SK Biopharm's $795M drug deal signals new era for Korean biotech

$400 million upfront bet on late-stage epilepsy candidate

Patent cliff blocked through 2032; cash cow pipeline secured into 2040s

H1 operating profit of 186.8 billion won funds R&D without new debt

SK Biopharm President Lee Dong-hoon speaks at a press conference at the Westin Chosun Hotel in Jung-gu, Seoul, on Wednesday. [SK Biopharm]

SK Biopharm has struck a deal worth up to $795 million to license in ofacalim, a next-generation epilepsy drug candidate, from NASDAQ-listed biotech Biohaven — a move the company says marks a fundamental shift in the Korean biotech business model.

The deal represents a departure from the industry's long-standing practice of discovering early-stage compounds and licensing them out to multinational pharmaceutical giants. SK Biopharm is now acquiring a late-stage global pipeline and selling directly across the United States, the world's largest drug market, completing what analysts describe as a fully integrated global pharmaceutical value chain.

SK Biopharm President Lee Dong-hoon said at a press conference at the Westin Chosun Hotel in Jung-gu, Seoul, on Wednesday that the decision was "a strategic bet to compete directly in the same league as the big CNS-focused pharma companies in the US and Europe — not just to be compared with domestic rivals." Lee said the move came after three years of rigorous due diligence on nearly every pipeline asset in the market, following the company's declaration in July 2023 to become a "big biotech."

Particularly striking is the upfront payment of $400 million — more than half the total deal value, at 50.31 percent — a structure industry observers say is highly unusual and reflects strong conviction in the drug's commercial prospects. Ofacalim is currently in simultaneous global Phase 2 and Phase 3 trials.

Yoo Chang-ho, SK Biopharm's head of strategy, said the company had carefully evaluated clinical data through a rigorous due-diligence process, reviewed recent deal trends in the CNS market and conducted external valuation analysis. "This is a strategic partnership structure designed to support Biohaven in successfully completing its Phase 2 and Phase 3 trials," he said.

Patent cliff cleared through 2032; long-term cash cow secured into 2040s

The most consequential outcome of the deal is that it preemptively addresses the patent cliff risk inherent in SK Biopharm's single-product structure. The US composition-of-matter patent for Xcopri (cenobamate) — the company's flagship epilepsy drug and primary revenue driver — is set to expire in October 2032, a timeline that has long weighed on investor sentiment about the company's medium- to long-term growth.

Ofacalim's composition-of-matter patent runs through 2039, with patent term extension likely to push protection into the 2040s. With that asset now secured, SK Biopharm said it has built a foundation for stable, uninterrupted cash generation of hundreds of billions of won annually through the mid-2040s. The company's growth trajectory, previously dependent on Xcopri alone, is now positioned to evolve into a long-term "double blockbuster" model alongside ofacalim.

150-strong US sales force leveraged; complementary safety and efficacy profiles

The acquisition is also designed to maximize leverage from SK Biopharm's existing US direct sales network. "Adding a new product to our existing US sales infrastructure keeps incremental costs low while significantly expanding revenue and margins," Lee said. The company operates a direct sales force of about 150 representatives covering hospitals and specialists across the United States, and expects to add only 10 to 20 additional sales staff to support ofacalim's launch.

At the portfolio level, the two drugs offer complementary profiles: Xcopri leads on efficacy, while ofacalim emphasizes tolerability and safety. Xcopri, which works through a sodium channel inhibition mechanism, achieves seizure-free rates of up to 20 percent and derives roughly 80 percent of its prescriptions from epileptologists treating severe cases. Ofacalim, by contrast, activates Kv7.2/7.3 potassium channels through a novel mechanism, delivering a strong safety profile.

Yoo said that unlike competitor Xenon's azetukalner — which targets GABA receptors and has been associated with central nervous system side effects such as dizziness and high patient dropout rates — ofacalim avoids GABA entirely, significantly reducing adverse effects. That profile makes it an optimal first-line option for general neurologists, for whom managing side effects is paramount. The company also sees future potential in developing a combination therapy with Xcopri, as well as expanding into primary generalized tonic-clonic seizures, pediatric indications and rare disease areas.

H1 operating profit of 186.8 billion won fuels next-generation modality investment

The financial firepower behind the deal stems from cenobamate's exceptional cash generation. SK Biopharm posted operating profit of 186.8 billion won ($135 million) in the first half of 2026 alone, cementing a firmly profitable trajectory. The company holds approximately 330 billion won in cash and cash equivalents on a standalone basis, along with 200 billion won in available credit facilities. Given annual cash generation in the low-to-mid 300 billion won range, management said it can comfortably fund the deal through operating cash flow alone, without additional borrowing or a rights offering.

"Few Korean pharmaceutical or biotech companies generate close to 200 billion won in operating profit in a single half-year," Lee said. "We were confident we had the strongest cash generation capability." He added that roughly half of this year's and next year's earnings alone would be sufficient to cover the full upfront payment.

Industry observers view the transaction as a symbolic watershed moment for Korean biotech, marking its ascent to the top of the global drug development value chain. Having secured credibility with US capital markets and global investors through the large-scale partnership with NASDAQ-listed Biohaven, SK Biopharm said it plans to accelerate investment in next-generation modalities — including radiopharmaceutical therapy, targeted protein degradation and AI-driven translational research — underpinned by its long-term cash generation base.

silverpaper@heraldcorp.com