Oscotec's anti-resistance cancer drug under development, "OCT-598," has entered phase 1 clinical trials. The key question is whether it can secure first-in-class status in the anti-resistance oncology field, which is projected to reach an annual market size of $950 billion (about 1,366 trillion won).
Based on the closing price on the 2nd (51,000 won), the company's market capitalization stands at about 1.955 trillion won. The market says that, given its licensing-out track record with global pharmaceutical companies, future clinical results will likely be a major variable for a stock re-rating.
"Overcoming resistance" is a key keyword that global pharmaceutical companies cite as a next-generation cancer strategy. This is because resistance to existing treatments is observed in a significant number of patients with advanced cancer.
New drugs that are commercialized as first in class are more likely to be out-licensed at higher values at earlier stages. Oscotec aims to secure at least two early-stage licensing deals in its anti-resistance oncology pipeline by 2030 and holds four related candidates, including OCT-598.
◇ Complete response confirmed in animal studies…perfect blockade and clinical difficulty remain challenges
Typically, when a first-line anticancer therapy loses effectiveness, treatment shifts to second- and third-line regimens with different mechanisms. The biggest hurdle is that some cancer cells survive and proliferate again during this process, making tumors more aggressive.
Oscotec focused on the fact that prostaglandin E2 (PGE2), an inflammatory signaling molecule secreted by cancer cells under treatment pressure, plays an important role in resistance formation. OCT-598 is designed to dually inhibit EP2 and EP4 among the receptors for prostaglandin E2 (PGE2), an inflammatory signaling molecule secreted by cancer cells. Oscotec aims to use this to suppress resistance to existing anticancer drugs and extend treatment efficacy as a combination therapy.
Preclinical data are drawing positive assessments. In cell studies, lung cancer cells that survived after administration of the standard chemotherapeutic "docetaxel" proliferated again over time, but when combined with OCT-598, regrowth was suppressed in a concentration-dependent manner. During this process, the proportion of "polyploid" cells that excessively replicate their genome also decreased.
Meaningful differences were also observed in animal studies. Among mice treated with radiation therapy alone, only 1 out of 13 showed complete tumor disappearance and recurrences occurred, but in the group that received a combination with OCT-598 at 10 mg/kg, tumors disappeared in 6 out of 13. Only 1 out of those 6 experienced recurrence. In the 30 mg/kg combination group, complete response was observed in 4 out of 8.
Based on these results, Oscotec received approval for a phase 1 clinical trial plan for OCT-598 from the U.S. Food and Drug Administration (FDA) in May last year and from the Ministery of Food and Drug Safety in November. The target indications are solid tumors, including lung, breast, prostate, gastric, and head and neck cancers. In Korea, patient dosing began in Dec. last year at Seoul National University Bundang Hospital, and participating institutions will be expanded to the National Cancer Center and Asan Medical Center, among others.
The company plans to first confirm safety and the appropriate dose through monotherapy in the early clinical stage, expand to a docetaxel combination study, and later review the potential to combine with standard treatments, including immuno-oncology drugs.
However, given that cancer resistance arises through multiple pathways, some point out that it is difficult to expect a complete blockade with a single mechanism alone. Combination therapy also has limitations in that clinical difficulty is high, as managing side effects and analyzing drug–drug interactions are essential.
◇ Growing governance risks amid R&D expectations…resolving shareholder conflict is "key"
Another burden is governance uncertainty. Oscotec is pushing to make its U.S. subsidiary Genosco a wholly owned subsidiary, but shareholder conflict over corporate valuation has continued since last year.
Genosco sought a KOSDAQ listing, but amid controversy over a dual listing, it received a "not approved" decision in the preliminary listing review, effectively derailing its initial public offering (IPO) plans. In response, Oscotec proposed to concentrate pipeline value in the parent company by additionally acquiring the remaining 40.9% equity in Genosco to make it a 100% subsidiary.
The issue is the acquisition price. Oscotec shareholders view Genosco's fair corporate value at about 700 billion won, while Genosco shareholders value it as high as 1 trillion to 1.4 trillion won.
As the valuation gap between the two sides remains wide, funding options are being reconsidered from scratch. The company pushed to amend its articles of incorporation to increase the number of authorized shares under a plan to bring in strategic investors (SI) and financial investors (FI) to acquire the remaining equity, but the measure was voted down at an extraordinary shareholders meeting in Dec. last year.
Since the start of this year, the dispute has expanded into legal action. On the 5th of last month, a minority shareholder, a person surnamed Choi, filed for a provisional injunction with the Suwon District Court Seongnam Branch to allow the inspection and copying of the shareholder registry. This was seen as a move to gauge the voting-rights landscape ahead of the regular shareholders meeting in March.
Minority shareholders also sought a provisional injunction on the 13th of last month to suspend the effect of shareholders meeting resolutions. Accordingly, if the court limits the effect of the supermajority voting clause in the articles of incorporation, key agenda items such as the appointment and dismissal of directors could be passed with the approval of a majority of shareholders in attendance. The shareholder alliance is pushing a plan at this regular shareholders meeting to enter the board by appointing its recommended candidates as an auditor and outside directors.
If the composition of the board also changes while funding for the Genosco acquisition remains unsettled, analysts say it could affect the pace of R&D investment and pipeline operations plans.
The company said it is continuing to communicate with shareholders ahead of the regular shareholders meeting. A company official said, "Chief Financial Officer (CFO) Shin Dong-jun is in ongoing talks with shareholders," and added, "We have continued communication since the extraordinary shareholders meeting last year."
Currently, the equity consolidated by Oscotec's minority shareholder alliance is about 13.64%, exceeding the stake held by the largest shareholder and related parties (about 12.67%).