SK Bioscience invests billions in the post-pandemic era

undertakes massive investments worth hundreds of billions of won as it accelerates its activities in the post-pandemic era.

Completed the first expansion of its pneumococcal vaccine manufacturing plant in Andong

Last year, the company invested KRW 300 billion to acquire a German CDMO firm, and invested another KRW 300 billion to relocate its operations to Songdo

Acquires KRW 100 billion stake in Novavax and retrieves investment

SK Bioscience has taken proactive steps to discover new growth engines in preparation for the post-pandemic era.

 

The company has invested KRW 81.5 billion to expand its vaccine plant in Andong and approximately KRW 300 billion for the acquisition of a German CDMO biotech company.

 

The construction of its headquarters, research center, and factory in Songdo, which required an investment of KRW 300 billion, is in its final stages.

 

SK Bioscience has recovered most of its investment by selling its stake in Novavax, which it acquired for KRW 110.2 billion.

 

According to industry sources on the 2nd, SK Bioscience recently held a completion ceremony to celebrate the expansion of its pneumococcal vaccine production facility at its vaccine manufacturing plant, L-House, in Andong, North Gyeongsang Province.

 

The expanded facility will be used as a manufacturing base for GBP410, a 21-valent pneumococcal vaccine candidate jointly developed with Sanofi.

 

SK Bioscience President Jaeyong Ahn (fifth from left) and Sanofi Executive Vice President Thomas Triomphe (sixth from left) and other key executives from both companies are cutting the ribbon to mark the completion of the facility

Through the expansion, SK Bioscience has secured approximately 4,200 square meters (1,300 pyeong) of new space by expanding the existing vaccine manufacturing facility at L House.

 

The facility will be used as a production base for GBP410 and is expected to obtain certification from the US Food and Drug Administration (FDA) for its compliance with current Good Manufacturing Practice (cGMP) standards.

 

This is the first large-scale expansion of SK Bioscience's Andong vaccine plant since its establishment.

 

SK Bioscience invested KRW 200 billion in 2012 to construct the L House in Andong.

 

The L House is equipped with core technologies and production facilities for cell culture, bacterial culture, and genetic recombination, enabling it to produce most vaccines that can be developed domestically.

 

SK Bioscience has invested an additional KRW 81.5 billion for the expansion of the L House thereafter.

 

GBP410 was jointly developed by SK Bioscience and Sanofi since 2014.

 

It is a protein-conjugated vaccine candidate created by conjugating a specific protein to pneumococcal capsular polysaccharides, which cause pneumonia, acute otitis media, and invasive diseases.

 

The conjugate method is known to provide the highest preventive efficacy among commercially available pneumococcal vaccines.

 

GBP410 is currently undergoing global Phase III clinical trials in Australia, the US, and South Korea, targeting approximately 7,700 infants (6 weeks old) to adolescents (17 years old).

 

SK Bioscience and Sanofi confirmed the efficacy and safety of GBP410 in a Phase II clinical trial that ended in August last year.

 

In a comparison between GBP410 and the control vaccine, Pfizer's “Prevenar 13,” among 140 children aged 12–15 months and 712 infants aged 42–89 days, GBP410 demonstrated equivalent immunogenicity compared to the control vaccine.

 

No serious adverse events related to the vaccine were reported in terms of safety.

 

SK Bioscience plans to invest approximately KRW 200 billion by 2024 to expand the manufacturing facilities of L House, which possesses state-of-the-art vaccine production facilities such as cell culture, bacterial culture, genetic recombination, and protein conjugation, and to establish new platform facilities for mRNA and next-generation viral vectors.

 

Apart from this expansion, SK Bioscience has purchased an additional 99,130 square meters of land in the Gyeongbuk Bio 2nd General Industrial Complex, which is currently under construction in Maegok-ri, Pungsan-eup, Andong, near the existing L-House site, and plans to further expand its manufacturing facilities.

 

SK Bioscience is actively investing to secure new growth opportunities based on the cash accumulated through its COVID-19 vaccine contract manufacturing (CMO) activities during the pandemic.

 

SK Bioscience announced in June that it had signed an agreement with Germany

SK Bioscience acquired IDT Biologika in Germany in October last year.

 

Through its wholly-owned subsidiary established in Germany, it acquired a 60% stake in IDT Biologika held by the German pharmaceutical and biotechnology company Klocke Group.

 

SK Bioscience acquired IDT Biologika for a total of KRW 370 billion.

