[At a Crossroads] Hyundai Bio① What is the 3 Billion Won Contract Deposit for the COVID-19 Treatment Received by 'C&Pharm'?

Conflict Between MFDS and Others Over Emergency Use Authorization of COVID-19 Treatment
Major Shareholder Already Received 3 Billion Won Deposit

Hyundai Bioscience's 'Jepti', being developed as a treatment for COVID-19.

As controversy continues over the emergency use authorization of Hyundai Bio's COVID-19 treatment 'Jepti,' attention is focused on the 3 billion KRW contract payment received by the largest shareholder CNPharm as compensation for the Jepti business rights. According to the contract, CNPharm is not required to return the contract payment regardless of the emergency use authorization outcome.

According to industry sources on the 1st, Hyundai Bio's COVID-19 treatment 'Jepti (CP-COV03)' has recently sparked controversy. Hyundai Bio completed Phase 2 clinical trials of Jepti last April and is pushing for emergency use authorization, but the Ministry of Food and Drug Safety (MFDS) states that it has not received an emergency use authorization application from the Korea Disease Control and Prevention Agency (KDCA).

Hyundai Bio claims that it conducted an 'integrated clinical trial for emergency use authorization,' combining Phases 2 and 3 as per the special law of the KDCA, at the request of the MFDS. After completing the trials and applying for emergency use authorization, Hyundai Bio alleges that the MFDS changed its stance. On the other hand, the MFDS maintains that Jepti's clinical trials were not intended for emergency use authorization.

In particular, Hyundai Bio's announcement suggests that there is a divergence of opinion regarding the efficacy evaluation section of the clinical trial data.

Hyundai Bio evaluated the period required for improvement of 12 COVID-19 symptoms in patients after Jepti administration as the primary efficacy endpoint of Phase 2 clinical trials. The trials were conducted by dividing subjects into three groups: Test Group 1 receiving 300mg of Jepti, Test Group 2 receiving 450mg, and Test Group 3 receiving a placebo.

In this trial, symptoms improved on average after 9 days in Test Group 1, 12.25 days in Test Group 2, and 13 days in Test Group 3. Although the groups receiving Jepti showed symptom improvement faster than the placebo group, the group receiving the higher dose showed a slower improvement. This indicates no 'dose-dependency.'

Hyundai Bio explains that the delay in symptom improvement in the high-dose Jepti group was due to side effects from magnesium oxide included in Jepti. However, they argue that three symptoms unrelated to magnesium oxide side effects?fever, headache, and sore throat?showed statistically significant improvement in the high-dose group, so there is no problem.

Oh Sang-gi, CEO of Hyundai Bio, recently stated in a media interview, "A general outline regarding Jepti's emergency use authorization will be available by February at the latest."

While Hyundai Bio stands at a critical crossroads, it has been confirmed that the largest shareholder CNPharm has already received the 3 billion KRW contract payment regardless of Jepti's market launch. According to the Financial Supervisory Service's electronic disclosure, Hyundai Bio signed a 'COVID-19 Treatment Joint Development Agreement' with its largest shareholder CNPharm on May 28, 2021, acquiring the COVID-19 treatment business rights. Although the total amount was not disclosed, 3 billion KRW was paid to CNPharm as a contract payment.

The contract payment is structured to be refundable only if Jepti's Phase 1 clinical trial fails. Hyundai Bio completed Phase 1 clinical trials in February 2022 and effectively announced clinical success by demonstrating safety and bioavailability. Subsequently, Phase 2 trials were completed last April.

According to the contract, even if the emergency use authorization is not granted, CNPharm is not required to return the 3 billion KRW to Hyundai Bio. However, from Hyundai Bio's perspective, if the market launch is delayed, the disappearance of COVID-19 could reduce Jepti's commercial value. In the worst case, it would be difficult to guarantee sales equivalent to the 3 billion KRW contract payment. Hyundai Bio was repeatedly asked about the possibility of returning the contract payment but did not respond.