[ANALYSIS] Korea sees advantages, challenges with Moderna

By Kim Yoo-chul

President Moon Jae-in's goal is to help South Korea become a global vaccine hub, and given the country's strengths in manufacturing, his ambition is, in theory, achievable and deliverable.

South Korea is home to the world's two-largest memory chipmakers: Samsung and SK hynix. Because of the similarities in the complexities of semiconductor production and contract development and manufacturing (CDM) in the biologics oriented sector, a growing number of domestic companies are jumping into the CDM(O) organization market.

Specifically, both the semiconductor and CDMO industries are required to have high-quality manufacturing capabilities and maintain long-term partnerships with clients. Plus, customers are always welcoming new entrants as they explore alternative suppliers, mostly because of "cost." Also, the United States and Europe are the leaders in the biopharmaceutical industry, with South Korea and China taking roles as CDMO suppliers.

South Korea's manufacturing capability in the production of memory chips, displays, household appliances, chemicals, steel and construction, have made remarkable contributions to the country's economic prosperity, and based on their similarities, the CDMO business has the potential to become the country's "next" breakthrough.

But analysts are stressing that the country's role in the promising global biopharmaceutical industry could be expanded if the country invests more, beyond just bulky and thinner-margin CDMOs, and instead sees substantial progress in widening companies' patent portfolios and honing the original technologies used in messenger RNA (mRNA) vaccines.

One critical aspect of mRNA vaccine technology is the "delivery system," the method widely being used to protect the mRNA from possible degradation and which facilitates uptake into human cells.

What highlights mRNA vaccines the most is that they are well-positioned for use in an expanded range of different infectious diseases, such as Zika, HIV and various types of cancer. Health experts say that mRNA vaccines constitute the most critical "new" technology in fighting future epidemics and another pandemic.

"Because of mRNA's ability to become a kind of platform technology, local companies must invest more into research of this messenger function, the core part of mRNA. If the country's leading CDMO companies, such as Samsung Biologics and SK Bioscience, can see progress in terms of getting a number of relevant patents, then that will make them more powerful, and help them avoid worries about possible margin cuts," said a senior fund manager at a Europe-based investment bank, in Seoul by telephone.

On the sidelines of President Moon's recent summit with U.S. President Joe Biden, the CEO of Moderna confirmed earlier reports from The Korea Times that the U.S. biopharmaceutical company was reviewing a plan to possibly build a plant here, although specific details regarding this are as yet unknown.

President Moon Jae-in, center, poses with Samsung Biologics CEO John Rim, left and Moderna CEO Stephane Bancel during a vaccine partnership event held between Korea and the United States at a hotel in Washington, D.C., May 22.

While Moderna executives reportedly told South Korean government officials that it may transfer its patented mRNA technology to Korean companies, questions remain about how far South Korea could advance as a vaccine hub if Samsung Biologics, the world's top-tier CDMO firm, only agrees to a "fill and finish" manufacturing deal with Moderna.

Because the latest agreement signifies that Moderna's mRNA vaccine will be shipped from the United States for packaging and distribution in Korea only, which is also the equivalent of the Samsung affiliate becoming just an assembly line for the U.S. firm, much more government effort is necessary to prevent the country from being treated as just another supply partner.

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Korea is getting closer with Moderna, as the Korea National Institute of Health signed an agreement to collaborate on mRNA vaccine research here. The trade ministry also signed an agreement with the U.S. biotechnology company to explore local manufacturing opportunities for mRNA vaccines here.

The government announced various incentive programs for local companies that put the spotlight on developing mRNA vaccines, as it doesn't make sense for Korean companies to be involved in commercializing them merely based on CDMO strengths.

The administration is also betting on lipid nanoparticles (LNPs) based mRNA technology, because one of the keys to protecting foreign mRNA from being destroyed by the immune system post-injection are delivery systems, including LNPs. Effective LNPs are crucial for new mRNA vaccines and therapies, DNA gene therapies and even Crispr gene-editing therapies, according to reports and some experts.

Moderna has 24 LNP-based mRNA development programs in its portfolios, with at least 14 having entered actual clinical studies, the company said.

This photo shows Samsung Biologics' drug product manufacturing process, provided by the company, Sunday. Courtesy of Samsung Biologics

At the G7 summit in Britain, German Chancellor Angela Merkel told President Moon that she will explore every avenue to support Korea's plan to strengthen their countries' mutual partnership ― specifically in the area of vaccine development ― with Germany's mRNA vaccine patent holders.

Regarding the possibility of directly manufacturing mRNA vaccines, not just packaging them, in South Korea, Samsung Biologics officials said the company plans to add mRNA vaccine product-manufacturing lines to its Songdo plants "from the first half of next year, at the earliest."

"The scalability of mRNA vaccine-producing equipment to be installed in our plants won't be that small, as the company wants to better respond with rising demand for mRNA vaccines and other vaccine candidates for use against diseases," an official said.

From a technology standpoint, the most promising delivery system adjuncts are LNPs, as they provide not only improved antigen stability and immunogenicity, but also targeted delivery and slow release.

Pfizer and Moderna vaccines both use LNP encapsulation as their delivery mechanism. But Moderna's LNP technology is known to have the upper hand, as its vaccines can be stored for six months at minus 20 degrees Celsius.

A growing number of South Korean bio companies and ventures have acknowledged the significance of having in-house mRNA vaccine technology, and have been spending more to scale up their ability to produce mRNA vaccines, amid the possible acquisition of mRNA vaccine-related patents.

Stock market analysts cite ST Pharm, Hanmi Science and Samsung Biologics as leaders in terms of gradual progress in the development of LNP-based mRNA vaccines.

"Because LNP-based mRNA vaccines are widely being used by Pfizer and Moderna, Korean companies are greatly interested in acquiring relevant patents and hoping for transfers of technology," said the official. The U.S. Food and Drug Administration (USFDA) has recently approved Onpattro ― an mRNA-based drug that has LNP as its base ― for use.

One problem, however, is that Moderna's LNP-based mRNA vaccine technology is being challenged for an alleged patent infringement by Arbutus Biopharma.

This legal tussle is pressuring Moderna to pay for a license to use Arbutus' patent portfolio. Citing this situation, experts say that discussions about a possible technology transfer from Moderna can only proceed if its attempts to invalidate patents it allegedly infringed on are successful.