not issued until December 2025. Consequently, the target completion date was pushed back from December of this year to June of next year, and the investment scale increased from 65 billion won to 89 billion won. This means that even after securing the funds, construction could not begin for over a year.

Amid these developments, Peptron announced on the 24th that it had applied for a building modification permit to reflect design changes aimed at expanding the production and support facilities at Plant No. 2. According to the proposed changes, the total floor area of Plant No. 2 will be expanded by 2.5 times, from approximately 12,000 square meters to about 30,000 square meters. Along with the modification permit process, Peptron is proceeding with follow-up procedures, such as selecting a construction contractor.

However, the biggest risk is the uncertainty surrounding the contract with Eli Lilly. Although Peptron signed a technology evaluation agreement with Lilly for its SmartDepo platform in October 2024, the evaluation period was extended to October of this year, and there has been no news yet regarding a formal contract.

Market concerns have grown, particularly after Lilly signed a contract in June 2025 with Sweden’s “Kamurus”—considered a competitor of Peptron—to develop and commercialize a long-acting incretin therapy worth up to $870 million. Although Peptron has stated that there are no issues regarding the technology evaluation, market anxiety remains unresolved due to the overlap in the target pipelines.

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CDMO Before Approval… The Outcomes for Helixmith and Curatis

On September 28, 2020, Helixmith decided to conduct a capital increase worth 281.7 billion won. The funds were allocated as follows: 107.9 billion won for facility construction, 103.8 billion won for working capital, and 70.0 billion won for debt repayment. Helixmith completed construction of a GMP facility for cell and gene therapies the following year, entered the CDMO business, and set a goal of 10 billion won in revenue within two years. However, it failed to deliver concrete results and was eventually acquired by BioSolution in 2023.

Curatis is another example of a company that built a factory without any approved products or concrete contracts, ultimately leading to its sale. Curatis constructed a factory in Osong in 2020, even though its vaccine under development was still in the early stages of clinical trials. The company planned to secure revenue through CDMO services, but the value of orders received was negligible. In 2024, the ratio of loss from continuing operations before income tax expense soared to 128.3%, and the company was eventually acquired by Inventige Lab.

Jinwon Life Science anticipated a surge in demand for plasmid DNA during the COVID-19 pandemic and significantly expanded the production facilities of its Texas-based subsidiary, VGXI. In 2020, the company lent VGXI $52.79 million (approximately 65 billion won) in facility funding, and in 2021, it raised 55.8 billion won in facility funding through a 140.2 billion won capital increase. The advance payments and loans invested in VGXI totaled 140.4 billion won, accounting for 73.45% of Jinwon Life Science’s assets. However, as the pandemic ended, demand plummeted, and VGXI fell into complete capital impairment.

Aprogen is currently developing biosimilars. Although these have not yet been approved, the company completed its Osong plant in 2018—a project requiring an investment of 370 billion won—to enable rapid production once approval is granted. However, delays in biosimilar approvals and a prolonged lack of external contract manufacturing orders have led to ongoing difficulties. Aprogen Biologics’ actual production output at the Osong plant stood at “0 liters” as of the first quarter of 2026. Since the Osong plant’s real estate has been pledged as collateral for the largest shareholder’s debt, the company’s ability to raise additional funds has also been severely limited.

Is the Plant Just a Pretext?

In all of the previous cases, companies proceeded with plant construction using external funding, but it was found that only half or less of the funds were actually used for construction. Looking at the proportion of raised funds used for plant construction, the figures are 54% for Peptron, 40% for Jinwon Life Science, and 38% for Helixmith.

Analysts suggest this is not unrelated to listing maintenance requirements. If the ratio of statutory losses to equity exceeds 50% on two or more occasions over a three-year period, a company is designated as a “monitored stock”; however, convertible bonds are classified as debt and thus do not contribute to capital expansion. Consequently, a rights offering is the most practical means of increasing equity.

Furthermore, critics point out that while “3 billion won in revenue”—a requirement for maintaining listing status following the grace period for KOSDAQ’s technology-based special listing—is generally achieved through technology exports by new drug developers, CDMO contract manufacturing is virtually the only viable option when technology exports are difficult. Consequently, they argue that factory construction amounts to little more than a stopgap measure.

An industry official stated, “Since it takes a considerable amount of time to build a facility that meets U.S. and other international standards and bring it into actual operation, we cannot simply say that proactively moving forward with facility construction is a bad thing.” However, the official added, “But constructing a facility blindly without a concrete operational plan poses a risk.”