Returning to the pharmaceutical and biotech beat after two years as a Washington correspondent, the first thing I noticed was the changed mood. People chose their words carefully and grew more cautious when discussing new investments or research and development. The answer was always similar when I asked why. "Investment money has all flowed out to the semiconductor sector, and it will take quite a while for sentiment to turn around." A hard-to-explain defeatism had spread across the industry.
Expectations were high as recently as this summer. Securities analysts issued one forecast after another predicting that sentiment in the biotech sector would shift as topline results from late-stage trials, U.S. Food and Drug Administration approvals and licensing deals with global pharmaceutical giants arrived in the second half of the year.
The reality proved the opposite. In July, HLB (028300) received a third complete response letter from the FDA for its liver cancer treatment combining rivoceranib and camrelizumab, delaying U.S. approval once again. That same month, Kolon TissueGene's osteoarthritis treatment TG-C failed to meet its co-primary endpoints in the first of its late-stage U.S. trials. Just 10 days ago, Orum Therapeutics tasted defeat as well. ORM-6151, a blood cancer drug candidate licensed to Bristol Myers Squibb three years earlier, was discontinued at the Phase 1 stage.
Because of this mood across the biotech sector, the market responds indifferently even when major good news breaks. Alteogen (196170) signed a licensing agreement with Novartis early this month for its ALT-B4 platform technology worth up to 4.4165 trillion won ($3.2 billion), yet its share price sits about 16% below where it stood when the deal was signed. The market has become numb to good news and hypersensitive to bad.
Perhaps this happens because Korea's biotech sector is too small to be called a market at all. In global markets, countless pharmaceutical companies and biotechs fail in clinical trials and return licensed technology. This is entirely natural. Viewed across the industry as a whole, it is a constant alternation of failure and success. In Korea, however, a single company's trial result or one licensing deal is often treated as the success or failure of the entire industry.
Drug development carries overwhelmingly high odds of failure by its very nature. In a study analyzing candidate compounds that entered clinical trials between 2011 and 2020, only 7.9% of Phase 1 candidates reached final approval. Failure is a cost already built into the drug development process.
This is not to say every failure deserves leniency. Companies that exaggerate trial results, conceal material information and betray investor trust must pay a strict price in the market. But technological failure and breached trust must be distinguished.
Innovation does not come from places where nothing fails. It comes from the courage to endure failure and try again. A market that abandons an entire industry over a few pieces of bad news is unlikely to produce a world-class drug. What Korean biotech needs now is patient capital — the willingness to keep investing while absorbing failure.
