Shinpoong Pharmaceutical, Hopes for COVID-19 Treatment... Stock Price and Market Cap Soar

In the domestic stock market, expectations for the bio sector are rising as time passes. Success in developing new drugs not only improves performance but also drives corporate value to sky-high levels. However, discovering new drug candidates and developing them into new drugs requires enormous development costs and typically 10 to 15 years of research. Despite this, the probability of successfully developing a new drug is less than 1%. New drug development is thus a 'high-risk, high-reward' investment. Investing in new drug development companies often encounters unexpected variables. They may raise capital through stock issuance or sell treasury shares to cover clinical costs. Ultimately, it is important to invest within manageable limits and maintain continuous interest. We examined the financial structure and new drug development status of Helixmith and Shinpung Pharmaceutical, which are at the center of the bio boom.

[Asia Economy Reporter Yoo Hyun-seok] Shinpung Pharmaceutical was an ordinary pharmaceutical company manufacturing and selling finished drugs and raw materials. However, this year it quickly rose to become one of the top 30 companies by market capitalization on the KOSPI. This was thanks to the antimalarial drug 'Piramex,' being developed as a treatment for COVID-19, which caused the stock price to surge 20-fold.

Founded on June 5, 1962, with the primary purpose of manufacturing pharmaceuticals, Shinpung Pharmaceutical entered the Korea Stock Exchange on January 20, 1990. Initially, it sold various generic drugs but now also develops and sells improved new drugs and new drugs.

On January 2, Shinpung Pharmaceutical's market capitalization was 387.9 billion KRW, which increased to 6.7026 trillion KRW as of the 29th of last month, ranking 35th in KOSPI market capitalization. The driving force behind this surge is Piramex. Piramex is a domestically developed antimalarial drug approved as a new drug by the Ministry of Food and Drug Safety in 2011. It was listed on the World Health Organization (WHO) Essential Medicines List in 2017 and has obtained marketing authorization in 22 countries, including Europe. Although it is the 16th new drug approved domestically, its sales scale was not very large. From 2018 to the first half of this year, Shinpung Pharmaceutical received approximately 1.385 billion KRW from Piramex exports.

The market's attention was drawn due to the potential for repurposing as a COVID-19 treatment. The main ingredients of Piramex, pyronaridine phosphate and artesunate, showed inhibitory effects against COVID-19. On the 4th of last month, Piramex received approval from the Ministry of Food and Drug Safety for a Phase 2 clinical trial plan (IND) for COVID-19 treatment. This clinical trial will be conducted on 116 patients domestically.

Excluding expectations for the COVID-19 treatment, the company's performance has been steady. Sales increased from 185 billion KRW in 2017 to 189.7 billion KRW last year. However, operating profit decreased from 9.6 billion KRW to 2 billion KRW during the same period due to an increase in selling and administrative expenses by over 5 billion KRW last year. In the first half of this year, sales and operating profit were 95.5 billion KRW and 3.6 billion KRW, respectively, marking increases of 7.6% and 71.03% compared to the same period last year. Exports notably increased as well, rising from 10.8 billion KRW in the first half of last year to 19.6 billion KRW this year, an 80.70% increase.

Besides Piramex, Shinpung Pharmaceutical is developing improved new drugs and new drugs. The stroke treatment SP-8203 is currently in Phase 2 clinical trials domestically, with patient recruitment nearing completion. Additionally, the bone disease treatment SP-35454 has completed Phase 1 clinical trials in the European Union (EU), and the antiplatelet new drug candidate SP-8008 is undergoing Phase 1 clinical trials in the United Kingdom.

The financial structure is stable. As of the first half of this year, the consolidated debt ratio was 82.7%, and the reliance on borrowings was 27.4%.

This content was produced with the assistance of AI translation services.