Alteogen will move to a KOSPI transfer listing as early as the end of the third quarter. The company plans to pass related agenda items at next month's regular shareholders meeting, then within two to three months form the audit committee, the internal transactions review committee, and the outside director nomination committee, and begin preparing the preliminary review application for the Korea Exchange (KRX).
The key is regaining shareholder trust. Alteogen recently took a direct hit after its partner Merck (MSD) in the United States disclosed a 2% sales royalty rate for the subcutaneous (SC) formulation of the immunotherapy Keytruda, "Keytruda Qurex." When the figure, which fell short of market expectations, was made public, stock volatility increased and investor sentiment weakened. On the day the disclosure became known, on Jan. 21, selling spread across biotech stocks and the KOSDAQ index fell more than 3%.
◇Alteogen starts parallel deal talks…signals higher royalties on new contracts
The company plans to reverse momentum with additional technology out-licensing results within the year. At a recent non-deal roadshow (NDR) for analysts, it said, "We are holding simultaneous discussions with as many as 10 companies," adding, "We cannot disclose specific numbers or sizes, but we are pursuing contracts in formats not seen before this year." Some are said to have entered the due diligence (DD) stage.
The royalty rate for new contracts is being discussed at the mid–single-digit to low–double-digit level. The company said, "The contract with MSD was the first, so it was set low," and stressed, "Subsequent contracts will be different."
Deal sizes are also trending higher. A company official said, "Around $300 million (about 430 billion won) per asset is becoming a benchmark." In 2024, Alteogen signed a $300 million agreement with Daiichi Sankyo to develop and sell an Antibody-Drug Conjugate (ADC) "Enhertu" SC formulation. The exclusive license agreement signed last month with Tesaro Inc., a subsidiary of GSK plc, totaled $285 million. In both cases, sales royalties are separate.
An option contract signed in Dec. last year with an unnamed global pharmaceutical company is also being discussed for conversion to a final agreement within the year. A company official said, "We are currently conducting DD." However, there is a risk of prolonged negotiations. The Tesaro case, too, was initially scheduled to be finalized in Nov. last year but carried over into the new year.
Expectations are also rising for additional milestone inflows. AstraZeneca recently began a phase 1 trial of the SC formulation of the immunotherapy "Imfinzi." In March last year, Alteogen signed a $600 million development rights agreement with AstraZeneca subsidiary MedImmune for one product.
The two companies did not disclose the target product, but the industry view is that it is likely Imfinzi, given that human hyaluronidase was used in the clinical trial. Another basis is that only two companies—Halozyme and Alteogen—can apply this technology to global commercial products. Halozyme has not signed a contract with AstraZeneca.
Alteogen also pulled out a shareholder-return card. Early this month it decided on its first dividend. It will pay 371 won per common and preferred share, totaling 20 billion won. Final approval will be at the March regular shareholders meeting, and payment will be made within one month of the resolution date.
A company official said, "We aim for continuous dividends rather than a one-off," adding, "There are also calls for a bonus issue and a stock split, so we are reviewing various options." The company also left open the possibility of concurrent share buybacks.
◇Preliminary review hinges on three years of results…commercialization pace of Keytruda SC at a "watershed"
The most important variable in the KOSPI transfer review is the speed of commercialization of Keytruda Qurex. This is because the preliminary review application includes performance forecasts for the next three years. The company said, "To present a reliable three-year outlook, estimated sales of Keytruda Qurex must be reflected."
According to MSD, Keytruda Qurex posted $40 million in sales over the four months since its U.S. launch in Sept. last year. If it receives a J-code in Apr., market penetration is expected to accelerate further. A J-code is a billing code for reimbursement within the U.S. public insurance system, and once assigned, it improves prescribing convenience.
MSD has set a goal to switch up to 40% of total Keytruda prescriptions to the SC formulation by 2028. Applying this simply to last year's annual Keytruda sales ($31.6 billion) yields about $12.64 billion. Applying a 2% royalty rate would mean Alteogen could receive about $252.8 million in annual royalties.
Alteogen believes the conversion rate could be higher. A company official said, "Monotherapy areas where the SC formulation is first applied account for 65% of the total, and including combinations with oral drugs it is 70%–80%," adding, "The 30%–40% presented by MSD is a conservative figure."
However, there is a time lag before royalty receipts. This is because no royalties are paid until a certain sales threshold is reached. Royalties occur after payment of sales milestones. The maximum sales milestone is known to be $1 billion. A company official said, "Royalty receipts will be possible in three to four years."
The timing of the KOSPI transfer is somewhat fluid. This is because, as sentiment in the KOSDAQ market has improved recently, some shareholders are calling to remain. Even so, the company emphasized, "The ultimate goal is a KOSPI transfer."