[Edaily Reporter Minji Son ] The financial health of domestically listed biotech companies is diverging sharply depending on their performance in technology transfers and commercialization. It is estimated that some companies will need additional funding within a year if their current cash burn rate continues. In contrast, companies that have secured technology royalties and product sales showed relatively healthy cash flow from operating activities.

An analysis of the financial health of major biotech companies that submitted their semi-annual reports this year via the Financial Supervisory Service’s electronic disclosure system on the 24th revealed that the simple cash burn periods for ABION Inc.(203400)and Aptabio Therapeutics Inc.(293780)were 5.6 months and 8.3 months, respectively. GI Innovation Inc.(358570)was calculated at 9.8 months, while Genexine, Inc.(095700), Voronoi, Inc.(310210), andQurient Co., Ltd.(115180)were estimated to be around 11 months. In contrast, ABL Bio Inc.(298380)and Onconic Therapeutics Inc. recorded a net cash inflow from operating activities in the first half of the year.

Cash and cash equivalents refer to funds that a company can use for operating expenses—such as research and development (R&D) costs and personnel expenses—within a relatively short period. This figure includes cash and cash equivalents, plus short-term financial instruments and liquid financial assets such as deposits, income securities, and debt securities that can be converted to cash within one year. Funds subject to restrictions due to collateral, pledges, or escrow arrangements, as well as loans and accounts receivable, were excluded.

The cash-equivalent liquidity calculated in this manner was divided by the average monthly operating cash outflow to determine the depletion period. While restrictions on the use of specific financial instruments, additional costs associated with clinical trial expansion, one-time technology fees, and fluctuations in working capital could alter the actual depletion period, for the sake of simplicity, it was assumed that the pace of operating cash outflow in the first half of the year would continue at the same rate thereafter.

A short cash depletion period also implies that, in the absence of steady revenue from sources such as technology fees or product sales—or without external funding—the company will be able to sustain its current level of R&D activity for only a limited time. If funding is not secured, the company may need to adjust the schedules for ongoing clinical trials, patient recruitment, or the development of its pipeline.

A biotech industry official stated, “The cash burn period can suddenly increase due to technology transfer upfront payments or milestone payments, so a short period does not necessarily mean funds will be depleted immediately or that ongoing clinical trials must be halted,” but added, “As biotech companies advance through clinical stages and increase R&D investment, their funding needs grow exponentially, making proactive fundraising essential.”

In particular, the official added, “However, if a company’s financial cushion shrinks, the likelihood that it will pursue external financing measures—such as a capital increase or the issuance of convertible bonds—under unfavorable terms increases,” noting that “from an investor’s perspective, this could lead to equity dilution, while for the company, it could result in repayment burdens.”

Biotech

Companies’

Cash Burn Accelerates… Cash Reserves Lasting Around One Year or Less

ABION Inc. was found to be the company with the tightest cash position. As of the end of June, ABION Inc.’s cash and cash equivalents totaled approximately 9.08 billion won. Excluding 3 billion won in deposits pledged as collateral for short-term financial instruments, such as loans, the company’s cash and cash equivalents totaled approximately 11.08 billion won.

Operating cash outflows in the first half totaled 11.82 billion won, exceeding the company’s available liquid funds. Based on an average monthly outflow of approximately 1.97 billion won, the simple cash burn rate is 5.6 months.

Aptabio Therapeutics Inc. calculated its cash and cash equivalents at 14.71 billion won. This figure excludes short-term financial products worth 800 million won, which were provided as collateral for a loan to the employee stock ownership association for the acquisition of treasury stock. In this case, based on operating cash outflows of 10.63 billion won in the first half, the cash depletion period is 8.3 months.

GI Innovation Inc. held approximately 39.09 billion won in liquid assets, consisting of 29.02 billion won in cash and 10.07 billion won in equity-linked bonds (ELBs). Operating cash outflows for the first half totaled 23.83 billion won, resulting in a simple cash burn period of 9.8 months.

Genexine, Inc.’s cash and cash equivalents totaled 25.86 billion won. Based on operating cash outflows of 14 billion won in the first half, the cash burn period is 11.1 months. However, the large amount of financial liabilities classified as current liabilities is a variable. Genexine, Inc.’s short-term borrowings and convertible bonds (CBs) total approximately 110.3 billion won, which is more than four times its cash and cash equivalents.

In addition, the simple cash burn periods for Voronoi, Inc. and Qurient Co., Ltd. were each calculated at 11.1 months. Voronoi, Inc. held 69.89 billion won in cash, time deposits, and current financial assets; however, this is attributed to a cash outflow of 37.73 billion won from operating activities in the first half of the year.

Capacity

to Last Over a Year… Follow-up Clinical Trials and Pipeline Remain Variables

Vaxcell-Bio Therapeutics(323990)It is estimated that the company holds approximately 14.2 billion won in cash and cash equivalents, excluding short-term deposits with restricted usage. Operating cash outflow for the first half totaled 6.1 billion won, resulting in a simple cash burn period of 14 months. Although the current debt burden is not significant, the future development schedule is critical given that the company’s cash reserves cover just over one year of operating expenses.

