Corporations in the bio sector, facing funding shortages and the risk of delisting, are turning to cryptocurrency ventures to find breakthroughs. Developing new drugs requires massive amounts of funding, but the sources are limited. As the institutional entry of cryptocurrency accelerates, some bio corporations are pursuing strategies to utilize cryptocurrency as a medium- to long-term financial asset for research and development (R&D) financing. Bio corporations venturing into cryptocurrency have also emerged in the United States.
◇To secure R&D funding through cryptocurrency ventures
AP Healthcare, a subsidiary of Aprogen, added blockchain and cryptocurrency investment and financial services to its articles of incorporation on the 7th and changed its name to 'APTOCROMAP'. AP Healthcare is a company that distributes and sells pharmaceuticals such as topical medications, gastrointestinal medications, and antibiotics.
Aprogen's other subsidiary, Apt NeuroScience, also announced its entry into the cryptocurrency investment business through its U.S. subsidiary last June. With cash reserves of $12 million (approximately 16.53 billion won), it began purchasing cryptocurrencies including Bitcoin, planning to secure R&D funding as a stable medium- to long-term revenue source.
Aprogen, the parent company of these firms, focuses on biosimilars and contract development and manufacturing organizations (CDMO). It is currently preparing for European approval for the biosimilar of Roche's breast and stomach cancer treatment 'Herceptin' and is producing the biosimilar of AbbVie's autoimmune treatment 'Humira' through its subsidiary Aprogen Biologics.
In December last year, Aprogen acquired Geolit Energy, a thermal energy company (currently Apt NeuroScience), thus entering the Parkinson's disease treatment development sector. Alongside Chung Jong-kyung, head of the Genetic Engineering Research Institute at Seoul National University, it is developing a new substance aimed at preventing the loss of dopamine neurons. However, Apt NeuroScience has recorded operational deficits for three consecutive years, indicating a desperate need for performance improvement.
A representative from Apt NeuroScience noted, "To sustain the bio business, we needed a stable revenue source while minimizing the risk of losses, and we will directly invest in assets with clear growth potential and scarcity, like Bitcoin, and expand into related businesses."
The cryptocurrency business is also being utilized as a breakthrough strategy for companies on the verge of delisting. Cancer drug developer Bridge Biotherapeutics handed over management rights to the U.S. cryptocurrency hedge fund Parataxis in June and changed its name to 'Parataxis Korea'. Jeong Jeong-kyu, former CEO of Bridge Biotherapeutics, joined the new company as an internal director.
Bridge Biotherapeutics entered the KOSDAQ through a technical exception listing in 2019, but it fell into financial difficulties after failing to demonstrate efficacy in the Phase 2 clinical trial of its idiopathic pulmonary fibrosis treatment 'BBT-877'. BBT-877 was transferred to Germany's Boehringer Ingelheim for a technology transfer worth 1.46 trillion won in 2019 but was returned in October 2020 due to toxicity issues.
Bridge Biotherapeutics aimed for a comeback through its own clinical trials, but due to cumulative deficits, it was designated as a managed company in March when its operating loss before tax deductions exceeded half of its capital.
◇Similar patterns in Korea and the U.S… Industry worries about neglecting core business
Similar cases are emerging in the U.S. Last month, cancer drug developer MEI Pharma announced that it would use the $100 million (approximately 139.2 billion won) raised through a paid-in capital increase to acquire the cryptocurrency Litecoin (LTC). The founder of Litecoin, Charlie Lee, officially joined MEI Pharma's board, solidifying the cryptocurrency business as an important pillar of the company.
Windtree Therapeutics, a developer of drugs for cancer and cardiovascular diseases, also announced plans to raise up to $200 million (approximately 277 billion won) to secure Binance Coin (BNB) around the same time. 180 Life Sciences, which is developing a new drug for inflammatory diseases, changed its name to 'ETHZilla' earlier this month and converted Ethereum (ETH) into a strategic financial asset.
The background of bio companies venturing into cryptocurrency lies in institutional changes. In the U.S., President Donald Trump is accelerating regulatory relaxation and system overhaul to foster the cryptocurrency industry, while in Korea, the proposal of the 'Digital Asset Basic Law' has increased the possibility of incorporating digital assets into the institutional framework.
However, there are concerns within the industry that bio corporations may place more emphasis on cryptocurrency ventures than on their core business of new drug development. Both Bridge Biotherapeutics and Apt NeuroScience have stated that they will continue to invest in bio R&D, but the market expects that the cryptocurrency business will become their main focus in the long term.
Seo Geun-hee, a researcher at Samsung Securities, said, "From an investor's perspective, it is possible for the stock price to rise and the market reaction to be positive in the short term if the company is seen struggling to survive," but added, "it is uncertain how feasible it will be to secure funding through cryptocurrency, and it is difficult to have high expectations for bio R&D at this moment." She also noted that "this phenomenon is particularly pronounced in the currently cash-strapped bio sector but could gradually spread to other industries."