HONG KONG – After more than a decade of development, Maryland-based Tissuegene Inc. and its Asia licensee, Kolon Life Science Inc., received a bittersweet go-ahead from the South Korean authorities to market gene therapy drug Invossa-K.

The most advanced candidate of Tissuegene's pipeline, Invossa-K is a first-in-class cell-mediated gene therapy designed to effectively treat osteoarthritis of the knee through the more convenient single intra-articular injection. Kolon Life Science, a subsidiary of South Korean conglomerate Kolon Group, is the local manufacturer of the drug. Kolon said that by injecting regenerating genes into cartilage cells, pain relief can last for one to two years.

Although the South Korean Ministry of Food and Drug Safety (MFDS) gave the marketing green light to Invossa, it didn't recognize the drug as a disease-modifying osteoarthritis drug (DMOAD) as Kolon Life Science had hoped.

"Invossa's effect of improving structures such as cartilage regeneration did not show any difference compared to the control group," said the ministry in a statement. "The range of prescriptions was also limited to moderate patients who failed medication and physical therapy. The degrees of knee osteoarthritis are doubtful, light, moderate and severe. Invossa can be prescribed to third-stage 'moderate' patients only."

Kolon Life Science's stock price (KOSDAQ:102940) took a dive last week. "Kolon's stock dipped down 9.7 percent [on July 13], partly because the MFDS seems to have focused on categorizing Invossa as a treatment instead of a DMOAD," Lee Sang-won, an analyst at Hanwha security, told BioWorld. "But I think this is not something to be disappointed with, since cartilage regeneration effects can be determined via long-term observation in a large-scale clinical trial that will be conducted in the U.S."

The company filed for a biologics license application with the MFDS in August based on the phase III trial results in Korea.

Tissuegene's chairman and CEO, Woosok Lee, said he is still very optimistic about the future of the drug. "We are excited to launch the world's first cell and gene therapy for knee osteoarthritis and potentially the world's first disease-modifying osteoarthritis drug," he said.

Tissuegene will seek a DMOAD designation in the U.S. based on the phase III studies conducted in the country. The company will start the trials next year. Given the length of the clinical period and the U.S. FDA's approval processing time, Invossa could hit the market in the U.S. by the end of 2022.

"This approval is the first critical step toward a global launch for this innovative, novel cell and gene therapy technology that will address one of the most pressing unmet medical needs," said Lee.

According to the MFDS, only four gene therapy products have been licensed by major advanced pharmaceutical countries such as the U.S. and Europe. Among them, Invossa is the first to specifically target knee arthritis. In spite of MFDS' doubt on the drug's efficacy, the approval still marks the first for a gene therapy drug in South Korea, and it is also the 29th approval of the sale of a new South Korean drug.

In preparation for Invossa's launch, Lee is planning to spend roughly $167 million in the expansion of Kolon's Chungju Plant in North Chungcheong province in preparation of overseas exports.

Invossa is expected to start sales in South Korea as early as September this year.

Apart from having Invossa approved, Tissuegene and Kolon have been actively exporting its technology overseas.

Last November, Tissuegene and Kolon Life Science signed an agreement on the development and commercialization of Invossa with Japan's Mitsubishi Tanabe Pharma Corp. Under the contract, Tissuegene will receive an up-front payment of $24 million plus milestone payments amounting to $415 million from the Japanese company.

Tissuegene said the deal "represents the largest single-territory deal on record for Korea" and that the company is to receive double-digit marketing royalties after the product is launched.

Founded in 1999, Tissuegene is slated to go public on South Korea's secondary Kosdaq market in September with an aim to raise up to $260.9 million. According to Korea Exchange, the U.S.-based company has filed for a preliminary review on June 15 on its plan for an IPO of 1.5 million shares.