With major bio stocks losing steam recently, Kolon TissueGene is showing an unusual rally. Investor expectations are rising as the announcement of phase 3 results for its knee osteoarthritis treatment under development is a month away. With the possibility emerging of the world's first new drug in an osteoarthritis market where global drugmakers have repeatedly failed, the market's attention is converging.
According to the Korea Exchange (KRX) on the 14th, Kolon TissueGene closed at 102,600 won on the 12th. After starting the year in the 70,000-won range, the stock has risen more than 40% in five months. In the securities industry, some are setting a target price of 280,000 won and saying the corporations' value could be significantly re-rated if next month's phase 3 results are positive.
It is also increasing its presence in the KOSDAQ market-cap rankings. While major names such as HLB (No. 6→9), ABL Bio (No. 4→13), and LigaChem Biosciences (No. 8→15) slipped, Kolon TissueGene rose one notch to No. 6.
TG-C, which Kolon TissueGene is developing, is a cell and gene therapy administered as a single injection for patients with knee osteoarthritis. It aims not only to relieve pain but to restore the damaged cartilage structure itself. The prospect that a single administration without surgery can sustain long-term efficacy is also cited as a differentiator.
The reason the market's focus is intensifying is that the U.S. Food and Drug Administration (FDA) has yet to approve any disease-modifying osteoarthritis drug (DMOAD). Currently, osteoarthritis patients receive symptom-relief treatments such as painkillers, steroid injections, and artificial joint surgery.
Global big pharma also tried to tackle this market but repeatedly failed. Tanezumab, an osteoarthritis treatment jointly developed by U.S. companies Pfizer and Eli Lilly and Company, failed to receive marketing approval from the FDA and the European Medicines Agency (EMA) in 2021, and development was halted. Lorecivivint by U.S. biotech Biosplice, which drew attention as a potential first-in-class osteoarthritis treatment, likewise failed to meet its primary endpoint in phase 3 in 2023.
TG-C has not had a smooth path either. The therapy received marketing approval in Korea in 2017 under the name Invossa, but the approval was canceled after it was confirmed that the active ingredient was kidney-derived cells rather than cartilage-derived cells as stated in the filing.
However, the FDA determined the issue was not directly related to safety and approved the resumption of clinical trials. Since then, Kolon TissueGene has continued development mainly in the United States and plans to disclose the phase 3 results via a filing next month. Based on this, the company plans to apply to the FDA for marketing approval in the first quarter of next year and is targeting a 2028 launch.
The company is also expanding the indications for TG-C. In addition to knee osteoarthritis, it is conducting U.S. trials for hip osteoarthritis and degenerative spinal disc disease. If TG-C succeeds in commercialization, the company expects to broaden the range of treatable conditions and expand the market.
The biggest points to watch in this trial are pain reduction and cartilage response. The key to developing osteoarthritis treatments is to prove efficacy that both improves patient-perceived pain and slows disease progression or restores damaged cartilage structure.
TG-C has already undergone clinical testing in Korea and received marketing approval. In U.S. phase 2, it met key endpoints with statistical significance, and both pain reduction and cartilage response were observed. Accordingly, the industry expects that if phase 3 merely reproduces the phase 2 results, the likelihood of FDA approval will increase further.
The industry believes the phase 3 report card to be released next month Will be a critical turning point not only for Kolon TissueGene's corporations' value but also in the global history of osteoarthritis drug development. Attention is also on whether it can solve the long-standing challenge of developing a disease-modifying osteoarthritis therapy.
Wi Hae-joo, an analyst at Korea Investment & Securities Co., said, "With this phase 3 readout, TG-C is expected to be evaluated as a disease-modifying osteoarthritis drug (DMOAD) that demonstrates both pain reduction and cartilage response," and added, "Just as the allergy treatment Dupixent and the autoimmune disease treatment Skyrizi each generate around $30 billion (Hanwha 45.739 trillion won) in global annual sales, osteoarthritis alone could post up to $12.5 billion (about 19 trillion won) in annual sales in the U.S. market."