Shares of TissueGene, the US-based biopharmaceutical subsidiary of South Korea’s Kolon Group, officially began trading on the Kodaq Monday. They opened at 52,000 won ($47), up 92.6 percent from the initial offering price of 27,000 won.

After trading began, however, the firm’s shares plunged by as much as 19 percent from the opening price, before closing at 42,700 won, down 17.88 percent.

Despite the drop, the shares still stood well above their initial offering price of 27,000 won. TissueGene’s market capitalization reached 2.58 trillion won on Monday, becoming the seventh largest firm by market cap on the Kosdaq. 

Based in Maryland, TissueGene has developed Invossa, the world’s first cell-mediated therapy for degenerative arthritis, or osteoarthritis, of the knee. The drug is designed as an injectable cell gene therapy administered into the knee joints to induce the regeneration of damaged cartilage.

The company has yet to prove via clinical trials that the drug can help with tissue regeneration. The drug was approved for only for pain relief and function improvement by Korea’s drug regulators in July this year.

Kolon-owned drugmaker is looking to prove Invossa’s regenerative properties during phase 3 clinical trials slated to take place in the US next month. The firm is aiming to commercialize the drug by 2023.

The success of Invossa’s overseas trials are expected to determine the company’s corporate value and share price in the future.

As of now, there is no treatment for osteoarthritis. Existing therapies like steroid injections and anti-inflammatory drugs are only used as pain-reducers. Given this, a treatment that regenerates damaged cartilage would be a game-changer in the market.

With the new funds generated by the IPO, TissueGene plans to expand its investment into Invossa’s development, including funding additional clinical trials to expand the drug’s treatment indications.

TissueGene disclosed last month that it will spend 154.6 billion won ($136 million) for the development of Invossa, vastly expanding its previously-announced investment quota of 96 billion won.

TissueGene is owned by the Seoul-based Kolon Group. Kolon Life Science holds 14.37 stake in TissueGene, while Kolon Corp. owns a 31.16 percent and Kolon Group Chairman Lee Woong-yeul holds a 20.38 percent stake.

By Sohn Ji-young (jys@heraldcorp.com)