The recent failures by Korean biotech companies to reach meaningful results in phase 3 clinical trials are undermining the credibility of the local industry, making people wonder if a home-grown bio-drug is just a mirage.

Four companies – Kolon Life Science, Sillajen, HLB And Helixmith -- have failed their phase 3 clinical trial and caused ripples in the local market. The four firms are considered as leading bio-drug makers and represent the tech-heavy Kosdaq market.

Helixmith and Kolon Life Sciences in particular bungled their clinical trials because of stupid reasons, raising questions about the competitiveness of local bio-companies.

Most recently, Helixmith said Tuesday that it had failed to make conclusions due to data contamination for its gene therapy Engensis due to a mix between the placebo and treatment groups. The company claimed that it was unable to correct the mix-up as the clinical trial was double-blind.

However, local industry officials have raised an issue with the company's explanation, claiming that it is impossible not to know of such mishaps until the end.

"In a trial, you're supposed to monitor closely which medications are prescribed to which patients because all drugs, including placebos, are numbered and labeled," an official at the clinical trial team of a multinational drugmaker said. "Even if a prescription error occurs, the hospital, the pharmacy and the clinical research associate can correct it through regular monitoring. It goes against common sense that the company did not know the drugs were mixed until the last minute."

Helixmith is still confident that its drug is safe and said it plans to revise the protocol for further clinical trials and apply for a sales license in the second half of 2022.

However, investors in the stock market do not seem to agree with the company's optimistic views. The company's shares plummeted to its lower limit for two consecutive days after failing the trial and stood at 84,000 won ($70) when the stock market closed on Wednesday.

Kolon Tissuegene also was ordered to discontinue phase 3 clinical trials from the U.S. Food and Drug Administration in May for Invossa-K Inj., a degenerative arthritis treatment, after the company revealed that it had "mislabeled” one of its key compositions for the drug.

Invossa is comprised of human chondrocytes (HC, 75 percent) and transformed cells (TC, 25 percent). In 2004, the company thought TCs were derived from cartilage.

However, the company had found that TCs were HEK 293 cells, derived from the kidneys. Kolon Life Science, the parent company of Tissuegene, discovered the mislabeling after a voluntary STR testing, often used for paternity testing.

After the embarrassing discovery, the company is struggling with local regulatory officials to keep the drug alive, but the Ministry of Food and Drug Safety seems set to revoke the license of the drug.

The company is also under suspicion for covering up the Invossa mislabeling for two years.

Kolon TissueGene said in a public filing that it notified its parent company Kolon Life Science in March 2017 that the cell ingredient of the second fluid of Invossa-K was not cartilage-derived but kidney-derived cells.

The public disclosure ran against Kolon Life Science's allegation that it found the mislabeling through a short tandem repeat (STR) testing for the first time in late February this year.

Sillajen also ended its clinical trial into anti-cancer drug Pexa-Vec, as it failed to reach valid results in August. In the process, the company lost additional trust from its investors after allegations arose that the company's executives sold their shares in advance after predicting that the drug would fail in a futility test.

While the company denied such allegations, the case is currently under investigation, as the prosecution carried out simultaneous raids on Sillajen's Busan headquarters and its Seoul office over the allegations.

HLB's new drug candidate Rivoceranib for gastric cancer also failed to improve overall survival in a phase-3 global trial.

Local experts cite lack of experience and expertise behind the repeated phase 3 clinical trial failure.

"There is a limited pool of companies and researchers who have gone through the entire process of designing and conducting a clinical trial and finally developing a new drug," a university hospital professor said. "As none of them have ever passed phase 3 clinical trials, it is questionable if they can even set up the basic design for such trials."

Others industry officials also pointed out the “all-or-nothing” strategy of local pharma companies, which bet their bottom on only one or two new drugs, as the problem.

Despite various remedies to resolve the recent failures, it is doubtful that the investor sentiment and credibility to the biopharmaceutical industry will return any time soon, industry watchers said.

"As the current situation with Helixmith seems to point toward a clinical failure, other biopharmaceutical stocks will inevitably receive adjustment due to deterioration in investor sentiment," said Shin Min-jung, an analyst at Hana Financial Investment. "In a market that has experienced repetitive phase 3 failures, the time has come for bio-drug developers to revise their strategy.”