Korea Biomedical Review is publishing a series of articles to analyze the top 10 Korean pharmaceutical and biopharma companies with the largest market capitalizations listed on the main bourse, Kospi, and the tech-heavy Kosdaq. The series aims to reflect key industrial issues and the flow of the capital market in the Korean pharmaceutical and biopharma industry. This is the eighteenth installment. -- Ed.

Bioneer, listed on the Kosdaq market, has returned to black in the second quarter of this year thanks to the strong performance of its probiotics business.

The company's business areas include molecular diagnostics, probiotics, and RNA interference (RNAi) drug development. Until a few years ago, molecular diagnostics drove the company's performance.

In March 2020, after the outbreak of Covid-19, the company obtained a license from the Ministry of Food and Drug Safety to export Covid-19 diagnostic kits and began supplying them overseas.

The company also developed a simultaneous diagnostic kit that diagnoses influenza and Covid-19 simultaneously, which led to explosive sales growth.

As a result, in 2020, sales spiked to 158.2 billion won ($119.1 million), up sevenfold from 2019, and turned to black with an operating profit of 95.7 billion won from a loss of 14 billion won.

However, as the pandemic subsided, the company's molecular diagnostics performance began to slow down in 2021.

In 2021, sale on a standalone basis was 127.3 billion won, down 20 percent from the previous year, and operating profit shrank by one-third to 29.3 billion won during the same period.

However, the company's revenue decline was short-lived as its probiotics business replaced the sales decline of the diagnostic kit business in 2022.

Thanks to the probiotics business, which generated 160 billion won in sales last year alone, the company has maintained sales in the 200 billion won range for three consecutive years.

Despite the decline in molecular diagnostics sales in the first half of the year, the company was able to continue its growth, with overall sales increasing 9.8 percent compared to the same period in 2022.

According to a recent public filing posted by Bioneer, the company posted sales of 125.3 billion won in the first half, up 9.91 percent from the same period last year.

However, operating profit shrank 51.92 percent for the first half of 2022 to 5 billion won.

Still, operating profit returned to the black for the first time in the second quarter, ending an operating loss of three consecutive quarters.

Notably, operating profit increased by more than 10,000 percent compared to the second quarter of last year at 43 million won.

The strong performance in the second quarter was driven by the strong growth of Ace Biome, a subsidiary specializing in probiotics.

Its flagship product, BNR Thin, accounted for the majority of the quarter's sales, with sales up over 30 percent compared to the previous year.

The product is a diet functional lactic acid bacteria commercialized by Bioneer after 20 years of research on the "Lactobacillus gasseri BNR17 strain," derived from human breast milk, and is the first individually recognized ingredient in Korea for its body fat reduction function.

This year, the company plans to further grow its sales by expanding its sales in Korea and overseas.

Continued profitability improvement with hair loss-related cosmetics, new drugs

While the company has managed to return to black and continue to increase sales, Bioneer plans to further improve profitability with Cosmerna, a functional cosmetic for hair loss.

Cosmerna is a functional cosmetic product that relieves hair loss symptoms based on Bioneer's siRNA (short interfering RNA) technology.

The core of the technology is to degrade messenger RNA (mRNA), which contains genetic information that makes hair loss-related proteins.

The company's work to develop Cosmerna has also been steadily progressing.

Last year, it received the highest safety rating of "Excellent 5-STAR" from the German Dermatest, an independent dermatological institute, and secured the framework for overseas sales by acquiring certification in the EU last year.

Following this, the company started sales of the product by launching it on its company mall in May and Amazon UK store in June.

Bioneer is confident in the success of Cosmerna as it is the world's first RNA-based hair loss treatment cosmetics and has recently expanded its raw material production capacity.

The company is also working on developing new drugs.

It recently received approval for a phase 1 clinical trial in Australia for SRN-001, a new drug for idiopathic pulmonary fibrosis (IPF) being developed by its subsidiary siRNAgen Therapeutics using the same technology used for Cosmerna.

SRN-001 is a gene therapy utilizing siRNA, which degrades the mRNA of empyregulin (AREG), a growth factor involved in pulmonary fibrosis.

The phase 1a study will enroll 24 healthy adults and is expected to be completed by the end of this year. The company plans to file a U.S. Food and Drug Administration (FDA) investigational new drug (IND) application next year.

Analyst expects growth to continue next quarter

Hyundai Motor Securities analyst Uhm Min-yong said the company achieved its largest quarterly sales and operating profit ever in the second quarter, and he expects the sales growth trend to continue in the third quarter.

"The growth of the company will continue in the third quarter as sales of Cosmerna will be reflected," Uhm said. "In addition, the company has started supplying Lactobacillus gasseri BNR17 strain to GSK for the latter's Centrum Probiotic Slim Care."

However, Uhm did not provide an investment opinion or price target.

Meanwhile, as of 10:30 a.m. Thursday, Bioneer's shares stood at 40,700 won, up 0.62 percent from the previous quarter.