[Reporter's View] Sales dilemma of newly listed bioventures

 “Off to a fair start” was the market’s assessment regarding the stock prices and performance of biotech companies that went public on the KOSDAQ this year.

 

However, upon closer inspection, some point out that the strengthened scrutiny of financial figures following the Fadu incident (accounting and revenue recognition controversy) has increased the importance of sales indicators, resulting in an ‘optical illusion’ that the listed samples generated favorable results.

 

While there's a prevailing view that the bio industry is experiencing a positive wind of change, there's also a conflicting view that primarily companies that were inherently favorable to the industry are going public.

 

Not all bio companies that have gone public have relied solely on sales.

 

Some have proven their success through clinical progress or partnerships.

 

Nevertheless, the consensus within the industry is that the growing influence of sales metrics is undeniable.

 

In fact, sales are the most intuitive defense mechanism from an investor protection perspective.

 

However, the biotech industry inherently has a longer time horizon than other industries.

 

Research and development, clinical trials, regulatory approvals, and technology transfer negotiations may signal future sales, but they are difficult to fully capture in current income statements.

 

This gap could fuel concerns about more conservative reviews and demand forecasts for R&D-focused companies.

 

In other words, caution is needed in interpreting the current “good performance” as a structural recovery.

 

As post-listing management requirements and external pressures increase, some are discussing attempts to strengthen the company's external image, which is not closely related to its core business.

 

This is evaluated as a potential distraction from the company's core business and an opportunity cost that could ultimately slow down the pipeline development process.

 

Of course, considering cases where some companies have received delisting warnings, it is difficult to blame measures that raise the threshold for new listings based on sales.

 

The need for investor protection is clear.

 

However, considering the purpose of technology-based special listings, the side effect of reducing opportunities for pure new drug development companies that do not generate immediate sales is ongoing.

 

This is not unrelated to the phenomenon of using ancillary businesses to offset sales to meet sales targets.

 

The reason why newly listed biotech companies seem to be performing well this year is due to the sales-centric filter.

 

While this is not inherently problematic, it does not fully reflect the pace of the biotech industry.

 

Ultimately, it is necessary to adjust the balance between regulations and evaluations to avoid overly narrowing the pathway for new drug development companies.

 

Sales metrics are important for investor protection and corporate continuity.

 

However, considering the purpose of the technology-based listing exemption and the unique characteristics of the biotech industry, a perspective that “also” considers sales may be more just.