The human tissue and human tissue-based medical device specialist L&C BIO(290650) posted record first-half results this year on the back of stronger sales of its extracellular matrix (ECM) product "Re2O."
L&C BIO said on the 11th that its first-half standalone revenue rose 78.4% year over year to 55.4 billion won.
First-half operating profit jumped 589.7% to 15.3 billion won. The operating margin climbed 20.5 percentage points, from 7.1% to 27.6%.
On a consolidation basis, revenue increased 80.4% to 69.1 billion won. Consolidated operating results swung from a 400 million won loss in the first half of last year to a 14.6 billion won profit this year. The operating margin also improved from -1.1% to 21.1%.
The company said operating profit outpaced revenue growth thanks to product mix improvements from increased Re2O sales, better production efficiency, and the dispersion of fixed costs.
The product driving the results growth is Re2O.
Re2O is a product developed to be injectable by grinding acellular dermal matrix that removes cells from donated human skin while preserving the extracellular matrix (ECM). While conventional human tissue has been used mainly in surgical and reconstructive fields, Re2O has extended this into the minimally invasive procedure space.
L&C BIO developed Re2O based on its human tissue processing and quality control capabilities accumulated since its 2011 founding. The company said it can leverage production and quality control infrastructure from its existing human tissue business, creating a structure in which manufacturing efficiency rises and the fixed-cost burden decreases as sales volumes grow.
In fact, as the standalone operating margin rose to 27.6% in the first half, Re2O-centered revenue growth translated into improved profitability.
L&C BIO has begun securing clinical and academic evidence to expand Re2O in global markets. The company said it plans to broaden research on the physical properties of ECM, the integration process with tissue after injection, histological changes, and long-term safety, based on usage experience accumulated in clinical settings.
In Mar., it recruited Lee Ju-hee, a special-appointed professor at Yonsei University College of Medicine, as vice chair. Lee is a dermatology and translational research expert who served as chair of the Department of Dermatology at Yonsei University College of Medicine and head of Dermatology at Severance Hospital. At the company, Lee oversees research and development direction, human tissue compatibility assessments, and global clinical and academic strategy.
In the second half, it will also consider ECM clinical studies in collaboration with overseas medical institutions and researchers. The plan is to further validate clinical experience accumulated in Korea within overseas research environments to secure evidence needed for global business expansion.
The improved first-half results are also expected to affect the company's planned paid-in capital increase and bonus issue.
L&C BIO plans to use funds raised through the paid-in capital increase to expand production capacity, automate processes, build global production bases, and establish overseas human tissue supply chains.
Regarding the paid-in capital increase, the market has expressed dilution concerns due to the higher share count, but the company said it is a growth investment to meet rising demand for ECM products, including Re2O.
The company plans to build a local human tissue value chain in the United States—covering donation, quality control, storage, and supply—through cooperation with U.S. tissue banks, and to normalize its China production base.
It will also pursue call option purchases and the retirement of convertible bonds. The company said that once related procedures are completed, the likelihood of derivative valuation losses related to the convertible bonds and the resulting corporate tax expense is expected to decrease.
A L&C BIO official said, "The growth of Re2O is not limited to increased sales of an individual product, but is the result of extending the human tissue processing and quality control capabilities the company has built up into a new market," adding, "Through additional research and domestic and overseas clinical studies, we will develop it into a human tissue ECM platform recognized in the global market."