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SK Biopharm screens M&A targets to become ‘big-biotech’

SK Biopharmaceuticals [KRX:326030], a unit of South Korean conglomerate SK Group, is exploring inorganic growth opportunities to become a global "big biotech" company, CEO Lee Dong-hoon said during a press conference today (18 July).

Lee said that “big biotech” refers to a company with a drug development pipeline of breakthrough technologies that have been acquired through active buys with its internal cash flow. When asked by this news service about the strategy to become a major player in the biotech industry, the CEO stated that the company is currently identifying potential firms with technological competence and evaluating whether to acquire a minority or full stake in them. 

The KRW 5.9trn (USD 4.7bn) market cap company is looking at North America and Europe as the main target regions due to its already-established presence there, he said, adding that it further plans to increase its footprint in those markets.

As such, SK Biopharm recently announced the acquisition of a 60% stake in ProteoVant Sciences, a New York-based new drug developer, for USD 47.5m on 30 June. It aims to secure and integrate ProteoVant Sciences’ technique related to TPD (targeted protein degradation) through the transaction.

Moreover, it is also looking at potential target companies in China since it sees the country as a new market opportunity, he continued. Potential candidates would possess cutting-edge technologies that could add value to its R&D platform. Lee also mentioned that bio companies are experiencing low valuations due to the current economic downturn and high-interest rates, therefore, "it is good timing for SK Biopharm to invest in promising companies." 

The company was founded in 1993 as a specialist in new drug development. The company’s biotech platform will mainly focus on these therapeutic modalities: RPT (Radiopharmaceutical therapy), TPD, and CGT (Cell and Gene Therapy). The partnerships among the group’s other bio affiliates such as SK Inc [KRX: 034730] and SK Pharmteco, a California-US-based contract development and manufacturing organization, will continue to accelerate growth, Lee said underlining the synergies as a “bio value chain” within the group.

SK Biopharm owns cash and cash equivalents of KRW 103.7bn as of 1Q 23, according to its interim report. Sale revenues increased 83% year-on-year to KRW 60.78bn in 1Q23, with its flagship anti-epileptic agent Cenobamate, contributing 97.4% of it. The operating loss narrowed to KRW 22.6bn for the same period, improved from KRW 37bn in 1Q22.

The company expects to reach break-even in 2024, said Lee during the presentation. It targets to achieve sales revenues of USD 1bn with operating profits of USD 600m by 2029. 

SK Biopharm’s path 

Announced Date Target Company Target Country  Bidder Company Seller Company Deal Value USD(m)
6/30/2023 ProteoVant Sciences Inc (60% Stake) USA SK Biopharmaceuticals Co., Ltd. 47.50
7/14/2022 SK Biopharmaceuticals (cenobamate rights for Latin America) (100% Stake) South Korea Eurofarma Laboratorios SA SK Biopharmaceuticals Co., Ltd. 62.00
12/23/2021 SK Biopharmaceuticals (cenobamate rights for Canada) (100% Stake) South Korea Endo International plc; Paladin Labs Inc. SK Biopharmaceuticals Co., Ltd. 36.47
1/4/2021 Arvelle Therapeutics International GmbH Switzerland Angelini S.p.a. EQT Life Sciences; NovaQuest Capital Management, L.L.C.; Andera Partners SCA; F Prime Inc; SK Biopharmaceuticals Co., Ltd.; H.I.G. BioVentures, LLC; KB Investment Co Ltd; BRV Capital Management 610.00

Source: Mergermarket