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Green Cross' two Kosdaq-listed cell therapy arms to merge

Green Cross expects the merger to give boost to contract manufacturing business

By Jul 18, 2021 (Gmt+09:00)

Green Cross's Hwasun factory in South Jeolla Province, South Korea
Green Cross's Hwasun factory in South Jeolla Province, South Korea

South Korea's pharmaceutical group Green Cross Corp., or GC Pharma, will combine its two cell therapy developers listed on the junior Kosdaq market in efforts to scale up and sharpen its focus on the growing cell-based therapy market. 

The combination of GC LabCell Corp. and GC Cell Corp, in which GC Pharma is top shareholders, is also aimed at accelerating their penetration into the contract development and manufacturing organization (CDMO) segment, according to the companies' regulatory filings on July 16. A CDMO develops and manufactures drugs for other pharmaceutical companies on a contract basis.

In an all-stock transaction, GC LabCell will be absorbing GC Cell by November of this year. Specifically, each share of GC Cell will be exchanged for 0.4 of GC LabCell's new share.

The combined entity will be named GC Cell Corp. with a pipeline of over 20 new drug candidates, as well as about 40 intellectual properties and 120 research staff. GC Pharma will remain a top shareholder with diluted ownership.

Both companies focus on cell therapies which have emerged as one of the innovative treatments in the biopharmaceutical sector.

GC LabCell, with 85.6 billion won ($75 million) in 2020 sales, develops cell-based cancer immunotherapy, using natural killer (NK) cells that kill virally infected or cancerous cells. NK cells are genetically engineered outside the body to target and destroy cancer cells.

Its drug pipeline includes the anticancer immunotherapy Immuncell-LC, made from a patient's blood, which pulled in 9.8 billion in first-quarter sales this year.

In comparison, GC Cell, with 40.9 billion in 2020 revenue, specializes in oncology therapeutic areas, using T-cell immunotherapies. T cells are white blood cells in the immune system that are infused into patients with cancer to fight infection.

Its 2020 operating profit was about one-fifth of GC LabCell's 6.4 billion won. On Friday, GC LabCell spiked 9.38% to close at 109,600 won, with GC Cell adding 3.58% to 43,350 won. 

Antibody immune system (Getty Images Bank)
Antibody immune system (Getty Images Bank)

In January this year, GC LabCell exported its chimeric antigen receptor (CAR)-engineered NK cell platform technology to Merck Sharp & Dohme (MSD), a US pharmaceutical giant. The $1.9 billion contract marked the largest-ever cross-border technology transfer by a South Korean biopharmaceutical company.

For the CDMO business, GC Pharma was picked as a reserved manufacturing capacity by the Coalition for Epidemic Preparedness Innovations (CEPI), a Europe-based vaccine developer, in October 2020. Under the contract, it is estimated to produce more than 500 million doses of CEPI-designated COVID-19 vaccines from March 2021 to May 2022, according to their statement.

A GC LabCell official said that the merger is expected to improve its operational efficiency and help speed up R&D.

"Running our cash cow clinical laboratory services together with the CDMO business, we will be able to boost our bottom line and set us apart from other biopharmaceutical companies," the official told The Korea Economic Daily. 

GC Pharma holds a stake of 38.66% and 23.08% of GC LabCell and GC Cell, respectively.

Write to Ju-hyun lee at deep@hankyung.com

Yeonhee Kim edited this article.

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