Korean biotech ENCell is making a push into Japan’s cell and gene therapy (CGT) market, looking to offset a steep revenue drop and secure licensing deals for its allogeneic mesenchymal stem cell therapy, EN001.

The company has signed an agreement with Cell Resources Corporation (CRC), a subsidiary of pharma distributor Alfresa Holdings, to expand CGT contract development and manufacturing (CDMO) in Japan. The deal came just a day after CRC launched a new CDMO hub on March 3, signaling a quick move to establish a presence in the market.

ENCell reported 7.2 billion won ($4.9 million) sales in 2024, a 31.5 percent decline, and an operating loss of 15.7 billion won, making Japan’s regenerative medicine sector a crucial opportunity. The primary revenue driver was CDMO services for clinical-stage CGT clients.

ENCell sees the agreement as more than just a CDMO expansion. CEO Jang Jong-wook said working with CRC, which has an established network in Japan, could help facilitate licensing deals for EN001 and other pipeline assets.

The partnership is part of ENCell’s broader effort to regain momentum after a difficult year. The company, which depends heavily on CDMO revenue, took a hit in 2024 as biotech funding slowed, clinical trials stalled, and a prolonged medical strike in Korea disrupted operations. Contract wins dropped, leading to fewer production orders and a sharp financial downturn.

But there are signs of a turnaround. ENCell recently locked in new contracts, including an 800 million won deal with CELLeBRAIN, a Korean biotech, earlier this month, and an agreement with an undisclosed global pharma company in December.

The company is also expanding beyond CDMO. It recently completed the development of an adeno-associated virus (AAV) manufacturing process with Sartorius Korea, positioning itself to enter viral vector production.

Meanwhile, Korea’s regulatory landscape is shifting. A recent amendment to the country’s regenerative medicine law, effective Feb. 21, expands access to investigational therapies beyond clinical trial participants. Industry players expect it to create new opportunities for CDMO firms. ENCell has already started outreach to major hospitals, aiming to capitalize on the regulatory shift and drive demand for its services.