According to the pharmaceutical and biotechnology industry on the 17th, drug research and development company OsteoNeuroGen is set to hold an extraordinary shareholders’ meeting on the 25th to propose the company’s dissolution. (Image from OsteoNeuroGen webpage)
SEOUL, June 18 (Korea Bizwire) — A string of clinical trial failures is putting severe financial strain on South Korea’s biotech sector, forcing some drug development firms into liquidation or restructuring as investor confidence continues to erode.
On Tuesday, industry sources confirmed that OsteoNeuroGen, a pharmaceutical startup focused on treatments for idiopathic pulmonary fibrosis, will convene an emergency shareholders meeting on June 25 to vote on the company’s dissolution.
The company had raised funding from institutional investors in 2020 and hired high-profile executives from KOSDAQ-listed firms to advance its lead candidate, ONG41008. But development setbacks—including the need to redevelop its compound synthesis process—caused delays and budget overruns.
Despite multiple consultations with technical evaluation firms and global experts through early 2025, OsteoNeuroGen concluded that further commercial development was no longer viable. The board and major shareholders reached a consensus that additional capital could not be secured and that liquidation would minimize further losses.
If the dissolution plan is approved, CEO Kim Ik-hwan will be appointed as liquidator, while Kim and other board members have pledged to resign following the vote. If the motion fails, the firm must appoint new directors.
As South Korea’s biopharma ambitions face mounting risks, analysts are warning investors to exercise heightened caution. (Yonhap)
Meanwhile, Bridge Biotherapeutics, another KOSDAQ-listed drug development firm, has initiated major workforce reductions after the failure of its lead compound, BBT-877, in a Phase 2 trial for pulmonary fibrosis.
The trial, which failed to produce statistically significant improvements, led to a stock freefall in April 2025. The company’s shares, which stood at 8,960 won on April 14, now trade below 700 won—a drop of over 90%.
Bridge Biotherapeutics has also been placed on a watchlist by the Korea Exchange after reporting two consecutive years of pre-tax losses exceeding 50% of its equity capital. If the company fails to correct the ratio by March 2026, it will face a delisting review under Korea’s listing eligibility rules.
In a separate setback, Orum Therapeutics announced in late April that it had halted a Phase 1 U.S. clinical trial of its breast cancer candidate ORM-5029. Shares of the company dropped nearly 30% following the announcement and remain volatile.
As South Korea’s biopharma ambitions face mounting risks, analysts are warning investors to exercise heightened caution. Calls are also growing to review regulations on biotech listings, especially given the high failure rate and capital intensity of clinical-stage development.
“Drug trials are inherently unpredictable, and the possibility of bankruptcy must be accepted when investing in clinical-stage firms,” one industry official said. “While more rigorous oversight is needed when listing these companies, delisting decisions should also be handled carefully.”
Under President Lee Jae-myung’s administration, regulatory bodies have faced increasing pressure to balance innovation with investor protection, especially as global biotech markets remain volatile amid shifting priorities under U.S. President Trump’s second term.
M. H. Lee (mhlee@koreabizwire.com)
