[Edaily Reporter KIM SAE-MI ] MEDIPOST CO., LTD.(078160)maintained an operating profit on a standalone basis in the first half of this year, but its consolidated operating loss widened due to increased R&D expenses related to global clinical trials and regulatory approvals underway in the U.S. and Japan. Consolidated net income turned positive as a result of substantial gains from the valuation of derivatives.

MEDIPOST CO., LTD. announced on the 14th that its consolidated operating loss for the first half of this year was 41.2 billion won, a 26.1% increase compared to the same period last year. During the same period, revenue rose 3.2% to 38.2 billion won, and net income turned to a profit of 21.4 billion won, compared to a net loss of 40.8 billion won in the same period last year.

A significant increase in consolidated R&D expenses contributed to the widening of the loss. R&D expenses for the first half totaled 43 billion won, up 26.5% from 34 billion won in the same period last year. Looking at the second quarter alone, R&D expenses amounted to 25.3 billion won, a 33.7% increase year-over-year.

The company explained that this was due to R&D and clinical trial costs associated with its expansion into the U.S. and Japanese markets. It noted that expenses were incurred in preparation for the marketing authorization application for Cartistem in Japan and for the treatment and administration of patients in the U.S. Phase 3 clinical trial.

Consolidated revenue for the second quarter was 18.8 billion won, up 5.3% year-over-year. The operating loss widened by 28.1% to 24.3 billion won, compared to 19.0 billion won in the same period last year.

On the other hand, on a non-consolidated basis, the company maintained an operating profit for the first half of the year. Non-consolidated revenue for the first half totaled 41.3 billion won, a 5.8% increase year-over-year, and operating profit stood at 700 million won. However, operating profit decreased by 46.9% compared to the 1.4 billion won recorded in the same period last year.

On a quarterly basis, standalone results also turned to a loss. Second-quarter standalone revenue was 19.9 billion won, a 6.0% increase year-over-year, but the company posted an operating loss of 1.1 billion won. In the second quarter of last year, the company had posted an operating profit of approximately 84 million won.

The return to profitability in consolidated net income for the first half of the year was driven more by financial gains than by improvements in operating performance. MEDIPOST CO., LTD. recognized 63.5 billion won in gains on the valuation of derivatives during the first half of the year. Consequently, financial income surged from 5.6 billion won in the first half of last year to 73.5 billion won this year.

Reflecting these derivative valuation gains—which do not involve cash outflows—the company posted a consolidated net profit of 32.2 billion won in the second quarter as well. In contrast, consolidated cash flow from operating activities for the first half showed a net outflow of 29.8 billion won.

As of the end of the first half, MEDIPOST CO., LTD.’s consolidated cash and cash equivalents stood at 78.4 billion won, while short-term financial assets totaled 115.0 billion won. Liquidity was significantly bolstered by the issuance of 150.0 billion won in convertible bonds (CBs) during the first half of this year.

MEDIPOST CO., LTD. plans to accelerate the global development of “Cartistem” in the second half of the year. Based on the fact that it met key endpoints in the Phase 3 clinical trial in Japan, the company is pursuing a marketing authorization application in Japan by the end of the year. In the U.S., it plans to proceed with patient dosing for the Phase 3 clinical trial. By the end of the year, the company intends to release interim results of real-world evidence (RWE) based on treatment data from approximately 560 patients in South Korea who received Cartistem more than three years ago.

A MEDIPOST CO., LTD. official stated, “While maintaining a profitable trend based on standalone financials, we are pursuing revenue growth from new growth engines such as our regenerative medicine business,” adding, “We will pursue global milestones in the second half of the year, including the initiation of patient dosing for the U.S. clinical trial and the submission of a marketing authorization application for CATIS INC. in Japan.”