Korea’s big bio startups to launch $39 mn investment fund

South Korea’s four leading biotech firms plan to launch an investment fund of up to 50 billion won ($39 million) to support smaller domestic bio venture firms struggling to raise funds.

According to biotech industry officials on Monday, LegoChem Biosciences Inc., Alteogen Inc., Peptron Co. and SugenTech Inc. have agreed to chip in 8 billion won each to set up a fund, which will look for unlisted promising Korean biopharmaceutical companies for investment.

The four venture firms, known as Korea’s first-generation biotech startups, will start looking for investment candidates in the first quarter of next year after launching a 30 billion won fund. The four also seek to attract more money from financial investors, including local brokerages, to eventually raise the fund's size to 50 billion won.

Solidus Investment, a Korean venture capital firm, will run the bio fund.

The move comes as smaller biotech companies are having difficulties raising funds due to stricter initial public offering (IPO) requirements and rising borrowing costs amid an economic slowdown and higher interest rates.

Just a few years ago, it was easier for biotech startups to attract rounds of funding for their new drug pipelines, given the ample market liquidity.

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With sharp and rapid interest rate hikes since early last year, however, some local bio venture firms have had to ditch their plans to develop novel therapeutics, citing a funding shortage.

“Since technologies for new drug development are intertwined, it is not easy for a biotech firm to survive without help from its peer firms,” said Kim Yong-zu, chief executive of LegoChem. “Sustaining the entire domestic bio ecosystem is essential to maintaining K-bio’s overall competitiveness.”

The four biotech firms are also considering transferring their novel drug development and management know-how to the junior biotech venture firms alongside new capital injections.

Last week, LegoChem licensed out its antibody-drug conjugates (ADC) technology platform to US biopharmaceutical giant Amgen Inc. for up to $1.2 billion.

Under the deal, Amgen will have the right to develop and commercialize the ADC technology utilizing LegoChem's next-generation ADC platform.

Alteogen has also exported its technology to a global pharmaceutical company to change its drug administration format from intravenous injection to subcutaneous injection.

Founders of the four first-generation biotech firms – Kim of LegoChem, Alteogen CEO Park Soon-jae, Peptron CEO Choi Ho-il and SugenTech CEO Son Mi-jin – all previously worked for LG Chem Life Sciences, the biopharmaceutical unit of LG Chem Ltd.

Write to Jae-Young Han at jyhan@hankyung.com
In-Soo Nam edited this article.