Daishin Securities said on the 2nd that risks tied to a key U.S. patent have eased considerably for Alteogen, while the likelihood of signing new license deals is rising. It kept a Buy rating and a target price of 500,000 won. Alteogen's previous session closing price was 366,000 won.
Hong Ga-hye, an analyst at Daishin Securities, said, "At the start of the year, the royalty rates of some partners fell short of market expectations, and recent lackluster flows into the pharmaceuticals and biotech sector weighed on the stock," but added, "Through a recent non-deal roadshow (NDR), we confirmed that patent risks have eased and that additional license deals are possible."
Earlier, the Patent Trial and Appeal Board (PTAB) ruled that Halozyme's core "'600 patent" was unpatentable in a post-grant review (PGR) filed by MSD (Merck), an Alteogen partner, against rival Halozyme. The U.S. Patent and Trademark Office also rejected instituting inter partes review (IPR) that Halozyme had filed targeting Alteogen's process patent.
Hong said that after Alteogen signed two license deals this year with GSK plc (GSK) and Biogen, additional talks have been expanding quickly. Talks based on material transfer agreements (MTAs) are reportedly underway with more than 10 potential partners.
Hong said, "Discussions with multiple global drugmakers have entered a concrete stage, making it highly likely that additional contracts will be signed within the year," adding, "It is also positive that recent deal terms are forming around upfront payments of about $300 million (about 410 billion won) per asset and a mid-single-digit royalty structure." She added, "If the deals expand into a package that bundles multiple products, the deal size could grow further."
The expansion of U.S. sales of the subcutaneous (SC) formulation of Keytruda, "Keytruda Qlex," was also cited as a key growth driver. Hong said, "As initial sales of Keytruda SC rise quickly, inflows of sales milestones to be received by Alteogen are set to begin in earnest." In fact, since its launch in Sep. last year, Keytruda SC posted $128 million (about 175 billion won) in first-quarter sales on an MSD basis this year.
The conversion rate also appeared higher than that of rival product Opdivo SC in the same PD-1 immuno-oncology class. Keytruda SC's conversion rate is 4.1%, outpacing Opdivo SC's 2.8%. Accordingly, the remaining sales milestones of about $1 billion (about 1.37 trillion won) that Alteogen is set to receive from MSD are expected to be recognized in partitions over the next three to four years.
Prospects also improved for additional commercialization pipelines. The subcutaneous formulation of Dupixent is being developed as a high-dose product, with a phase 1 trial expected in the first half of this year and entry into phase 3 in the second half. Commercialization is projected for 2029. The subcutaneous formulation of Enhertu is also showing the fastest clinical pace among Antibody-Drug Conjugate (ADC)-based products. Results from part 1 of the phase 1 trial are due in mid-month, while the announcement timing is yet to be decided.