April 19, 2024

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[THE INVESTOR] Shares of Kolon Life Science fell sharply on July 13 after Korea’s medicine regulator questioned the effectiveness of the country’s first gene therapy drug for degenerative arthritis developed by the company.

The drug Invossa-K Inj., an injectable cell gene therapy for osteoarthritis, which was granted approval by the Ministry of Food and Drug Safety for domestic sales on July 12, was largely expected to offer breakthrough improvements in joint structure but the authorities only okayed the drug for use in pain relief and function improvement.

“The therapy has not shown significant improvement in joint structure such as regeneration of damaged cartilage versus the control group,” the MFDS said in a release.

Disappointed with the limited indication, the company saw its stock price drop 7.4 percent to 136,300 won (US$ 120.04) as of 2:30 p.m. on July 13, following a 15.84 percent drop the previous day after the report was released.

“The clinical trials of Invossa were not designed to confirm the improvement of the structure, so we focused on pain relief and function improvement for approval,” an MFDS official said.

Having spent 19 years to develop the drug, Kolon Life Science is hinging hopes on Invossa to make inroads into the global gene therapy market estimated at around US$280 million.

The drug maker said the arthritis treatment will demonstrate its efficacy in joint improvement through clinical trials in the US.

“Long-term observation is needed to prove that the drug regenerates cartilage. ... We plan to prove this through long-term follow-up results of 1,020 large-scale patients in phase 3 clinical trials in the US,” an official at Kolon said.

Analysts here said investor concerns over the drug’s efficacy is excessive, given that 88 per cent of patients treated with Invossa reported improved symptoms for up to two years during phase 2 clinical trials in the US.

“The controversy over the efficacy of Invossa is only a deterioration in the short-term investment sentiment, and this can be proven in clinical trials in the US,” said Yang Hyeong-mo at eBEST Investment & Securities.

The existing arthritis treatment market is divided into drug treatment for mild patients and surgery treatment for serious patients. But Invossa is evaluated as “first-in-class” which can treat arthritis with injections without surgical treatment. Once the injection is given, the pain persists for a period of one to two years and the symptoms do not worsen, according to the firm.

By Park Han-na (hnpark@heraldcorp.com)