Genome & Company acquires US-based List Labs for $27 million

Genome & Company CEO Pae Ji-soo speaks during an online conference, Wednesday. Screenshot from the conference

Korean biotech firm acquires US-based CDMO firm

By Baek Byung-yeul

Genome & Company, Korea's leading microbiome anti-cancer drug developer, is set to expand its business scope to the contract development and manufacturing organization (CDMO) business by acquiring a 60-percent stake in the U.S.-based microbiome CDMO business company, List Labs, for $27 million. The Korean biotech company said Wednesday that it aims to become a leader in both drug development and production through the acquisition.

A microbiome refers to the community of microbes ― such as bacteria ― that live in the human body. Thanks to progress in DNA sequencing technologies, microbiomes have turned out to have a huge impact on determining whether people develop various diseases, while scientists and biotech firms are on the way to finding out which bacteria are beneficial and can be developed into treatments

“At a time when the microbiome market is expected to see huge growth in the next several years, we've decided to acquire List Labs, because we think that the most important part of the drug production process is to meet and respond to the standards of the U.S. FDA,” Genome & Company CEO Pae Ji-soo said during an online conference.

Genome & Company is focusing on three specific diseases: cancer, skin disease and central nervous system disorders such as autism. The company has been cooperating with global biopharmaceutical companies such as Pfizer and Merck.

Pae said that he expects the acquisition of List Labs to benefit both companies.

“The key to microbiome drug development is how well it meets U.S. standards. List Labs has done its business in the U.S. for the past 43 years, and the company is known to have one of the highest technological capabilities in the microbiome sector,” Pae said.

“Though the company has its limitations in terms of its production capacity, we decided to take over the firm, as we thought it would be a leading company if we jointly increase production capacity and beef up sales channels. So we think the two companies will create a great synergy effect,” the CEO said.

As the global microbiome drug market continues to grow, demand for the microbiome CDMO business is also expected to increase. According to the Ministry of Food and Drug Safety's 2021 data, there are 204 microbiome treatments currently being developed worldwide. The market size is expected to increase 167 times, from $56.3 million in 2018 to $9.38 billion in 2024.

Unveiling the future plans of List Labs, Pae said that the U.S. CDMO company will work on improving its production capacity and listing the company on the stock market by 2025.

“List Labs' factory will be expanded so that it can provide microbiome drug manufacturing for phase 3 clinical trials and actual manufacturing for commercial use. Also, its IPO will take place in 2025. Starting from the U.S., we expect List Labs to become a leader in other markets, such as China and in East Asia,” he said.

The CEO said that Genome & Company did not borrow money for the acquisition and does not intend to issue new shares.

“The $27-million acquisition was carried out using our own funds and we didn't receive new investments. In order to expand production capacity in the future, we should attract investments, but we are not considering issuing new stocks. Through factory expansion, the company will be able to grow into one of the global top three microbiome CDMO companies,” he added.

When asked which stock markets List Labs could be listed, Pae said that he “is not considering which market to list the company on.” But he added, “The NASDAQ market is one of the things I'm considering.”