Ever since the various applications of stem cells came to light in 1998, public opinion of stem-cell therapy rose and fell like a rollercoaster based on industry achievements. Anticipation and concerns intersected. Accusations and compliments diverged.

Amidst all of this tension, Dr. Kim Kyung-suk persistently devoted herself to the study of incurable diseases. In 2004, Kim started the stem cell company CORESTEM (founded on December 31, 2003). Ten years later, CORESTEM launched its first product—Neuronata R, a stem-cell therapy for Lou Gehrig's disease. In 2016, she successfully transferred technology for candidate substance 'CS20AT04', which is being developed as a stem-cell therapy for lupus.

Despite living through a tumultuous time marked by the 1997 Asian financial crisis and Dr. Woosuk Hwang's thesis manipulation scandal, Kim persisted with her stem-cell therapy research. How did this doctor, professor, and researcher stay focused on a single path? How did she envision the Korean bio-industry?

As a specialist in diagnostic medicine, Kim served as an associate professor at Hanyang University’s Institute of Medical Science.

CEO Kim Kyung-suk

- Why did you start stem cell research?

After JA Thompson’s 1998 paper showed human embryonic stem cells (ESCs, cells derived from a human embryo) can be infinitely proliferated in the laboratory, the mass production and utilization of ESCs started to catch people’s attention. Around that time, research started on adult stem cells (cells extracted from umbilical cord blood or adult bone marrow/blood, etc.). It was only after this that people began to pay attention to stem cells as a viable form of treatment.

Back then, patients in Korea with Lou Gehrig's disease received expensive injections of umbilical cord blood without verification of positive results. It is needless to say that scientifically unproven methods may have negative side effects. So when patient associations started requesting systematic research on stem-cell therapy, I began conducting joint research with Professor Seunghyun Kim of the Cell Therapy Center for Intractable Neurological Disorders at Hanyang University Medical Center.

- How did you conduct research in the early days when there were no research guidelines or methodology?

In the early days, there was no system for regulating stem-cell therapy. We received permission from the Ministry of Food and Drug Safety (MFDS) to conduct emergency clinical trials on nine patients with Lou Gehrig's disease. As I was preparing for the trials, I also started a venture company. A total of nine patients (three each with initial, progressive, and severe cases) were treated without any safety issues. There were no negative side effects either. So the researchers came up with a clinical design for 37 patients. Nonetheless, acquiring government funding was still difficult. Fortuitously, thanks to a bio industrial complex that was being planned in Osong, Chungbuk, we were able to get backing from the Chungbuk Biotopia Fund to cover our clinical trial expenses. These trials confirmed that more than half of the patients who received treatment experienced mitigated progression of the disease. At the time, there was a research program that allowed ‘conditional’ phase 3 clinical trials for rare diseases. Some domestic companies had already done this, so in 2009, CORESTEM applied for this program as well.

While we were in this program, new regulations were introduced. Stem-cell therapy had to undergo formal clinical trials. Even though we already did clinical trials, we had to go back and conduct non-clinical trials (animal experiments). By the time we completed this requirement, new GMP regulations for manufacturing facilities were introduced. We took apart all of our equipment and then put it back together again. In 2010, MFDS gave us permission to conduct conditional phase 3 clinical trials if we completed phases 1 and 2 concurrently, and proved a 2b comparative advantage test over a control group. After all this, the Neuronata R injection was finally approved in 2014, but the hurdles didn’t stop there. Even after the approval, as a new drug Neuronata R was obligated to go through a total inspection and have a risk management plan in place. CORESTEM was the forerunner of stem-cell therapy. In a way, the Neuronata R injection tells the history of the government's stem-cell therapy regulations.

- Attracting investment wasn’t easy either, was it?

Government R&D funding for the bio industry needs to increase. The same goes for venture capital (VC). VC funds started to enter the market in earnest from 2011-2012, when the company reached the commercial clinical stage. It was hard to get funding before that. In the early days, when stem-cell therapy was gaining ground, funding only flowed to professor Hwang; after the fraud case, funding stopped completely. As a result, attracting investment was a challenge. Fortunately, Neuronata was selected as a strategic item by the Ministry of Health and Welfare, and received government R&D support.

