Eximbank invests $10 mil. for Kolon's drug-developing subsidiary

By Nam Hyun-woo

The Export-Import Bank of Korea (Eximbank) said Sunday that it has inked a deal on investing $10 million in Kolon Group’s U.S.-based drug-developing subsidiary, the first case of the state-run bank making an equity investment in a drug developer.

The bank will invest in TissueGene, which is developing Invossa, the world’s first gene therapy for degenerative arthritis. Unlike existing treatments for degenerative arthritis, the new drug will alleviate pain and treat symptoms at the same time.

Treatments through Invossa will be done through injecting healthy human allogenic cartilage cells into the glenoid cavity of the knee and will not require surgical treatments. According to the company, the cells can be mass-produced so the drug can easily meet the growing demand.

Domestically, the new drug finished phase III clinical trials in April and will be introduced to markets in the near future. In the U.S., Invossa obtained approval for phase III clinical trials from the U.S. Food and Drug Administration (FDA) last May and will go for it in the second half of this year.

Drug development is a sector with high risks and high returns. Should a drug succeed, profit is guaranteed for a long period of time because the market can be dominated. However, it requires at least 10 to 15 years for development and hundreds of billions of won in investment.

According to Eximbank, it decided to invest in the company out of its responsibility to take a role of “priming water” so that promising companies bearing high risks can be financed smoothly down the road.

“As a state-run bank, Eximbank will take the leading role in supporting companies in promising industries such as pharmaceutics,” an official at Eximbank said. “Drug development requires a huge amount of long-term investments and we hope Eximbank’s investment can encourage private investments into such companies.”

The bank said it has raised the money allocated for supporting companies in promising industries to 3.5 trillion won this year, up 1 trillion won from a year earlier. For the next three years, the bank will spend 13 trillion won on such companies.