In particular, Vaxcell-Bio Therapeutics has completed the Phase 2a clinical trial for its NK cell therapy for liver cancer, “VCB-1102,” and is exploring the possibility of conditional approval or designation as an advanced regenerative medicine therapy. Furthermore, if efforts to expand indications and develop subsequent pipeline candidates proceed, the burden of R&D costs could increase.

KANGSTEM BIOTECH CO., LTD.(217730)The company held approximately 27.41 billion won in cash and short-term financial instruments, excluding restricted funds. Operating cash outflow for the first half of the year was 8.4 billion won—more than double the 3.4 billion won recorded in the same period last year—resulting in a simple cash burn rate of 19.6 months. Subtracting short-term borrowings and current portion of long-term debt totaling approximately 5.6 billion won shortens this to 15.6 months. As the company is also expanding its organoid business and advanced regenerative medicine sectors, its financial position could improve if clinical results lead to business partnerships; however, funding requirements for development are also likely to increase for the time being.

NeoImmuneTech, Inc.(950220) Cash and cash equivalents totaled approximately 36.62 billion won, while operating cash outflows for the first half of the year amounted to approximately 10.76 billion won. Based on these figures, the simple cash burn period is 20.4 months.

Shaperon Inc.(378800)As of the end of June, the company held approximately 25.8 billion won in cash and cash equivalents. Based on operating cash outflows of 7.01 billion won in the first half of the year, the cash burn period is 22.1 months.

However, the cash buffer decreases when the pre-maturity repurchase of convertible bonds (CBs) conducted after the fiscal year-end is factored in. On the 11th, Shaperon Inc. decided to repurchase the entire amount of its convertible bonds, with a face value of 8.6 billion won, prior to maturity. The repurchase amount, including principal and interest, totaled 8.68 billion won. If this amount is simply subtracted from the available funds as of the end of June, the cash burn period is reduced to 14.7 months. In essence, the company has injected cash equivalent to approximately seven months’ worth of operating funds in exchange for reducing the immediate potential dilution burden.

AbClon Inc.(174900)The company held approximately 36.38 billion won in cash and short-term financial instruments. Based on operating cash outflows of 9.24 billion won in the first half of the year, the cash depletion period is 23.6 months.

ViGenCell Inc.(308080)had cash and cash equivalents of approximately 29.38 billion won, and with operating cash outflows of only 3.91 billion won in the first half, its cash depletion period was calculated at 45.1 months. Although its cash position is relatively strong compared to peer companies, cash outflows may increase once the approval process, follow-up clinical trials, and preparations for commercial production for “VT-EBV-N”—a treatment for NK and T-cell lymphoma—get underway in earnest, as the company applied last month to the Ministry of Food and Drug Safety for designation as an advanced biopharmaceutical eligible for expedited review.

Companies Securing

Funds Through

External Financing or Product Sales

Have

Relative Leeway Companies

that secured funds through technology transfers or external financing, or generated revenue from product sales, demonstrated relatively strong cash reserves.

First, D&D Pharmatech Inc.(347850)held approximately 152.26 billion won in cash and short-term financial instruments. Operating cash outflow for the first half of the year totaled 16.97 billion won, resulting in a simple cash burn rate of 53.8 months. However, the significant increase in cash reserves was largely driven by the 226.5 billion won convertible bond (CB) issued last April. While immediate funding for research and development has been secured, the potential dilution resulting from future stock conversion and the burden of early redemption remain variables.

Olix Pharmaceuticals, Inc.(226950)secured approximately 214.15 billion won in cash and cash equivalents. Based on operating cash outflows of 21.15 billion won in the first half, the cash burn period is 60.8 months. However, Olix Pharmaceuticals, Inc. was also significantly impacted by the 115 billion won rights offering it conducted last year. This year, the company also carried out a rights offering worth 110.7 billion won. Going forward, milestone payments tied to the clinical progress of “OLX702A”—which was licensed to Eli Lilly—are cited as potential sources of cash inflow.

ABL Bio Inc. and Onconic Therapeutics Inc. both recorded positive operating cash flow in the first half of the year. ABL Bio Inc. held approximately 167.08 billion won in cash, cash equivalents, and current financial assets. Operating activities generated a net cash inflow of 9.43 billion won in the first half.

Onconic Therapeutics Inc. also secured approximately 62.62 billion won in funds, comprising cash and cash equivalents as well as current debt securities. Its operating cash flow for the first half of the year recorded a net inflow of 7.14 billion won.

Onconic Therapeutics Inc.’s cash generation is driven by “Zacubo,” a treatment for gastroesophageal reflux disease. With domestic prescription growth and overseas royalty income driving its performance, the company has established its business structure by reinvesting the secured funds into clinical trials for its anticancer drug candidate, “Nesuparip.”

A pharmaceutical and biotech industry official stated, “Given that investor sentiment toward biotech has not yet fully recovered, cash reserves, the rate at which they are being depleted, and the maturity structure of debt are expected to be key variables determining the performance of individual companies.” The official added, “As clinical phases advance and development pipelines expand, costs rise rapidly; therefore, it is essential to examine not only immediate financial strength but also the potential for additional cash inflows and future funding plans.”