According to a comprehensive report by E-Daily on the 26th, the reform direction for the biotech sector—presented by the KRX on the 19th at a “Briefing on the Enhancement of the Standard Technology Evaluation Model and the Reorganization of the Expert Evaluation Operating System” attended by lead underwriters, specialized evaluation agencies, venture capital (VC) firms, and companies preparing for listing—focused on strengthening commercialization indicators and establishing new metrics that reflect the characteristics of software (SW) medical devices.
Commercialization Value by Stage, Not Just Clinical Phase… Strengthening Medical Device IndicatorsFor pharmaceuticals, the plan is to evaluate companies not
merely based onwhich
clinicalphase they have reached, but also on the actual value secured at that stage and the potential for progression to the next phase. The intent is to reduce the influence of drug pricing, market share, and sales estimates—which currently have a significant impact on evaluations from the early stages of development—and to assess market potential in accordance with the specific development stage.
The plan also includes revising criteria to ensure that platform ownership is not interpreted as a de facto listing requirement, and to enable companies with a single technology to be evaluated on their own merits. Currently, platform ownership is viewed as a listing requirement, placing pressure on companies to acquire platforms—even artificially—but the exchange intends to revise the criteria so that the competitiveness and commercial viability of a single technology can be evaluated on its own merits.
Companies whose primary business model does not involve technology transfer will be evaluated based on their in-house development and commercialization strategies. The exchange stated that when contracts or revenue projections are presented as evidence of performance, it will verify whether objective data exists and whether such projections align with actual results.
In the medical device sector, the exchange identified a need to supplement evaluation metrics. Unlike pharmaceuticals, the evaluation will reflect business structures involving direct manufacturing and sales, and will assess whether companies can actually navigate the commercialization hurdles following regulatory approval. Securing distribution channels, product production capacity, and market share are expected to be key evaluation factors. The likelihood that inclusion in insurance reimbursement lists following regulatory approval will translate into revenue is also a major evaluation point.
For Software as a Medical Device (SaMD), relevant indicators will also be newly established and strengthened. Proposals were put forward to incorporate the performance of algorithms, the quality of training data, and clinical validation datasets, as well as the software lifecycle, cybersecurity, and personal information protection systems into the evaluation.
Behind this overhaul lies the exchange’s concern that, although the number of companies listed under the technology exception has exceeded 300, a significant number continue to operate at a loss, and there has been a growing number of cases where the growth plans presented at the time of listing have failed to translate into actual results. The goal is to enhance market confidence by more thoroughly verifying commercialization potential during the technology evaluation process.
The Effectiveness of Evaluating Companies Without Technology Transfer… Variations by Institution Also a FactorThe reform plan is scheduled to be finalized by the end of next month. It has been proposed that the new evaluation model be applied to applications submitted starting in the second quarter of next year. Detailed criteria, beyond what was disclosed at the briefing, have not yet been finalized. Consequently, the key question is whether companies planning to pursue an initial public offering (IPO) following next year’s technology evaluation will have sufficient time to prepare in accordance with the new standards.
The industry is particularly focused on how the commercialization potential of companies without a track record of technology transfer will be verified. An executive at a biotech company stated, “Technology transfer track records themselves serve as key indicators for technology evaluation agencies and stock exchanges when assessing development and commercialization strategies,” adding, “It is realistically difficult to independently verify a company’s technological capabilities and business viability without technology transfers.” He continued, “Without technology transfers, even venture capital (VC) shareholders or underwriters would find it difficult to recommend that a company undergo a technology-based listing evaluation.”
Consequently, some observers point out that for this policy to go beyond mere theory, it must specify what data and criteria will be used to recognize in-house development or direct commercialization strategies. They argue that simply excluding technology transfer records from the evaluation makes it difficult to gauge a company’s commercialization potential.
Regarding the focus on assessing the actual value a company secures, some interpret this as an intent to scrutinize more closely those companies that introduce technology from external sources to conduct Phase 1 and 2 clinical trials. An executive at a biotech company said, “It also appears to be aimed at filtering out companies that purchase re-implementation rights from external sources to conduct Phase 1 and 2 trials.” This suggests that the evaluation could extend beyond the clinical stage to include the scope of rights, revenue sharing, and the company’s capacity to lead follow-up development.
The issue of differing evaluation formats and review tendencies among evaluation agencies remains a challenge in the industry. This means that technical evaluations vary not only based on a company’s actual technical capabilities but also depending on the judgment tendencies and circumstances of each evaluation agency. A biotech industry official noted, “Since each agency focuses on different aspects, the results can vary depending on which agency is assigned—hence the term ‘a matter of luck’ is sometimes used,” adding, “There have been cases where a company failed the evaluation at one agency but passed after submitting similar materials to another.”
Of course, the reform plan does incorporate some of the industry’s feedback. The exchange has decided to prepare a standardized format for technology business plans and a common list of materials for data room setup to reduce differences in submission formats across institutions. It also plans to increase the number of evaluation personnel from the current four to at least six, including at least one expert from the industry or in commercialization.
To mitigate the information gap caused by the cost of pre-evaluation consulting, a plan was also proposed to conduct training on preparing for and responding to technical evaluations in collaboration with evaluation agencies starting next year. A proposal was also put forward to allow for re-evaluation in cases where procedural flaws—such as conflicts of interest among evaluation committee members or the clear omission of submitted materials—affected the results.