 

SK Bioscience purchased two existing shares of IDT Biologika for KRW 222.6 billion and one new share for KRW 122.1 billion.

 

Additionally, SK Bioscience acquired three existing shares of Technik-Energie-Wasser Servicegesellschaft mbH (TEW), a subsidiary of IDT Biologika, for KRW 22.3 billion, securing a 60% stake in TEW.

 

The initial acquisition price for IDT Biologics by SK Bioscience was set at KRW 339 billion.

 

Klocke Group retained a 40% stake in IDT Biologics and acquired a 1.9% stake in SK Bioscience, nd the prices of the existing shares of IDT Biologics and TEW increased slightly thereafter..

 

KK Bioscience decided to issue 1,519,543 new shares worth KRW 75.7 billion to the Klocke Group through a third-party allocation of new shares.

 

The funds SK Bioscience will invest in the acquisition of IDT Biologika are estimated at KRW 294.3 billion.

 

Founded in 1921, IDT Biologika is a large biotech company that operates contract manufacturing businesses in Germany and the United States.

 

It has a track record recognized by more than 10 key drug regulatory agencies in the United States and Europe, and produces bulk and finished products for vaccines and biopharmaceuticals across all stages from clinical trials to commercialization, along with process and analytical method development.

 

The company employs approximately 1,800 people.

 

The acquisition of IDT Biologika has already shown tangible results.

 

SK Bioscience's first-quarter sales reached KRW 154.6 billion, a sevenfold increase from 22.3 billion won in the same period last year.

 

SK Bioscience recorded sales of KRW 61.6 billion in the third quarter of last year, but with IDT's sales reflected, sales jumped to KRW 156.8 billion in the fourth quarter, exceeding KRW 150 billion for two consecutive quarters.

 

Of SK Bioscience's KRW 154.6 billion in sales in the first quarter, IDT’s sales accounted for KRW 118.3 billion, or 76.5%.

 

SK Bioscience

SK Bioscience is investing KRW 300 billion in Songdo, Incheon, to establish a new base.

 

SK Bioscience signed a land purchase agreement with the Incheon Free Economic Zone Authority in December 2021.

 

The agreement involves the construction of a global R&PD (Research & Process Development) center on a 34,138.8 square meter (approximately 9,216 pyeong) site in the 7th block, Sr14 lot of the expanded Incheon Technopark in Songdo-dong, Incheon.

 

SK Bioscience has signed a contract with the Incheon Free Economic Zone Authority to acquire land and buildings worth KRW 33 billion.

 

The newly established global R&PD center will house laboratories, factories, and offices for basic research, process development, and production in the vaccine and bio fields.

 

Through the establishment of the global R&PD center, SK Bioscience plans to actively expand its global bio CDMO business and secure new platforms, while strengthening collaboration with international organizations, domestic and foreign bio companies, and research institutions.

 

The company selected Songdo for the project due to its advantageous location, including proximity to the airport, connectivity with the existing Andong plant, and potential for synergy with nearby industrial complexes.

 

SK Bioscience also secured cash by recovering contract manufacturing payments it made through equity investment and the disposal of its stake in its COVID-19 vaccine partner Novavax.

 

SK Bioscience acquired 6.5 million shares of Novavax for KRW 110.2 billion in August 2023.

 

It secured a 5.5% stake by participating in Novavax's third-party allocation of new shares.

 

SK Bioscience plans to explore various collaborations, including utilizing Novavax's immune adjuvant ‘Matrix M,’ and to advance the development of its own vaccines.

 

SK Bioscience's equity investment also aims to replace unpaid amounts from COVID-19 contract manufacturing payments with the equity investment.

 

SK Bioscience will not pay Novavax’s equity acquisition price in cash.

 

Instead, part of the unpaid amounts that Novavax owes SK Bioscience will be used as funds for acquiring shares.

 

Accounting-wise, Novavax will pay SK Bioscience KRW 110.2 billion of the unpaid amount, with which SK Bioscience will acquire the shares.

 

At the time, Novavax agreed with SK Bioscience to reduce the debt from USD 195 million to USD 154 million.

 

After the equity investment, the debt size decreased to USD 65 million.

 

SK Bioscience sold 5.5 million shares of Novavax stock for KRW 105.3 billion last year.

 

The per-share sale price was KRW 19,147.

 

As of the end of last year, SK Bioscience holds 1 million shares of Novavax stock.

 

Applying Novavax's stock price of USD 6.3 as of the 1st, the stock valuation amounts to USD 6.3 million.