[At a Crossroads: Listed Companies] Panajin, Able to Produce COVID-19 Test Kits but Didn't ? Reasons Part 2

[Asia Economy Reporter Jang Hyowon] It has been revealed that Panagen could have originally developed a product similar to the novel coronavirus (COVID-19) diagnostic kit created by Siseon Biomaterials. Siseon Bio is a company established by Park Heekyung, the wife of Kim Sungki, CEO of Panagen, and is known to have a high technical connection with Panagen.

◆ Panagen Has the Technology but Did Not Develop a ‘COVID-19 Diagnostic Kit’

According to Panagen’s semi-annual report on the 25th, Panagen produces artificial gene (PNA) materials and various diagnostic kits. PNA is an artificial nucleic acid invented to overcome the limitations of DNA in terms of accuracy and stability, and is used in diagnostic technologies and gene therapy drug candidates.

As of the end of the first half of this year, Panagen’s sales composition is 2.7 billion KRW (36.9%) from PNA materials, 3.3 billion KRW (46.2%) from diagnostic products, and 1.2 billion KRW (16.8%) from merchandise and others. Diagnostic kit sales account for the largest portion.

Panagen’s main diagnostic products include tumor-related gene diagnostic kits and infectious disease diagnostic kits. COVID-19 is also one of the infectious diseases. This means Panagen possesses the technology to produce COVID-19 diagnostic kits.

Although Panagen did not develop a COVID-19 diagnostic kit, Siseon Bio quickly developed one and obtained the U.S. Food and Drug Administration (FDA) emergency use authorization as the fourth company in Korea last April.

Siseon Bio’s COVID-19 diagnostic kit uses a molecular diagnostic method based on PNA. According to Siseon Bio, most isothermal amplification (LAMP) diagnostic methods used for rapid diagnosis are judged visually, but Siseon Bio analyzes based on PNA coated with fluorescent substances, resulting in higher accuracy.

Ultimately, the use of PNA is the distinguishing factor from other products. Since Panagen owns the core PNA technology, it could have produced a COVID-19 diagnostic kit similar to Siseon Bio’s.

A Panagen official said, “We could have developed a COVID-19 diagnostic kit, but the company’s policy is not to develop kits for seasonal diseases,” adding, “Because it was unclear how well COVID-19 diagnostic kits would sell, we did not want to take the risk and therefore did not develop them.”

◆ Siseon Bio Has a High Technical Connection with Panagen

While Panagen remained inactive, Siseon Bio is estimated to have made a big hit with its COVID-19 diagnostic kit. Companies like Seegene and Osang Healthcare, which received FDA emergency use authorization around the same time as Siseon Bio, recorded operating profits in the range of 100 billion to 200 billion KRW in the first half of this year alone.

Siseon Bio was established in 2012 by Park Heekyung, former head of Panagen’s research institute and wife of Panagen CEO Kim Sungki. There is no equity relationship between Panagen and Siseon Bio, so Siseon Bio’s performance is unrelated to Panagen. Panagen only supplies PNA materials to Siseon Bio. Panagen recorded 1.1 billion KRW in sales from Siseon Bio in the first half of this year.

Although their performances are unrelated, technically Siseon Bio and Panagen have a close relationship. According to the Korean Intellectual Property Office, among the 31 patents filed and registered by Panagen, Park Heekyung, CEO of Siseon Bio, is listed as an inventor on 17 patents. These patents were filed while she was working as head of the research institute at Panagen.

Additionally, Panagen has an ordinary license agreement with Siseon Bio for the patent titled “Melting Curve Analysis Method Using PNA Probe” until 2031. This is the only patent among Panagen’s patents for which an ordinary license has been granted to a third party.

Panagen’s melting curve analysis technology enables multiplex detection, which is difficult with existing technologies, and is particularly useful for infectious disease testing. Siseon Bio cited this patent to register three new patents. To date, Siseon Bio has filed and registered a total of 13 patents.

There was also an explanation from an insider that some of the patented technologies previously developed by Panagen appear to have been partially utilized in the COVID-19 diagnostic kit developed by Siseon Bio.

A Panagen official said, “When PNA was first invented, many technologies that could be applied were mentioned, so there are technologies that are difficult to patent anew,” adding, “Among these technologies, some have become free technologies, and we understand that Siseon Bio used these.”

Siseon Bio stated, “Panagen’s technology was not used at all, and the COVID-19 diagnostic kit application technology is Siseon Bio’s independent technology,” but also said, “However, the patent technology cannot be disclosed at this time.”