Shinhan Investment & Securities said on the 29th that even though global drugmakers have been pushed back in the order of signing license-out (L/O) deals after material transfer agreements (MTA), they are paying option contract fees and waiting so as not to lose priority for signing. This means there is that much demand to secure Alteogen's technology, and the assessment is that once the first L/O is signed, subsequent deals are highly likely to follow quickly.
Accordingly, Shinhan Investment & Securities maintained a Buy rating and a target price of 730,000 won. Alteogen's previous session closing price was 439,000 won.
Eom Min-yong, a research fellow at Shinhan Investment & Securities, said, "The corporations signing this option contract decided to pay the option contract fee to maintain priority in signing, even after the conventional six-month period had passed and the L/O order had moved on," and noted, "It's a situation where global drugmakers are paying to line up."
Alteogen has already signed more than 10 MTAs. Because pending deals are typically discussed sequentially at intervals of about five to six months, if the order is pushed back, it can take considerable time to reach a contract. In particular, Alteogen is known to require submission of a term sheet about six months after an MTA is signed, and if that deadline is missed, the L/O discussion slot can pass to the next party—an interpretation seen as the backdrop for this option contract.
The partner and the product covered by the option contract were not disclosed. However, Eom said, "Considering that it was described as a different modality from monoclonal antibodies, bispecific antibodies, and Antibody-Drug Conjugate (ADC) with existing deal histories, and as a product with annual sales in the billions of dollars, it is highly likely to be Privigen, the immunoglobulin intravenous (IV) formulation from Australian drugmaker CSL." He also mentioned the possibility of applying the technology to convert an oral drug to a subcutaneous (SC) formulation or for SC administration of a high-dose obesity treatment.
As for the reason for delays in contracts with partners, the analysis pointed to strategic delays stemming from terms negotiations. Eom explained, "Even after U.S. Food and Drug Administration approval of Keytruda SC and the L/O with AstraZeneca, additional contracts are slow because the terms of the first post-commercialization deal are highly likely to become the baseline terms for contracts with more than 10 corporations currently in MTA." He added, "As a result, contracts with other corporations are being somewhat delayed while adjusting the terms favorably."
Regarding the recent German patent dispute with Halozyme, he said concerns are excessive. Eom said, "Patent litigation is an inevitable step for corporations that have entered the commercialization stage," and added, "If existing counterparties are maintaining their contracts without returning materials, there should be no substantive patent issues." He went on to say, "Sequential L/O signings going forward will gradually ease market concerns," naming Alteogen as his top pick.