[Edaily Reporter KIM SUNG-JIN ] Kangstem Biotech, which recently successfully completed a Phase 2a clinical trial for its osteoarthritis treatment candidate “OSCA,” is considering ways to complete follow-up clinical trials as quickly as possible. The leading options under consideration are either skipping Phase 2b entirely or combining Phase 2b and Phase 3 into a single trial. Kangstem Biotech recently officially announced that it has no plans to issue 30 billion won worth of convertible bonds (CBs); this financial strategy is also interpreted as a decision made with the goal of accelerating the clinical trial process.
Skip Phase 2b or Combine It with Phase 3?According to industry sources on the 4th, Kangstem Biotech is currently focused on developing a strategy to shorten the clinical trial period following Phase 2a. The company views the results obtained from this Phase 2a trial very positively and anticipates that they will enable it to accelerate its future clinical plans.
Previously, on the 29th of last month, Bae Yo-han, Head of Clinical Development at Kangstem Biotech, hinted at the possibility of shortening the subsequent clinical trial during a press conference announcing the top-line results of the Oscar Phase 2a trial, stating, “We did not say that the next clinical trial would necessarily be a Phase 2b trial.”
Although specific clinical plans have not yet been disclosed, it is understood that the company is considering either skipping Phase 2b or conducting Phase 2b concurrently with Phase 3. Lee Gye-jong, Chief Financial Officer (CFO) of Kangstem Biotech, explained in a phone call with Pharm iDaily, “We are currently considering our follow-up clinical strategy while taking various variables into account,” adding, “For example, if we set the Phase 2b trial enrollment at 400 participants, we could split the data midway to review the results for 200 participants and conclude the trial for the remaining 200 in Phase 3.”
It is reported that trends in clinical trial design for new drug development in Korea have recently become more diverse in terms of strategy and planning. A regulatory affairs (RA) professional in the pharmaceutical and biotech industry noted, “These days, clinical trial designs have become more flexible compared to the past, and there are cases where a company moves directly to Phase 3 after completing Phase 1.”
While specific clinical plans are expected to be finalized through discussions with the Ministry of Food and Drug Safety (MFDS), the key issue is whether Kangstem Biotech has secured sufficient data to convince the MFDS. Kangstem Biotech appears confident following positive results from its Phase 1 and Phase 2a trials. The company conducted its Phase 2a trial on 113 patients with moderate knee osteoarthritis, evaluating the safety and efficacy of both the medium-dose and high-dose groups. In particular, Kangstem Biotech viewed the confirmation of structural improvements—in addition to pain relief—as an encouraging sign.
“No Need for Capital Raising for the Next Two Years”Kangstem Biotech’s accelerated clinical development is closely tied to its financial strategy. The company dismissed rumors circulating in some quarters regarding plans to issue 30 billion won worth of convertible bonds (CBs), stating that it can operate without raising capital for the next two years.
In response to a question from Pharm Daily asking whether there were any plans for additional capital raising—such as a rights offering—excluding convertible bonds, CFO Lee drew a clear line, stating, “We have absolutely no plans for additional capital raising, including convertible bonds or rights offerings.” He explained, “We planned this financial strategy by solidifying our business in areas such as organoids,” adding, “We plan to utilize the cash inflows generated through commercialization.” Organoids are a technology that creates miniature organs—such as human skin or the pancreas—in test tubes for use in new drug development and cosmetic evaluations. Kangstem Biotech has been generating revenue by signing contracts with clients since late last year. On the 16th of last month, the company also announced that it had signed a “Material Transfer and Evaluation Agreement” (MTEA) based on organoids with one of the world’s top five pharmaceutical companies. The company’s financial strategy is expected to shift depending on the level of revenue generated by the organoid business.
According to the first-quarter report for this year, on a standalone basis, Kangstem Biotech held approximately 32.6 billion won in cash and cash equivalents combined with short-term financial instruments. Current liabilities due within one year totaled approximately 4.1 billion won. CFO Lee stated, “Although we considered issuing convertible bonds (CBs), we had established an internal policy from the early stages to proceed with the issuance only under favorable conditions, such as the interest rate.” He added, “However, since we were not offered terms as favorable as expected, we decided not to issue the CBs.”
“Commercialization Timeline Could Be Shortened by at Least 3 Years”Kangstem Biotech expects to significantly reduce the time to
commercializationby conducting Phase 2b and Phase 3 clinical trials concurrently. The CFO explained, “If Phase 2b and Phase 3 are conducted separately, it would take 6 to 7 years to reach commercialization, but conducting them concurrently could save at least 3 years.”
Kangstem Biotech plans to present the results of this clinical trial at international conferences starting this November and is preparing for follow-up clinical trials with the goal of obtaining approval by May of next year. Based on this, the company plans to begin the follow-up clinical trial in August of the same year and submit a clinical trial application to the U.S. Food and Drug Administration (FDA) in December.
If parallel clinical trials are feasible, corresponding cost savings are also expected. While Yu Young Pharmaceutical, which is collaborating with Kangstem Biotech, is scheduled to cover the full cost of the Oscar follow-up clinical trial, Kangstem Biotech also anticipates reducing indirect costs, such as personnel support related to clinical trial operations.
Kangstem Biotech recently appointed Professor Kang Kyung-sun of Seoul National University’s College of Veterinary Medicine—the company’s founder and technical advisor—as Chief Scientific Officer (CSO) in an effort to strengthen its research and development (R&D) capabilities. Professor Kang founded Kangstem Biotech in 2010 based on umbilical cord blood stem cell technology developed at Seoul National University. He transitioned to the role of Chairman of the Board in 2017 and stepped down to serve as a technical advisor in 2021.
