SK Bioscience grabs investors' attention as next year's No.1 bio IPO

A researcher at SK Bioscience conducts R&D on vaccine development. / Courtesy of SK Bioscience

By Anna J. Park

As the year 2020 draws to a close, investors are closely eyeing SK Bioscience ― a subsidiary of SK Chemicals focused on developing and manufacturing vaccines and treatments ― as it could be the largest bio initial public offering of next year.

Earlier this month, the contract development and manufacturing organization (CDMO) affiliate of SK turned in the necessary documents to the Korea Exchange (KRX) for its upcoming IPO. Normally, it takes the bourse operator two months to give the green-light for a company to go public. Given the usual timeline, SK Bioscience is expected to make its debut on the benchmark KOSPI market during the first half of 2021.

Considering the company is one of the most active biopharmaceutical companies in Korea regarding manufacturing and developing various types of vaccines, market watchers say the company's IPO timeline schedule couldn't be better than this.

In addition to its SKY Cellflu, SKY Zoster, and SKY Varicella vaccines, SK Bioscience is the only company here currently engaged in both developing its own vaccine prototypes as well as CDMO manufacturing. The biopharma firm signed CDMO contracts for COVID-19 vaccines with global pharmaceutical companies AstraZeneca in July and Novavax in August.

The firm is also researching its own COVID-19 vaccine for development, as its NBP2001 coronavirus vaccine received clinical trial approval from the Ministry of Food and Drug Safety in November; and Phase 1 is currently being conducted by Seoul National University Hospital.

The firm's second COVID-19 vaccine candidate, GBP510, is also close to clinical trials in the near future, with SK Bioscience filing an investigational new drug (IND) application to the Ministry of Food and Drug Safety earlier this month. The SK affiliate has received $13.6 million from the Bill & Melinda Gates Foundation (BMGF) ― $3.6 million in May and another $10 million in early December ― in funding for the second vaccine candidate.

SK Bioscience's vaccine center located in?Andong, North Gyeongsang Province / Courtesy of SK Bioscience

Solid pipelines

The company also highlighted that SK Bioscience will not only produce the amount of vaccine doses necessary in Korea, but also additional ones for overseas distribution. SK Biosciences' L HOUSE vaccine center located in Andong, North Gyeongsang Province, is estimated to be able to produce up to 500 million vaccine doses per year, and the firm's main revenue for the upcoming couple of years could be from manufacturing for export.

The firm's financial structure is also very concrete; its revenue during the first three quarters of the year stood at 158.6 billion won ($146 million) with an operational profit of 26.8 billion won. Profits are expected to grow faster from coronavirus vaccine production in the upcoming years.

“SK Bioscience's COVID-19 vaccine's cost of production is around $4-$5 per dose,” Seo Keun-hee, an analyst at Samsung Securities, said, adding that the firm's capability for mass-production would yield substantial growth in the near future.