Park Song-i, Head of Investment at Korea Investment Trust Management, recently met with Edaily and cited demand from global pharmaceutical companies as a key criterion for assessing the investment appeal of biotech firms. She explained that investors must examine not only the clinical results of candidate compounds but also the likelihood that the technology will actually lead to a technology transfer.
“Every quarter, we track not only the earnings reports and academic conferences of domestic companies but also those of big pharma, continuously assessing which Korean companies might be selected by them,” she said.
She also emphasized, “Whenever possible, we try to cross-check a company’s explanations using information from partners or global sources,” adding, “From an investor’s perspective, it is necessary to examine various viewpoints to reduce uncertainty as much as possible.” This is because even if a company presents the same clinical results in a positive light, risk factors may still be identified from a different perspective.
After majoring in pharmacy, Park worked for about three years in the clinical team of LG Chem’s Life Sciences Division. He then served as a pharmaceutical and biotech analyst at Meritz Securities before joining Korea Investment Trust Management. He currently manages the “ACE K-Bio KOSDAQ Active” exchange-traded fund (ETF), which selectively invests in KOSDAQ-listed biotech companies.
He moved from the front lines of new drug development to the securities industry because he wanted to examine the industry from a broader perspective. “While in the industry I examined specific drugs in depth, in the financial investment sector I must constantly monitor the industry as a whole,” Park said. “This is what drives me to keep learning on my own.”
Seeking
‘Big Pharma’s Top Picks’ Among Biotech Companies… Mitigating Volatility with Beauty DevicesPark focused on KOSDAQ biotech companies because the market is home to numerous biotech firms challenging themselves to develop new therapies. Since new drug development requires a long time and massive funds, he also paid close attention to the business model in which biotech firms verify the potential of candidate compounds and then license the technology to global pharmaceutical companies.
Park explained, “There are many biotech companies on KOSDAQ whose pipelines need to be analyzed to verify whether they align with global trends and possess the necessary technological capabilities.” He added, “Since domestic biotech companies are keeping pace with global trends and delivering results through steady technology transfers to Big Pharma, I believe there are many companies with high investment appeal if you can effectively separate the wheat from the chaff.”
However, he noted that when evaluating the competitiveness of domestic biotech companies, he tries to assess their business viability from the perspective of global pharmaceutical companies. His reasoning is that no matter how good the clinical data may be, it is difficult for a company to gain market recognition if there is no demand from pharmaceutical companies willing to adopt it for further development and sales.
Park said, “Rather than just listening to the company’s pitch, I examine whether the drug is industrially competitive from the perspective of global pharmaceutical companies and whether it will sell well if commercialized,” adding, “I aim to select companies that align with global trends and possess strong technological capabilities.”
To mitigate investment volatility, the ETF currently under management includes not only new drug development companies but also aesthetic medical device companies. This decision took into account that, unlike biotech firms—whose volatility can increase depending on clinical results or technology transfer—aesthetic device companies generate earnings through product sales.
Park explained, “While many biotech companies are operating at a loss and only a handful are profitable, aesthetic device companies are consistently generating earnings,” adding, “We included them in the portfolio to mitigate volatility from an earnings perspective.”
“RNA Therapies” Are the Sector to Watch… Market Expansion ExpectedHe assessed that
thedomestic biotech
sectoris not currently facing significant valuation pressure. However, since stock prices can fluctuate depending on market capital flows and external factors, he believed it was necessary to take a selective approach—focusing on companies with clear grounds for investment decisions, such as clinical results—rather than the sector as a whole.
Park noted, “Typically, many technology transfer deals are announced toward the end of the year, and expectations can carry over until the J.P. Morgan Healthcare Conference in January, so I view the sector as highly attractive for investment.” However, he added, “For now, it is a time to take a selective approach toward specific companies rather than increasing the overall weighting of the sector.”
Regarding next year’s outlook, he noted, “It is difficult to conclude that the entire sector will rise due to a specific catalyst,” but predicted, “If technology transfer achievements continue as they have this year, there is room for company-specific performance to be reflected at current stock price levels.”
Park identified RNA therapeutics as an area to watch over the next one to two years. Although the current market size is small, he believes there is potential for growth as the range of applications expands, similar to the early days of the antibody drug market.
RNA therapeutics are drugs that utilize RNA to regulate the production of disease-related proteins or to induce the production of necessary proteins.
Park noted that while early RNA drugs were primarily developed for rare diseases, their scope of application has recently expanded to include chronic conditions. “In the RNA field, development efforts are underway for various indications, such as obesity, age-related macular degeneration, and hair loss,” he said. “While some therapies are being developed on a personalized basis, others are intended for general use, which could broaden the treatment areas and scope of application.”
Progress in the development of personalized cancer vaccines is also drawing attention. Park predicted, “If personalized cancer vaccines successfully complete Phase 3 clinical trials and are commercialized, it will mark a turning point for the RNA therapeutics market,” adding, “The market is expected to take off in earnest as we approach 2030.”
Criteria Needed for Long-Term Investment… Next Growth Catalyst Must Be IdentifiedHe advised individual investors to understand and consistently monitor the technologies and candidate compounds being developed by companies, rather than chasing short-term stock prices or rumors. This is because biotech companies have long development cycles; while the potential returns are significant in the event of success, the losses can also be substantial in the event of failure.
Park noted, “Given the nature of the biotech industry, it’s difficult to know everything before investing, but it takes patience to see results until pipeline technologies are transferred.” He added, “To endure this period, you must have a deep understanding of the company to sustain a long-term investment.”
He also emphasized the importance of establishing criteria for reassessing investment decisions before committing. If a company relies heavily on a single key candidate compound and the development of that compound fails, thereby reducing the business’s sustainability, investors should reconsider their investment.
He noted that even after a stock price rises, investors should examine the company’s upcoming development roadmap and potential growth catalysts. He explained that if the initially targeted rate of return has been achieved but it is difficult to identify future catalysts that could further increase the company’s value, one option is to realize some profits and monitor the company’s subsequent performance.
Park said, “When stock prices are high, investors sometimes miss out on profits because they’re only thinking about further gains,” adding, “It’s best to invest based on your own criteria and continue to monitor the company’s developments even after realizing profits.”
