Shinhan Investment & Securities said on the 9th that, in the technology transfer agreement signed with Novartis regarding Alteogen(196170), the number of items expected to switch to a subcutaneous (SC) formulation is projected to decrease from three to two. One of the drug candidates secured by Novartis failed to meet the primary endpoint in phase 3.
As a result, it maintained a Buy rating but slightly lowered the target price from 5.4 million won to 5.2 million won.
Researcher Yoon Seok-hyun at Shinhan Investment & Securities said, "Among the three AOC (Antibody Oligonucleotide Conjugate) items held by Novartis, Del-desiran failed to meet the primary endpoint in phase 3," and added, "Accordingly, we are lowering the three items we had assumed as SC development candidates to two."
In Oct. last year, Novartis acquired Avidity for about 16.4 trillion won, securing three AOC candidates: Del-zota, Del-desiran and Del-brax. Among them, Del-desiran, a DM1 (myotonic dystrophy type 1) treatment, recently failed to meet the primary endpoint in phase 3.
Alteogen signed a technology transfer agreement worth 4.4 trillion won with Novartis on the 2nd. Shinhan Investment & Securities had initially valued the company on the view that Alteogen's SC formulation conversion technology could be applied to all three AOC items held by Novartis.
However, due to the clinical failure of Del-desiran and the resulting uncertainty in future development strategy, this item was excluded from the expected SC conversion pool. Del-desiran had been categorized as a candidate for SC formulation conversion because it is administered intravenously (IV) every eight weeks over 54 weeks, but after the clinical failure, whether and how development will continue has become unclear.
However, Shinhan Investment & Securities judged that the terms of the technology transfer agreement between Novartis and Alteogen are unlikely to change. Researcher Yoon analyzed, "Due to this phase 3 failure of Del-desiran, there will be no return of the upfront payment or reduction/changes to the existing contract."
Development of the remaining AOC candidates is proceeding smoothly. In particular, Del-zota is under development with a goal of securing U.S. Food and Drug Administration (FDA) approval in the first half of 2027, and the SC formulation development plan is also expected to remain unchanged. Del-brax is likewise being developed with a sales target of up to $4 billion, so the value from SC conversion is still considered valid.