Kainos Medicine, once called a "next-generation biotech hopeful" for its AIDS treatment and a new Parkinson's drug candidate, is now on the brink of being delisted from the KOSDAQ market. It sought a breakthrough through technology licensing results and pipeline expansion, but analysts say it failed to overcome practical barriers such as a chronic deficit structure, capital erosion, and listing maintenance requirements.
According to the Korea Exchange (KRX) on the 15th, the exchange decided to delist Kainos Medicine on the 26th after reviewing whether to delist the company. Accordingly, liquidation trading begins on the 15th.
Earlier, when the Corporate Review Committee passed a delisting resolution in Nov., the company immediately submitted an objection and an improvement plan, but the Market Committee's final decision did not change.
Regarding the decision, the company said, "We are swiftly filing for an injunction to contest the effect of the delisting decision and are exploring all response measures to resume trading."
Kainos Medicine, founded in June 2007 as a new drug development corporations, has developed key pipelines including treatments for AIDS and Parkinson's disease, multiple system atrophy (MSA) therapies, and anti-cancer drugs.
MSA is a neurodegenerative disease accompanied by autonomic dysfunction along with Parkinson's disease or cerebellar ataxia, with symptoms that worsen rapidly and an average survival period of only about eight years after onset. With no fundamental treatment, it is considered an area with a high level of difficulty for new drug development. Kainos Medicine leveraged this pipeline to enter the KOSDAQ market in 2020 through the technology exception program.
A representative achievement is the technology transfer of the AIDS treatment "KM-023." In 2014, the company transferred KM-023 to Chinese pharmaceutical firm Jiangsu Aidea, establishing a sales base in China. Initially, the structure paid 2% royalties on China monotherapy sales, but in 2023 the contract was revised to expand the technology transfer scope to the rest of the world excluding Korea. As a result, it shifted to terms receiving 45% of gross profit on sales in countries holding the patent, raising expectations for entry into global markets such as the United States and Europe.
The Parkinson's treatment substance "KM-819" received phase 2 approval from the Ministery of Food and Drug Safety in Oct. last year. To conduct phase 2 in the United States, it also established the U.S. subsidiary Fascinate Therapeutics. Through this trial, the company aimed to put MSA treatment development on track and then expand to multinational trials including the United States to pursue orphan drug designation and early market entry. Earlier in 2024, it also recruited Caroly Barlow, regarded as an authority in neurodegenerative diseases in the United States, as chief medical officer (CMO).
However, the prevailing view in the market is that such achievements alone were not enough to fundamentally improve the company's financial structure. While the funding burden for new drug development increased, the company was designated as an administrative issue and became subject to a substantive examination of listing eligibility, leading to a prolonged trading halt. The exemptions for technology-exception-listed corporations from the operating loss requirement and the annual sales 3 billion won requirement for five years after listing also ended last year.
As a result, first-half sales last year did not reach 700 million won, and the company became subject to a substantive review of listing eligibility. Cumulative sales in the second quarter last year were only 500 million won, while the net loss was 4.1 billion won, far exceeding the sales scale. The financial burden was evident in the indicators as well. Early last year, it was designated as an administrative issue due to a capital erosion ratio of 50% or more, and it was also named a company with poor disclosures. As of 2024, the operating loss-to-equity ratio reached 239.2%.
Fundraising also did not go smoothly. Kainos Medicine sought a paid-in capital increase of about 16.7 billion won through 2024 from Sheerone Global Group and individual investors, but no actual funds have flowed in to date. On the 5th, the company said in a revised filing that the payment date was postponed to the 23rd of this month.
Given the immediate heavy funding needs for new drug development, some also note that even if an injunction is granted, entering the clinical stage could pose not only a financial burden but also a management risk. Typically, phase 2 and phase 3 trials each require tens of billions of won, so without a stable funding structure, the development timeline is bound to be shaken.
The industry sees this case as once again exposing the structural limitations commonly borne by technology-exception-listed biotech corporations. It showed that technology and pipelines alone have limits to maintaining a listing, and that a certain level of sales and financial stability is required at the same time.
A biotech industry official said, "Given the nature of new drug development corporations, operating losses in the early stages are inevitable, but once a certain period has passed after technology-exception listing, applying the same yardstick can be a significant burden," adding, "This case shows that if technological achievements are not connected to actual sales and fundraising, maintaining a listing is not easy."