[Edaily Reporter KIM SAE-MI ] Matica Biotechnology (hereinafter “Matica”), which Cha Bio Group has been developing as a forward base for contract development and manufacturing (CDMO) of cell and gene therapies (CGT) in the U.S., has marked the fifth year of operations at its Texas plant. Despite more than $100 million in upfront investment, last year’s revenue totaled only 3.9 billion won, and construction on Plant 2—which was slated for completion in 2027—has not even begun, shifting the focus to whether the investment can be recouped.

150 billion won invested, but last year’s revenue was 3.9 billion won… Losses persist despite strong won

According to the biotech industry on the 21st, Chabiotech Co.,Ltd.’s cumulative investment in Matica as of last May totaled $112 million (approximately 150 billion won).

In 2022, Matica completed construction of a viral vector cGMP production facility spanning approximately 45,000 square feet in College Station, Texas. The facility integrates processes ranging from process and analytical method development to GMP production at scales of up to 500 liters.

Current revenue is negligible compared to the scale of investment. Last year, Matica’s revenue was 3.9 billion won, while its net loss was 31.7 billion won. It is important to note that last year’s environment was favorable for converting dollar revenue into won, as the average annual won-dollar exchange rate reached a record high of 1,422 won. An industry insider pointed out, “Even with last year’s high exchange rate, revenue failed to exceed 4 billion won.” In the first half of this year, revenue was 1.6 billion won, and the net loss was 17.4 billion won.

According to Chabiotech Co.,Ltd.’s interim report for this year, the book value of its investment in Matica is 20.2 billion won, and the amount loaned is 40.1 billion won, for a total of 60.3 billion won. However, since the book value of the investment reflects the current accounting valuation, it may differ from the cumulative actual investment amount. This is why it is difficult to conclusively determine whether the investment will be recouped based solely on the current book value.

In that case, the extent to which the cumulative investment is recouped through operating cash flow could serve as a criterion for judgment. To date, Matica has cited an expansion of orders as the basis for its growth. Matica secured approximately 10 billion won in orders from 10 companies in 2024 and secured another approximately 10 billion won in the first half of 2025. This year, it has also announced a series of projects with UHN, Seojium, Baeksdom, and Bondwell.

However, the specific contract amounts and order backlog remain unverified. When asked about the final contract value as of 2025, this year’s cumulative contract value, and the order backlog, Chabiotech Co.,Ltd. declined to disclose this information, citing non-disclosure agreements (NDAs) with clients and business considerations. The utilization rate of Plant 1 was also not disclosed for the same reasons.

Legally Binding, Yet… A “Gap” Between Order Value and Actual Revenue

Cha Bio Group has made it clear that Matica’s order contract is a formal, legally

binding

agreement. A Cha Bio Group official emphasized, “The CDMO contracts that Matica Biotechnology counts as orders are formally signed and concluded with clients and are legally binding.” The official continued, “Due to the nature of the industry, CDMO contracts are structured such that work proceeds in stages—development and production—and payments are invoiced accordingly,” adding, “This is a standard contracting practice in the global CDMO industry and is a separate issue from the legal binding nature of the contracts.”

On the other hand, some observers are questioning the legal enforceability of Matica’s order contracts. An investment banking industry source pointed out, “As far as I know, most of Matica’s order contracts are non-binding,” adding, “Even if they secure 10 billion won in orders, it’s important to note that this does not necessarily mean the entire amount will be recognized as revenue.”

Given the nature of the CDMO business, one must also consider the time lag between contract signing and revenue recognition. As the contract size increases with each stage—from process and analytical method development to clinical GMP production, late-stage clinical trials, and commercial production—the client’s development stage and actual GMP production volume are more critical to profit improvement than the mere number of orders secured.

In fact, the company’s previously disclosed projected revenue recognition for orders secured in 2024 is spread out as follows: 1 billion won in 2024, 5.2 billion won in 2025, 2.5 billion won in 2026, and 1.3 billion won in 2027. Notably, Matica’s total revenue last year was 3.9 billion won, falling short of the 5.2 billion won the company had originally expected to recognize last year from the 2024 order book alone. This highlights the gap between order value and actual revenue.

The company views this year’s first GMP production as a turning point for revenue expansion. A representative from Chabiotech Co.,Ltd. stated, “The break-even point (BEP) coincides with the start of full-scale GMP production,” adding, “Revenue generated from GMP production is significantly larger than that from process and analytical method development, which are in the early stages.” The representative continued, “We expect revenue growth to accelerate starting with this year’s first GMP production.”

However, the company did not specify a target date for reaching the BEP. For the time being, the key challenge will be securing sufficient GMP production volume to boost the plant’s operating rate. An investment banking industry official expressed concern, saying, “Even with a low plant operating rate, fixed costs such as labor and equipment maintenance continue to accrue,” and warned, “If sufficient production volume isn’t secured, the plant could become a ‘money-eating behemoth’ that only devours fixed costs.”

Plant No. 2, originally slated for completion in 2027… “Construction to Begin in Line with Clients’ Late-Stage Clinical Trials”

Plans for additional expansion have also become more flexible. Matica announced plans to complete Plant 2—which would expand production capacity from the current 500 liters to 2,000 liters—within two to three years by 2024. At that time, the company envisioned completing the expansion by 2027.

Currently, the company has not disclosed the start or completion dates for Plant 2, nor the estimated investment costs. A Chabiotech Co.,Ltd. official explained, “We are adjusting the detailed schedule by comprehensively considering market conditions and the status of orders,” adding, “We have already secured the site for Plant 2 within the grounds where our existing production facilities are located.” The official also noted, “We plan to begin the expansion of Plant 2 in time for when our major clients enter late-stage clinical trials in earnest.”

In effect, this means the company intends to proceed with additional investment only after confirming the clinical progress and demand from its existing clients. This is interpreted as an effort to reduce the burden of making preemptive investments in Plant 2, given that the utilization rate and break-even point (BEP) of the existing Plant 1 have not been disclosed.

The company cited the supply chain restructuring required by the U.S. BIOSECURE Act as an opportunity for Matica. It anticipates growing demand in the U.S. and its allied nations for CDMOs with production and quality control capabilities. According to the company, Plant 2 is also intended to secure the capacity to supply viral vectors for commercial production in line with clients’ late-stage clinical trial and commercialization schedules.

However, simply having a production facility in the U.S. does not guarantee stable demand. For example, Charles River Laboratories, which has operated a CGT CDMO facility in the U.S., was responsible for the commercial production of Vertex’s gene-editing therapy “Casgevy,” but decided in February of this year to sell its CGT CDMO business. This decision followed the company’s announcement last year that demand from CGT clients had fallen short of expectations at the time of the business acquisition.

An industry insider commented, “The key to Matica’s orders lies in quality rather than scale,” adding, “If annual revenue from a plant that required a 150 billion won investment falls short of even 4 billion won, we need to examine how much of the announced order value is actually being converted into revenue.”