In the beginning of phase 2 trials in 2012, Neuronata received its first VC investment. Since then, we have been able to improve our production facilities and recruit additional researchers. However, VC investments come with a caveat. There are many strings attached to protect the principle of the investors (i.e. redeemable convertible preferred stock). If the company fails to meet its goal, the investment turns into debt. Fortunately, our initial public offering went off without a hitch, so we didn’t have big issues. Nonetheless, VC is very conservative in the bio industry.

Investment is a prerequisite for the industry to grow. However, this field requires a long-term perspective. It’s not an industry were investments are readily recovered. It usually takes 12 to 15 years for a new drug to come out. The same applies to biopharmaceuticals and stem-cell therapy. It took more than 10 years for Neuronata to launch. Investors must be prepared to wait at least 5 to 7 years. The view that “bio will be hot soon” is not desirable.

- A bill has been passed to establish a legal basis for cultivating/managing stem-cell therapy. Will a management system be created as a result?

Under current circumstances, I don’t think that the Legislative Bill for Support and Maintenance of Advanced Regenerative Medical Treatment is a good idea. It doesn’t feel like a law initiated for the sake of promoting the industry, as it is proposed. The bill still needs work. Creating another management system alongside the Pharmaceutical Affairs Act (ACT) would make things even more difficult for the industry. It’s confusing because we won’t know which of the two rules to follow.

When developing high-tech drugs such as stem-cell therapy, everything is regulated from the moment we start collecting bone marrow. It would be great to have an integrated law to follow from the early stages of R&D. There are too many regulations for us to follow as it is. I wish the government would take a careful look from the perspective of the developer, public safety, and promoting the industry. Also, having two management systems is the same as having two “super cops.” We urgently need a unified system.

- CORESTEM is focused on rare diseases. It doesn’t look like you only have the Korean market in your sights.

There are 2,500 Lou Gehrig's patients in Korea, and 350,000 worldwide. I had a difficult time getting the attention of investors because no one thought it was moneymaking to cure Lou Gehrig's disease. Unlike diabetes and hypertension, which sport a large market for new drugs, rare diseases often lack options for treatment because the drug market is relatively small. That means there are more patients who are eager for treatment.

However, the investment risk for rare disease is smaller compared to that of chronic diseases. First, fewer subjects are required for clinical trials, so clinical testing costs are lower. Since there are no alternative treatments, the approval is relatively easy. Therefore, once the safety and efficacy of a drug is demonstrated, expanding the indication strategy is easier. The anti-cancer drug Gleevec, which has multiple indications, is an example. It turns out that treatments for rare diseases are very marketable. This view is shared by global firms as well. When I started my research, I did it for its own sake. I didn’t sit down and develop a marketing strategy. It may be coincidence, but the R&D path we took ended up being the best one.

Lupus treatment CS20AT04, the successful outcome of a technology transfer agreement with Hanlim Pharmaceuticals, cost 13 billion KRW (11 million USD) to bring to the development stage. That number doesn’t even include royalties, just domestic rights. We aren’t studying illnesses that lack a cure just in Korea, but around the world. The market is bigger than people realize. We are ultimately targeting global markets. If there is a disease with a cure, there is no reason to think about difficult stem-cell therapy first. But when patients are desperate because no treatment exists, we go to great lengths to find a cure. If you consider the market, diseases with many patients are more costly to develop. CORESTEM is trying to hit niche markets with minimal investments. This is especially the case for Lou Gehrig's disease, since there is no cure abroad. In fact, many multinational pharmaceutical companies are showing an interest in Neuronata.

CEO Kim Kyung-suk

- Korea’s new drug price negotiation preferences don’t mention stem-cell therapy.

Stem cell products aren’t considered new drugs (preferential treatment criteria), so we requested improvements. However, policy is still weak on things like insurance prices. I don’t think there’s any reason why Neuronata shouldn’t be covered. It has worldwide recognition as the first stem-cell therapy for Lou Gehrig's disease. If the Korean government won’t cover new drugs developed domestically, they’re telling us not to sell them abroad. The problem is insurance. To that end, we have provided justification for insurance prices that will be evaluated by the Health Insurance Review & Assessment Service in early 2017. I anticipate good results.

-You must have a different perspective as a doctor, researcher, and entrepreneur.

