We will accelerate CHA Vaccine's strategic pivot. We plan to overhaul the business structure so the company is not swayed by infectious diseases.
On the 22nd in Seoul, new CEO Han Seong-il of CHA Vaccine held a briefing and said, "We will focus on building a structure for sustainable growth." CHA Vaccine, an affiliate of CHA Biotech, was listed on KOSDAQ in 2021 via a technology special listing.
This was the first such session since Han took office as CEO in August. Han and key executives unveiled the company's mid-to-long-term growth strategy and global business vision. Han said that day, "We will concentrate our capabilities on a shingles vaccine and immuno-oncology, and expand our technology business based on our adjuvant platform."
Han graduated from the Department of Biology at Korea University and earned a Ph.D. in biochemistry from Purdue University in the United States before working in the country. After serving as head of structure-based new drug development at the research and development center at Pfizer, the U.S. pharmaceutical company, Han joined CHA Vaccine in June this year.
Improving results is a key task for CHA Vaccine. Last year's operating loss was 7.69642 billion won, widening from the previous year. As of the first half of this year, the operating loss was reported at about 5.46274 billion won and the net loss at about 6.36066 billion won. As a result, there is also a potential risk of being designated as an issue-management stock, which could lead to a delisting risk.
The Korea Exchange (KRX) designates KOSDAQ-listed corporations as issue-management stocks if annual revenue is less than 3 billion won and the ratio of legal losses to equity exceeds 50% two or more times over three years. For technology special listings, the revenue requirement is deferred for five years and the legal-loss requirement for three years. If, after the grace period ends, the company fails to meet the legal-loss requirement for two consecutive years, it may be designated as an issue-management stock starting in the fifth year after listing.
This year marks the fourth year since CHA Vaccine's listing. The revenue requirement applies starting in 2027, but because there is still no vaccine revenue, the market says the company must show visible potential for improved results.
The company said it plans to concentrate resources on research and development assets with high commercialization potential. It added that it has already adjusted parts of its internal organizational structure and is pursuing expense efficiencies, such as introducing artificial intelligence (AI) for candidate discovery and research and development.
The core pipeline (drug candidates) the company is currently focusing on is CVI-VZV-001, a shingles preventive vaccine candidate. The company said that in a phase 1 clinical trial, it confirmed safety and efficacy (preventive effect) with a 100% seroprotection rate. The company said it plans to pursue technology transfer in parallel with global partnerships, starting with a phase 2 clinical trial next year.
As a competing vaccine, there is Shingrix, a recombinant protein vaccine from GSK plc that is already commercialized. CHA Vaccine believes its shingles preventive vaccine is sufficiently competitive. While Shingrix is highly efficacious, it relies entirely on imports and is expensive; CVI-VZV-001 has equivalent efficacy but, based on domestic technology, can be supplied at a lower cost, which the company says can overcome supply instability.
The candidate CVI-CT-002, an immuno-oncology therapy for companion animals, is also a pipeline the company expects. The company originally developed the substance as an immuno-oncology therapy for humans, but after therapeutic effects were confirmed in animal studies, it began developing it targeting mammary gland cancer in companion dogs. Developing veterinary medicines is easier than human medicines, which require massive development time and expense, and with the global animal health market expanding, the company is aiming to make this a cash cow (revenue source).
According to the company, in a pilot study (phase 1/2) of CVI-CT-002, administering intratumoral injections once a week for three weeks yielded a 100% response rate. Recently launched anticancer drugs for companion animals require daily intravenous administration, and their response rates are reportedly in the 30% range. Han said, "We are currently pursuing a dual strategy of label expansion and technology export," adding, "We aim to complete a pivot study (phase 3) by 2027 and launch the product in 2027."
In addition, the company said it will continue developing the Japanese encephalitis vaccine candidate CVI-JEV-001 and the hepatitis B therapeutic vaccine and preventive vaccine CVI-HBV-002. It said it plans to expand its adjuvant platform business. Han said, "We plan to diversify our vaccine platform development by applying the adjuvant platform to a variety of modalities (therapeutic approaches), such as messenger RNA (mRNA), in addition to existing recombinant protein vaccines."
Previously, CHA Vaccine was selected for the "adjuvant library" program by CEPI (Coalition for Epidemic Preparedness Innovations), an international organization, enabling it to supply its adjuvant Lipo-Pam, which the company developed, to vaccine corporations and research institutes worldwide. The company is eyeing opportunities for global partnerships and technology transfer through this.
When asked when improved results would become visible, Kim Sang-gi, chief financial officer (CFO) of CHA Vaccine, said, "Considering the progress of key pipelines, we expect 2027," adding, "Various measures to boost short-term revenue before then are under review."
Han said, "I will actively leverage the network I have built over more than 20 years at Pfizer to grow CHA Vaccine's global partnerships," adding, "Through clinical performance delivery and global partnerships, we will secure revenue and operating profit as soon as possible and solidify confidence in CHA Vaccine in the market."