AbClon was designated an "investment warning issue" at the very start of the new year. The reason was that the stock price surged excessively in a short period, with a one-year gain exceeding 200% and the closing price on the 6th hitting the highest level in the past 15 trading days. AbClon's closing price on the 6th was 55,500 won, and the closing price on the 13th was 54,200 won.
It is interpreted that expectations for the commercialization of its core pipeline were priced in first. However, with clinical results still pending, the key will be how to bridge the gap between expectations and reality.
◇ Expectations for removal from watchlist and clinical momentum… AbClon shares overheat
The Korea Exchange (KRX) said on the 7th that it designated AbClon as an investment warning issue. The investment warning system is intended to cool short-term overheating, and whether to lift the designation is determined after a certain period based on price movements. If the surge continues after designation, trading can be suspended once.
Founded in 2010, AbClon is a bio company that has grown on the basis of antibody new drugs and CAR-T cell therapy platforms. It entered KOSDAQ in 2017 through a technology special listing. Its key pipelines include the CAR-T cell therapy "AT101 (brand name Nespesel)" and the antibody therapy "AC101."
The short-term catalyst that lifted the share price is Nespesel. AbClon aims to complete dosing of patients in phase 2 for Nespesel, with relapsed or refractory diffuse large B-cell lymphoma (DLBCL) as the indication, in the first quarter of this year. It plans to apply for marketing approval to the Ministery of Food and Drug Safety in the fourth quarter.
With recent designation as a development-stage orphan drug and inclusion in expedited processing, expectations have risen that the approval process could speed up. The company expects that, if approval proceeds smoothly, the product could launch as early as the first half of next year.
If Nespesel enters the commercialization stage, it will be AbClon's first case of approval for a CAR-T Therapy. Analysts say it could mark a turning point for the company to be re-evaluated as a holder of an actual commercialized product, beyond being seen as a technology platform company.
The mid- to long-term growth pillar is AC101. Henlius, a Chinese partner that in-licensed AC101 from AbClon, is developing "HLX22," a therapy based on it, as a first-line treatment for gastric cancer. It began a global phase 3 trial in Jul. last year.
It is also pursuing indication expansion. In Apr. last year, it began a phase 2 breast cancer trial combining an Antibody-Drug Conjugate (ADC) with HLX22. The target population is the HER2-low patient group, which accounts for about half of all breast cancer patients.
Henlius has presented the maximum annual sales potential of HLX22 at more than $10 billion (about 14 trillion won). Applying a 5% running royalty to this would allow AbClon to expect up to 700 billion won in annual royalty revenue.
An AbClon official said, "Royalties are received immediately from the time the product is actually sold," and noted, "As early as the end of next year, or around 2028 at the latest, royalty revenue could occur."
Another driver of the share price rise is expectations of easing financial risk. AbClon posted annual revenue of 2.3 billion won in 2024 and was designated a watchlist company last year. That is because it failed to meet the sales requirement (annual revenue of 3 billion won) for technology special-listed corporations. However, as it recorded 3.09 billion won in revenue on an accumulated basis through the third quarter of last year, there is a view that removal from the watchlist is likely after the designated audit in Mar. this year.
The ratio of loss from continuing operations before income taxes to equity also fell to 44.2% at the end of the third quarter last year from 55.4% in 2024. This was due to raising a total of 36 billion won in Oct. last year through third-party allotments, including 25.2 billion won in perpetual convertible bonds and 10.8 billion won in convertible preferred shares.
◇ Nespesel still has clinical variables… Focus on the role of "joint development partner" Chong Kun Dang
However, there is a hurdle to clear. It is securing the final clinical data.
In the interim phase 2 data, Nespesel recorded an objective response rate (ORR) of 94%. ORR refers to the proportion of patients whose tumors shrink by a certain threshold after anticancer treatment. The complete response (CR) rate, where cancer cells disappeared entirely after Nespesel administration, was 68%. Both figures are higher than Novartis' "Kymriah" and Gilead's "Yescarta."
However, this figure analyzed only 32 patients evaluable for efficacy out of 35 dosed patients, leaving the possibility that the average could decrease as the sample size increases.
Regarding this, the company said, "Given the trend so far, the final data is highly likely to be similar to or better than the interim results," and explained, "Patient dosing is expected to be completed by next month at the latest."
Depending on the Ministery of Food and Drug Safety's review schedule, the timing of Nespesel's approval may also vary. Domestic competitor Curocell announced the final phase 2 results of "LymcaTO" at the end of last year and is currently undergoing the agency's marketing approval review. Approval had been expected by the end of last year but was delayed.
If commercialization is delayed, the financial burden is expected to grow. AbClon recorded an operating loss of 12.6 billion won and a net loss of 12.8 billion won on an accumulated basis through the third quarter of last year.
Some also mention the possibility of additional investment by Chong Kun Dang. Chong Kun Dang secured a 7.3% equity stake in AbClon in May last year, becoming the second-largest shareholder. At that time, Chong Kun Dang signed a joint research and development (R&D) partnership with AbClon and secured the right of first negotiation for domestic sales of Nespesel.
A Chong Kun Dang official said, "AbClon's platform structure, which can expand from antibodies to CAR-T, underpinned the investment decision," and added, "There are no plans to secure additional equity at this point, and we will continue a friendly cooperative relationship with AbClon going forward."