Whether Peptron and Eli Lilly and Company will sign a technology transfer deal for the long-acting drug delivery platform "SmartDepot" is becoming increasingly uncertain. As Lilly focuses its entire organization on launching the oral obesity drug "Orforglipron," external partnerships based on injectables appear to be sliding down the priority list.
Lilly recently disclosed that as of Dec. 31 last year it had secured $1.5 billion (about 2.15 trillion won) in prelaunch inventory. Most of it is Orforglipron stock. The company had also revealed in Feb. last year that it pre-stocked $550 million worth of initial inventory.
Securing inventory before a drug approval is standard practice, but a case of front-loading production at this scale is unusual. U.S. pharmaceutical trade outlet FiercePharma analyzed that Lilly's aggressive inventory buildup is interpreted as a strong will not to repeat the early supply shortages seen with the launches of "Mounjaro" and "zepbound."
Lilly CEO Dave Ricks also zeroed in on Orforglipron during an earnings call earlier this month, saying, "We are targeting a U.S. launch in the second quarter of this year and a global rollout in 2027." Orforglipron was mentioned 21 times during the roughly one-hour conference call. As with the JP Morgan Healthcare Conference last month, there was no mention of Peptron.
The U.S. Food and Drug Administration (FDA) target action date for Orforglipron is Apr. 10. Filings have also been completed in 40 countries outside the United States.
◇Lilly poured 2 trillion won into the "pill"… Peptron left in "false hope" for over a year
Peptron signed a SmartDepot technology evaluation agreement with Lilly in Oct. 2024. The structure was to apply the technology to Lilly's peptide drugs, evaluate it for about 14 months, and then discuss whether to transfer the technology.
SmartDepot is a platform technology that slowly releases a drug in the body to extend its half-life. The company says it can extend the efficacy of short half-life peptides from one week to several months. Expectations grew in particular as its applicability to Lilly's zepbound, currently on the market, came into focus.
The expectations were priced into the stock. The share price, which was around 50,000 won before the deal was announced, topped 100,000 won in seven trading days and neared 400,000 won at the end of Nov. last year.
However, in Dec. last year, when the technology transfer contract had been expected to be signed, the situation changed. Peptron corrected its disclosure to extend the technology evaluation period from "about 14 months" to "up to 24 months." The stock then fell into the 200,000 won range.
According to the corrected filing, the technology evaluation agreement expires in Oct. The company said this is "because additional substances beyond those under review need to be evaluated."
Given that additional substance reviews are conducted when existing evaluations are proceeding smoothly, a positive interpretation is also possible.
But conversely, it can also be read as a lack of a "decisive knockout." If Lilly judges that "performance is good but large-scale Production yield is not coming through," or that "in-house candidates are more efficient," Peptron will lose the opportunity cost equal to the contract period.
This agreement is, after all, a nonbinding "evaluation stage." Lilly can terminate the contract at any time with written notice 30 days before expiration.
A Peptron official said, "It is true that the structure allows termination at any time if Lilly so wishes," adding, "For now, we are simply waiting for Lilly's decision."
◇Sales of 4.6 billion won, market cap of 6 trillion won… Peptron faces inevitable shock if the "Lilly mirage" lifts
Peptron plans to boost its bargaining power by expanding capacity (CAPA). Peptron's microparticle method is extremely demanding in keeping particle size uniform. It must prove large-scale production safety at the level Lilly wants to move closer to a definitive contract.
The company recently obtained building approval for a second plant of about 5,000 pyeong within the Osong Advanced Medical Complex in Cheongju, North Chungcheong Province. The total investment is 89 billion won, with a target to begin operations next year.
However, financial capacity does not appear sufficient. In the third quarter of last year, Peptron posted negative (-) 15.67 billion won in cash flow from operating activities. The deficit widened 51.7% from a year earlier. The shortfall in working capital is being covered through external financing, including issuing 24.3 billion won in exchangeable bonds (EB).
Cumulative sales in the third quarter of last year were 4.6 billion won. With a limited revenue base, large-scale expansion is proceeding in parallel. Aside from "Loopone," launched last year through LG Chem, Peptron has no clear revenue pipeline.
The competitive landscape is also tough. Pfizer recently released topline results from a phase 2b trial of its once-monthly obesity drug candidate "PF-3944 (MET-097i)." Amgen is developing the once-monthly injection "maritide" in phase 3. AbbVie has also formalized development of a long-acting injection.
The issue is valuation. As of the close on the 20th, Peptron's market capitalization was about 6.4 trillion won. A platform company with limited commercial results is receiving this level of valuation based solely on expectations for a single technology transfer event.
By contrast, Camurus, another long-acting partner of Lilly, recorded about 360 billion won in sales and about 150 billion won in pre-tax profit last year with already commercialized products, yet its market cap remains in the 5 trillion to 6 trillion won range.
Industry watchers warn that unless Peptron delivers simultaneous results with multiple global pharmaceutical companies beyond Lilly, it will be hard to avoid a stock shock if the deal falls through. A company official said, "We are continuing discussions with several global pharmaceutical companies, but nothing has been finalized yet."