The most important thing is safety. No matter how urgently the patient needs treatment, and even if advanced technology is applied, drugs shouldn’t be applied in situations where safety isn’t assured. Even if just one problem arises, who will be held responsible? That’s why people shouldn’t think of biological drugs as a method to get rich quick.

Keep in mind that medicine is for the people. You shouldn’t think of it as a tool. The same goes for the entire industry. Even just a sectoral safety problem can affect the entire industry. The once popular gene therapy market is one example. It has been stalled since the death of Jesse Gelsinger during unsafe clinical trials in 1999. Proceed too quickly, and you can kill the entire industry. On the other hand, there should always be room for the chance of failure while developing new drugs. Recently, there were a couple of deaths during clinical trials for Hanmi Pharmaceutical’s drug Olmutinib. Some viewed this incident as something that shouldn’t have happened, but this perspective could cause a contraction of the entire industry.

- There is a growing number of doctors who are interested in starting a business. What advice would you give them?

It has been my experience that doctors are in a very favorable position to develop drugs and medical devices for the people. They understand the treatment system in hospitals and have advanced medical knowledge. Doctors already know how to apply the technology. They are capable of thorough mediation studies that link basic and clinical medicine. Aren’t they the ones most aware of unmet needs for medical care? The more doctors actively participate in business, the more the healthcare industry will improve.

When you get started, it’s important to remember that in research there is no such thing as failure. In a large-scale clinical trial involving hundreds of patients, even if only 100 of them have reactions, it’s possible to classify the characteristics of the entire group, or draw a separate indication for the hundred who reacted. As long as you don’t stop, you can’t fail. This was my experience while developing Neuronata. The interim results weren’t what we expected, but we didn’t try to hide them. We published the data as it was. We based future research and hypotheses on those findings. If you don’t get the results you expected, you can always brainstorm again with the same data.

We should also keep in mind that doctors are fallible. It would be perfect if we could develop technology and be business savvy, but such cases are uncommon. In my experience, I was able to lead technology development, but not my business. So I open my mind and collaborate with someone who can compensate for my deficiencies.

- You recently signed an agreement with the Myongji Hospital Cell Therapy Center. What specifically does it entail?

Myungji Hospital specializes in cancer and stem-cell therapy for overseas patients. CORESTEM brings stem-cell therapy to the table. Myungji Hospital contributes to stem-cell therapy in a big way, and they have high interest in lupus. Since stem-cell therapy isn’t just for Lou Gehrig’s disease, the agreement will allow us to pool our resources and collaborate. The primary goal is to provide stem-cell therapy for Lou Gehrig’s disease, and in the process, there may be room for additional research.

- You have the air of a researcher more so than that of corporate representative.

I work for the joy of doing research. I am a self-proclaimed geek. But when it comes to investment and management, especially anything having to do with fundraising, I am out of my element. But since I like research, I keep doing it. During the Asian financial crisis, people working in life science laboratories affiliated with large corporations were the first to get laid off. Having witnessed this, I felt that my life as a salary worker was in jeopardy. It’s shear horror for a diligent and hardworking researcher to have someone come along and tell him to stop doing his work. This is true for doctors as well. When I was a doctor, I could feel the noose tightening during every weekly meeting where we measured individual revenue. Wherever you work, if your sales are behind, they will fire you without warning. Because of these experiences, I felt the need for a stable workplace.

So, the first thing that I considered when making a company was job security. I sincerely wanted to create a community that would always do research together. This is the company’s leading philosophy. I keep it to this day. For most of the people who have been working with CORESTEM over the last ten years, this is their first job. The salary is also on grade scale. Isn’t it the same for our products? It took ten years for Neuronata to come out. We’ve been working for five years on a stem cell solution for lupus.

The most important thing is to keep your books clean. Every penny has to be accounted for. You can only spend money after the entire enterprise agrees on how to use investments and profits next year. "We have enough money to pay everyone’s salary for the next three years, but things become unclear after that. There is some risk, but by investing now we can sow seeds for the coming years. What should we do?" This sort of cognitive process includes new employees as well, and we do it every year. When everyone agrees on a course of action, even when things fall through, people are less regretful.

At home I’ve always been a troublemaker. There are still people who worry about me doing business rather than doing research or diagnosing patients in the hospital. But I keep going because I enjoy doing research. I look forward to doing what I do best with my employees in the future.

hwz@docdocdoc.co.kr

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