SK Biopharmaceuticals' Chinese joint venture pushes for listing

Approves crossover investment in Ignis, amendment to the agreement for clinical development of Ignis' reformulated drug in China

Expects to gain higher equity value, mitigate US business dependency, and secure a growth engine in Greater China

SK Biopharmaceuticals’ Chinese joint venture appears to be accelerating preparations for an initial public offering (IPO). This follows SK Biopharmaceuticals’ board approval late last year for pre-IPO investment in the joint venture and changes to the clinical development contract for an improved drug candidate in China. Observers note that SK Biopharm can simultaneously expect the benefits of expanding its China business and increasing its stake value through the joint venture's listing.

According to industry sources on the 10th, SK Biopharm's board of directors in November last year approved two agenda items: a crossover investment in its Chinese joint venture, Ignis, and amendments to the agreement for the clinical development in China of an improved new drug owned by Ignis. Both proposals passed with unanimous support from outside directors.

Ignis serves as SK Biopharmaceuticals’ strategic outpost for the Chinese market. In 2021, SK Biopharmaceuticals established Ignis together with China-based global investment firm 6 Dimensions Capital (6D). At the time of its launch, Ignis raised USD 180 million in Series A funding, the largest Series A investment in China’s pharmaceutical industry that year. Investors included Ruentex Group, KB Investment, WTT Investment, Abu Dhabi sovereign wealth fund Mubadala Investment Company, HBM Healthcare Investments, and Goldman Sachs.

At the time, SK Biopharmaceuticals transferred the China rights to 6 central nervous system (CNS) assets, including its self-developed epilepsy drug cenobamate and sleep disorder treatment solriamfetol, to Ignis and acquired equity worth USD 150 million in the venture. Under the contract, SK Biopharmaceuticals also secured revenue streams, including a USD 20 million non-refundable upfront payment, USD 15 million in milestone payments tied to development, approval, and sales stages, as well as sales royalties. As of the end of September last year, SK Biopharm held 41% of Ignis shares, making it the largest shareholder.

Industry observers view the latest board approval as a signal linked to Ignis’s IPO plans. Crossover investments are typically a funding method used by unlisted companies preparing for IPOs to attract institutional investors. Considering Ignis is pursuing a listing, this crossover investment decision is interpreted as a move to enhance its corporate value and establish an investment foundation before the IPO. Ignis is known to have formed an advisory team and proceeded with IPO preparations around the first half of last year to pursue a listing on the Hong Kong Stock Exchange (HKEX).

At the same time, the revision of the clinical development agreement for the improved drug is seen as a measure to accelerate clinical trials in China and secure a more efficient commercialization pathway. China’s regulatory system, particularly regarding clinical trial sponsors and approval procedures, is heavily localized, requiring development structures tailored to local requirements. Analysts say the flexible adjustment of the contract structure reflects an effort to expedite clinical development and regulatory approval in line with the local regulatory environment.

Ignis Pipeline Overview (Source: Ignis)

Market expectations place the potential Ignis IPO around the first half of this year. If Ignis successfully lists on the Hong Kong exchange as planned, its growth trajectory is expected to accelerate. The influx of IPO capital could strengthen short-term funding for the China launch of cenobamate and solriamfetol, while in the longer term supporting development of additional CNS assets transferred from SK Biopharm as well as Ignis’s own pipeline.

Ignis secured favorable conditions for entering the Greater China market after receiving new drug application (NDA) approvals from China’s National Medical Products Administration (NMPA) in December last year for both cenobamate and solriamfetol. With over 11 million epilepsy patients in China, the market is estimated to be worth USD 1.1 billion as of 2024. The number of patients with obstructive sleep apnea is estimated to exceed 170 million. With the two approvals, Ignis aims to expand access to treatments for CNS disorders in Greater China and provide new therapeutic options for local patients.

Ignis has also applied for authorized generics for cenobamate and solriamfetol as part of a strategy to secure early market share. Authorized generics are identical versions of the original drug marketed with the permission of the original drug’s company. T This strategy allows companies to respond to competing generics after patent expiration while simultaneously targeting the price-sensitive segments of the market.

In addition to licensed assets, Ignis is advancing its own drug development programs. The company recently completed dosing of the first patient in a Phase I clinical trial of ‘IGS01’, its internally developed candidate for levodopa-induced dyskinesia (LID) in Parkinson’s disease. IGS01 is a small-molecule drug candidate belonging to the positive allosteric modulator (PAM) class targeting the M4 muscarinic receptor, which regulates brain neurotransmission. This development signifies Ignis's evolution beyond merely commercializing acquired assets into a CNS biotech company with its own pipeline and R&D capabilities.

The benefits SK Biopharmaceuticals stands to gain from Ignis's growth are clear. As Ignis's largest shareholder, SK Biopharmaceuticals is expected to see the value of its stake rise to hundreds of billions of won. Furthermore, by securing the massive Chinese market, it can diversify its portfolio, moving beyond its current business structure that is heavily dependent on the United States, which accounts for more than 90% of its revenue.

An SK Biopharmaceuticals official stated, “We understand that Ignis is preparing for a listing on the Hong Kong stock exchange, but the specific timeline is confidential and difficult to confirm.”