[Reporter’s View]Biotech’s responsible approach to failure

A Responsible Stance on Failure: The Case for Accountability in Biotech

Cases of terminated licensing deals and halted clinical trials are on the rise in Korea's biotech sector.

 

Recently, IntoCell announced that the licensing agreement for its ADC (antibody-drug conjugate) platform with ABL Bio had been canceled due to patent overlap issues.

 

Prior to that, Orum Therapeutics voluntarily decided to halt clinical development of its lead pipeline after the occurrence of serious adverse events (SAEs).

 

This series of announcements quickly translated into investor losses.

 

IntoCell’s stock plummeted immediately after the termination of its licensing deal was made public.

 

The following day, the company’s share price closed at a price 25.9% lower compared to the previous trading session.

 

On the day of the disclosure, IntoCell hit the lower limit in after-hours trading (3:40–8:00 p.m.), falling to KRW 28,900.

 

When Orum Therapeutics announced the suspension of its clinical trial, its stock price also fell to the lower price limit, showing a similar trend.

 

Ironically, both companies had recently gone public via Korea’s special technology listing track (Tech Exception IPO).

 

Less than two months after listing on the KOSDAQ, they released negative disclosures.

 

This has fueled suspicions that the licensing deals may have been used to inflate valuations and justify higher offering prices during the IPO process.

 

Critics have also raised concerns that the Korea Exchange (KRX) failed to properly vet these companies during the tech exception listing review process.

 

However, it is necessary to take into account the fact that failure is inevitable in the biotech industry.

 

New drug development is inherently a high-risk, high-reward industry with a high failure rate.

 

Even global big pharma companies often succeed in developing only one out of dozens of candidate substances.

 

Midway terminations of licensing agreements or discontinuation of clinical trials are not uncommon, both in Korea and abroad.

 

In other words, failure itself cannot be regarded as the core issue.

 

Due to the structural nature of the biotech industry, it is also unrealistic to expect the stock exchange to filter out all risks in advance.

 

However, this does not mean that all failures should be excused.

 

Companies must maintain a minimum level of responsibility for their technology and decision-making processes.

 

This responsibility is even greater for publicly listed companies, as their actions can undermine trust in the entire domestic biotech industry.

 

In fact, investors have already witnessed multiple instances where poor handling by individual companies has led to a collapse in overall market confidence.

 

In the end, what truly matters is how a company responds after failure.

 

The real test lies in how transparently it discloses the reasons behind a terminated clinical trial or a canceled deal, the technical limitations involved, and what alternative plans it puts forward.

 

The greater risk is not the failure itself, but the inability to provide a convincing explanation for it.

 

To earn a second chance in the market, companies must be willing to thoroughly explain the causes of failure and demonstrate a proactive attitude — even amid uncertainty.

 

In this regard, IntoCell's response was noteworthy.

 

For two days after the contract termination, IntuCell issued two official statements, sharing details on the structure and analysis of the patent issues that led to the termination, the results of legal reviews, the connection to its current pipeline, and plans to secure additional technology.

 

The company also pledged to restore market communication and trust by having its CEO purchase KRW 10 billion worth of company shares and expanding investor relations (IR) activities.

 

IntoCell's actions stand in contrast to some biotech companies that have remained silent or offered vague explanations in the face of failure.

 

It remains to be seen how faithfully IntoCell will follow through on its commitments and whether this communication approach will help restore market trust in the future.

 

Hopefully, this case will serve as a turning point for the Korean biotech industry—prompting a broader reflection on how companies confront and manage failure.