Pharmaceutical distribution corporations Theragen Etex(066700) decided to sell equity in its new drug development subsidiary MedPacto(235980) nearly two years ago, but the transaction has yet to be completed.
That is because disappointing results in new drug development have reduced the appeal of an acquisition, and Theragen Etex prefers a strategic investor (SI) that can create synergies in the new drug business over a financial investor (FI).
Still, there are signs of change recently. The targeted anticancer drug "Vactosertib," which had been virtually the only new drug candidate so far, showed positive early data in an osteosarcoma trial, and the follow-up pipeline "MP010" is also about to enter phase 1.
The key is timing. As MedPacto's corporations value rises, the appeal of an acquisition grows, but from Theragen Etex's standpoint, the incentive to rush to sell equity could diminish. Theragen Etex is also said to be watching the situation without setting a deadline for the sale, drawing attention to how it will unfold.
◇ Acquisition appeal dented by sluggish "Vactosertib"… phase 3 colon cancer trial also a funding burden
In Nov. 2024, Theragen Etex said it would dispose of a 14.7% stake held by the largest shareholder, including management control, in MedPacto. But no news has followed that the transaction was completed. Theragen Etex's equity stake in MedPacto has remained at 14.39% since the end of 2025 to date.
According to the industry, some financial investors (FIs) were said to have shown interest in MedPacto. However, Theragen Etex was said to prefer a strategic investor (SI) that can create synergies with MedPacto's new drug business.
The decline in MedPacto's corporations value was largely driven by the sluggish development of Vactosertib.
When MedPacto listed on KOSDAQ via the technology special listing program in Dec. 2019, it drew strong market expectations for the combination potential of Merck's (MSD) immunotherapy "Keytruda" with Vactosertib. At the time, the Vactosertib combination regimen was being developed as a first-line treatment for Non-small cell lung cancer (NSCLC). But safety concerns arose during the clinical process, followed by the rejection of a clinical trial amendment plan and a voluntary withdrawal of phase 2.
MedPacto then pursued a plan to continue development as a second-line treatment for the same indication by combining AstraZeneca's immunotherapy "Imfinzi" with Vactosertib instead of Keytruda. However, due to expense burdens, related development was put on hold. The company has since been expanding indications to osteosarcoma and colon cancer.
The most advanced indication in development now is colon cancer. It is conducting phases 2b and 3. However, phase 3 is expected to require expenses in the hundreds of billions of won, making additional investment necessary.
The problem is that the company still relies heavily on Vactosertib. With no clear results having emerged from Vactosertib so far, the growth drivers it can present to investors are limited.
◇ Positive signals in osteosarcoma trial… possibility of FDA priority review voucher
The indication where MedPacto is hoping for a turnaround is osteosarcoma.
On the 7th, MedPacto submitted an application to the Ministery of Food and Drug Safety to amend the clinical trial plan (IND) for Vactosertib osteosarcoma phase 2, adding a medium-dose patient cohort. As the medium-dose cohort showed relatively higher therapeutic effect in phase 1, the company plans to compare dose-specific effects in phase 2 to determine the optimal dose. It also plans to apply for the same amendment with the U.S. Food and Drug Administration (FDA).
A MedPacto official said, "Early phase 2 data are also positive," and noted, "We are preparing for publication in an international journal by the end of the year or early next year."
The company also emphasizes that the osteosarcoma trial is being conducted as a monotherapy. While combination therapy can introduce various variables such as the effects and side effects of the co-administered drug, it said monotherapy is relatively easier to interpret in clinical results.
Vactosertib has received FDA orphan drug designation for osteosarcoma. If development succeeds and certain conditions are met, there is a possibility of receiving an FDA priority review voucher (PRV). Using a PRV can shorten the FDA review period from the usual 10 months to 6 months.
MedPacto is leaving open the possibility of securing funds by using a PRV. PRVs can be bought and sold and have previously been the subject of transactions worth hundreds of billions of won. With the program set to sunset in 2029, some project the competition to secure them will intensify. The osteosarcoma trial of Vactosertib is expected to be completed in 2028.
A company official said, "A PRV is issued together when a new drug receives final FDA approval," adding, "We are also considering selling it to a global pharmaceutical company to secure funds."
◇ "MP010" to enter clinical trials next year… "No reason to rush a sale if the value rises"
Along with Vactosertib's clinical results, MedPacto is counting on its follow-up pipeline. It currently has two preclinical-stage candidates, and both are aimed at early technology transfer.
The lead candidate is MP010. The company expects to file a phase 1 IND at the end of the year or early next year. A MedPacto official said, "Approval is typically granted within one to two months after filing," adding, "It takes up to five months until patient dosing."
MP010 is a protein therapy (bispecific fusion protein) that recognizes and binds two targets simultaneously. As it is a substance with demanding chemistry, manufacturing and controls (CMC), the company said it needed experts with experience in this field.
To that end, MedPacto Chairman Kim Sung-jin recruited CEO Woo Jeong-won in May. Woo previously served as head of clinical development, head of business development, and head of the protein production technology research institute at the new drug development company Genexine(095700).
A MedPacto official said, "MP010 has a mechanism similar to Vactosertib, but animal studies have confirmed that it shows superior immune cell activation and anticancer effects," adding, "We are currently wrapping up toxicology assessments." The official said the first indication is likely to be pancreatic cancer.
If meaningful results follow in the two pipelines, MedPacto's corporations value could change. It could also help secure funds needed for the colon cancer trial. MedPacto is said to be reviewing various investment options to raise expenses for the colon cancer trial.
However, whether Theragen Etex will immediately move to sell is another matter. If MedPacto's value rises, it will be easier to find a buyer, but the incentive to delay a sale until it can command a higher price will also grow.
An industry official familiar with the internal circumstances of both companies said, "Theragen Etex is also considering continuing to hold the equity."