LegoChem eyes lucrative 'guided missile' drugs with Orion's investment boost

LegoChem Biosciences will use the funds from confectionery firm Orion Group acquiring a 25.7 percent stake of the biotech firm to become a leading antibody-drug conjugate (ADC) developer, its CEO said in a shareholder letter on Tuesday.

LegoChem Biosciences CEO Kim Yong-zu

LegoChem Biosciences will use the funds from confectionery firm Orion Group acquiring a 25.7 percent stake of the biotech firm to become a leading antibody-drug conjugate (ADC) developer, its CEO said in a shareholder letter on Tuesday.

“We have set an ambitious target of being the new front runner in the future ADC field, including in immune-oncology drugs,” said LegoChem CEO Kim Yong-zu.

“To get there, we need R&D (research and development) funding worth about 1 trillion won ($744.6 million) for the next five years or so," Kim said.

"On top of the 220 billion won we have currently secured and the hundreds of billions the licensing deal is expected to bring in through the coming years, we need an additional 500 billion won in funding, which we hope to secure through the strategic partnership with Orion."

ADC, one of the hottest themes in oncology today, enables improved anti-cancer therapeutic effects with minimum damage to non-tumor cells and therefore are often dubbed “guided missile” drugs.

Founded in 2005, LegoChem recently licensed out its ADC candidate targeting solid tumors with an upfront payment of $100 million from Janssen Biotech. The landmark deal, which is the largest ever signed by a Korean biopharmaceutical company, may potentially reach up to $1.72 billion in value.

Orion is “the best fit as a strategic partner that we’ve been looking for,” Kim said.

“We have been seeking a long-term strategic partner — with over a 20 percent stake — that would respect LecoChem Bio’s independence in management and understand the high-risk, high-return nature of the new drug development,” the CEO explained.

Orion Group recently announced that its Hong Kong-based subsidiary Pan Orion will acquire a 25.7 percent stake in LegoChem Bio for 550 billion won to become the biotech company’s largest shareholder. The payment for the investment is scheduled for March 29.

As Orion is set to secure less than a 50 percent stake in LegoChem, whether the biotech firm will be consolidated as a subsidiary in the confectionery manufacturer’s financial reporting is yet to be known.

Following the acquisition announcement, Orion shares nosedived in the market and hit a series of 52-week lows. Orion closed at 89,800 won on Wednesday, down 7.04 percent. Kosdaq-listed LegoChem slid 2.3 percent to 51,000 won.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]