Korean biotech companies, which drove up the buying spree on the Kosdaq market in 2018, suffered severe ranking fluctuations last year hit by negative issues such as clinical trial failures.

Some firms that achieved the fastest stock price growth had to yield their high rankings to newcomers, which pulled off huge licensing-out deals with positive clinical results.

The Kosdaq-listed biotech companies performed poorly in terms of market capitalization in 2019 compared to 2018. Although biotech firms kept the No.1 and 2 positions on Kosdaq, rankings of their peers generally went down last year.

The combined market caps of pharmaceutical firms reached 32.99 trillion won ($28.56 billion), accounting for 14.46 percent of the Kosdaq market cap in late 2018. The aggregate size shrank by 28.85 trillion won, however, and their proportion also fell to 11.96 percent.

SillaJen and Kolon TissueGene, which used to enjoy significant jumps in stock prices, suffered a plunge in market cap rankings in 2019.

SillaJen’s market cap was the second largest, with 5.13 trillion won as of the end of 2018, but its ranking dropped to 25th with 1.33 trillion won at the end of 2019. The setback resulted from the halt of the global, phase-3 study on Pexa-Vec, SillaJen’s signature oncolytic virus, in August. About 4 trillion won worth of SillaJen’s market cap vanished due to the stock price fall in the past year.

Kolon TissueGene’s ranking, which used to be 9th on Kosdaq in market cap, nosedived to the 87th in the wake of the regulator’s revocation of approval for Invossa-K, the gene therapy for osteoarthritis. As the original developer of Invossa, Kolon TissueGene was valued at around 2 trillion won when it went public in 2018. Before the Invossa recall, its market cap stood at 2.63 trillion won at the end of 2018.

However, the company reported that Invossa’s second fluid contained kidney-derived cells (GP2-293 cells), instead of cartilage-derived cells as authorized. The Ministry of Food and Drug Safety meted out an administrative discipline, and the prosecution’s investigation followed, which led a steep drop in Kolon TissueGene’s corporate value. The company’s market cap declined to 489.6 billion won at the end of last year, which was one-fifth of the market cap a year earlier.

Helixmith’s market cap also lost almost 2 trillion won, and its ranking slid from fourth to seventh due to its failure of the global phase-3 trial.

Medytox’s stock prices were on a gradual decline, following the prosecution’s probe into the alleged manipulation of drug manufacturing data and the lawsuit against Daewoong Pharmaceutical over a botulinum toxin strain. Its market cap fell from 3.26 trillion won to 1.74 trillion won in the past year. Medytox's market cap ranking on Kosdaq went down from sixth to 11th.

Hugel, the rival of Medytox, was able to narrow its market cap gap with Medytox to about 30 billion won. Hugel’s market cap slightly rose from 1.66 trillion won in late 2018 to 1.71 trillion in late 2019, ranking right behind Medytox.

Celltrion Healthcare is still firmly retaining its No.1 position on Kosdaq, but its market cap diminished by around 3 trillion won. The company’s market cap recorded 7.62 trillion won at the end of 2019, falling from 10.58 trillion won a year earlier. The share of its market cap in the Kosdaq market also dropped by 1 percentage point.

Taking advantage of the setbacks of biotech leaders, new companies emerged as active players.

HLB, which ranked at 7th in late 2018, showed a remarkable rise to the second during the past year. Once, the company’s stock price halved due to a negative result of a global phase-3 trial. However, the company reversed its result analysis and announced that it would apply for new drug approval, driving up its share price again. HLB’s market cap recorded 4.91 trillion won recently, accounting for 2.03 percent of the Kosdaq’s market cap.

Mezzion Pharma’s market cap also notably expanded from 795 billion won to 1.66 trillion won, on the back of the positive results of a phase-3 trial. Its market cap ranking surged from 38th to 13th. After completing the trial on udenafil, a treatment candidate for congenital single ventricle heart disease, the company plans to apply for new drug approval early this year.

Gemvax & Kael and Alteogen achieved rapid growth in market cap, as well. Gemvax & Kael unveiled positive results of a phase-2 study in Alzheimer’s disease, and its market cap jumped by over 1 trillion won to 1.48 trillion won. The company’s ranking shot up from 91thh to 16thh.

Alteogen signed a 1.6 trillion-won licensing contract with a multinational drugmaker and enjoyed its market cap rising about three folds from 361.6 billion won to 929.7 billion won.

Biotech firms that suffered ranking falls due to negative clinical results are seeking stock price rebounds this year. Kolon TissueGene hopes to resume the U.S. clinical trial on Invossa.

Industry watchers are paying attention to how old leaders and newcomers in the biotech industry will perform on Kosdaq this year.

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