[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. On the other hand, 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 interim reports for 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. For GI Innovation Inc.(358570), the period was 9.8 months when considering only cash and cash equivalents, but it was confirmed to be 17.6 months when including non-current financial assets that the company stated it could liquidate if necessary. Genexine, Inc.(095700), Voronoi, Inc.(310210), andQurient Co., Ltd.(115180)were calculated to be around 11 months. In contrast, ABL Bio Inc.(298380)and Onconic Therapeutics Inc. recorded a net inflow of cash 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 payroll—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. Even if classified as non-current financial assets, bond-type products that allow for redemption at any time and have no usage restrictions were included in available funds. Funds subject to usage restrictions—such as those encumbered by collateral, pledges, or escrow—as well as loans and accounts receivable were excluded.

The cash-equivalent liquid funds calculated in this manner were divided by the average monthly operating cash outflow to determine the cash 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 the company will be able to maintain its current level of R&D activity for only a limited time if it fails to generate sufficient revenue from sources such as technology fees or product sales, or if it is unable to secure external funding. If funding is not secured smoothly, the company may have to adjust the schedules for ongoing clinical trials, patient recruitment, or the development of its subsequent pipeline.

A biotech industry official stated, “The cash burn period can suddenly increase due to technology transfer upfront payments or milestones, 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, the required funding increases exponentially, making proactive fundraising essential.”

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

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 borrowings among short-term financial instruments, 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 800 million won in short-term financial products provided as collateral for a loan to the employee stock ownership association to acquire treasury stock. Based on operating cash outflows of 10.63 billion won in the first half, the cash depletion period in this scenario 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 outflow for the first half totaled 23.83 billion won, resulting in a simple cash burn rate of 9.8 months.

However, GI Innovation Inc. separately holds approximately 30.9 billion won in non-current financial assets invested for the purpose of managing surplus funds. The company explained, “These assets are also operating assets that can be liquidated when necessary.” Including these, available funds total approximately 70 billion won, resulting in a cash burn period of approximately 17.6 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 of the year, the cash burn period is 11.1 months. However, the large size 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, more than four times its cash and cash equivalents.

In addition, the simple cash burn periods for Voronoi, Inc. and Qurient Co., Ltd. were also calculated at 11.1 months each. Voronoi, Inc. held 69.89 billion won in cash, time deposits, and liquid 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, excluding restricted short-term deposits, the company holds approximately 14.2 billion won in cash and cash equivalents. Operating cash outflows in the first half totaled 6.1 billion won, resulting in a simple cash burn period of 14 months. While 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 in the first half of the year totaled 8.4 billion won—more than double the 3.4 billion won recorded in the same period last year—resulting in a cash burn rate of 19.6 months. Subtracting approximately 5.6 billion won in short-term and current portion of long-term debt 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 total repurchase amount, including principal and interest, was 8.68 billion won. If this amount is simply deducted from the cash on hand as of the end of June, the cash depletion period is reduced to 14.7 months. In effect, the company 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 approximately 29.38 billion won in cash and cash equivalents; since operating cash outflows in the first half totaled only 3.91 billion won, the 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, following the company’s application last month to the Ministry of Food and Drug Safety for designation as an advanced biopharmaceutical eligible for expedited review.

Companies Securing External Funding or Product Sales

Have

Relative Leeway

Companies that secured funds through technology transfers or external financing, or generated 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 was 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 influenced by the 115 billion won rights offering it conducted last year. This year, the company also conducted a 110.7 billion won rights offering. Going forward, milestone payments tied to the clinical progress of “OLX702A”—which was licensed to Eli Lilly—are cited as potential sources of cash inflows.

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, “Nesupalip.”

A pharmaceutical and biotech industry insider stated, “With investor sentiment in the biotech sector yet to fully recover, cash reserves, the rate at which they are being depleted, and the maturity structure of debt are expected to be key factors determining the performance of individual companies.” The insider added, “As clinical stages 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.”