Attention is on whether Chong Kun Dang pharmaceutical, which is accelerating a shift to a new drug development-focused model, will hit an inflection point.
Its operating value has long been assessed at a discount versus domestic peers due to stalled profit growth, but expectations for a re-rating are emerging as Novartis has added the in-licensed candidate to its core pipeline.
As of the close on the 5th (85,000 won), Chong Kun Dang pharmaceutical's market capitalization was about 1.1732 trillion won.
◇ Novartis seeks the "next Entresto"… CKD-510 emerges as a strategic asset
In its recent earnings presentation, Novartis introduced "PKN605" as part of its phase 2 cardiovascular, renal and metabolic (CRM) pipeline. PKN605 is the new development name for the HDAC6 inhibitor "CKD-510," which Novartis in-licensed from Chong Kun Dang pharmaceutical. The compound was initially developed as a treatment for the rare disease Charcot-Marie-Tooth, and it was out-licensed in 2023 in a deal worth about 170 billion won. The current indication is atrial fibrillation.
CRM is one of Novartis' four key pillars. In particular, with the heart failure drug Entresto losing patent protection, securing the next growth driver is urgent. In response, Novartis has been deploying resources to strengthen its CRM capabilities, including acquiring U.S. drug developer Tourmaline Bio last year and in-licensing multiple candidates from China's Argo Biopharma.
The market viewed the formal addition of CKD-510 to the pipeline as reaffirming Novartis' commitment to development and commercialization.
Mirae Asset Securities raised its target price from 110,000 won to 155,000 won. The figure reflects 1.7 trillion won in operating value and 210.7 billion won in risk-adjusted net present value (rNPV) for CKD-510. The rNPV assumes a 2033 launch and factors in market share, milestone and royalty terms, and probability of success.
Operating value applied the average EV/EBITDA multiple of 13.5 times for top domestic drugmakers excluding Yuhan to slightly revised 12-month forward EBITDA. Chong Kun Dang pharmaceutical's EV/EBITDA has hovered around 8 times, a discount of roughly 20%–30% versus peers.
Novartis has two pipelines in development for the atrial fibrillation indication: the FXI inhibitor "abelacimab" for stroke prevention (anticoagulation) and CKD-510.
Researcher Kim Seung-min said, "Novartis is pursuing a strategy to secure both pillars of atrial fibrillation treatment—'stroke prevention' and 'rhythm control,'" adding, "While the final readout of CKD-510's phase 2 is expected between 2027 and 2028, an interim data update is also possible."
Since Oct. 28 last year, Novartis has been conducting a phase 2 study of PKN605 in patients with atrial fibrillation. The primary completion date is Sept. 9, 2027.
Lee Ji-su, a researcher at Daol Investment & Securities, also said, "Atrial fibrillation still has high unmet need due to toxicity concerns with existing therapies and limits in rhythm control efficacy," adding, "Given Novartis is continuously expanding its cardiovascular pipeline across various modalities, the new drug value of CKD-150 as well will be fully re-rated depending on subsequent clinical results."
◇ Chong Kun Dang pharmaceutical accelerates shift to a "new drug profile"… bets on infrastructure and a dedicated subsidiary
With CKD-510's position within Novartis confirmed, attention is also on whether market confidence in Chong Kun Dang pharmaceutical's research and development (R&D) strategy will recover.
With the launch of a holding-company structure in 2014, Chong Kun Dang pharmaceutical defined new drug development as its "second founding." In 2017, it expanded and reorganized its central research center into a technology research center and a new drug research center, ramping up R&D investment. Since then, it has continuously invested around 10% of sales into research and development expenses, recording ▲ 163.5 billion won in 2021 ▲ 181.4 billion won in 2022 ▲ 151.3 billion won in 2023 ▲ 157.4 billion won in 2024 ▲ 167.5 billion won in 2025. As a result, it now holds more than 20 self-developed pipelines.
The top current focus is establishing the Baegot bio integrated research and development complex. Chong Kun Dang pharmaceutical plans to use this as a starting point to shift to an R&D-centered model. Including all operating costs such as facility investment, research and development expenses, and personnel costs, it plans to invest 2.2 trillion won. The investment period runs through 2033.
To that end, it issued 100 billion won in unsecured bonds and then raised 61.1 billion won by issuing exchangeable bonds (EB) against all 626,712 treasury shares. The entire 161.1 billion won raised will be invested in building the Baegot complex. An industry source said, "I understand additional fundraising is also under review."
In November last year, the company launched Accela, a subsidiary specializing in new drug development, strengthening its open innovation strategy. It espouses an NRDO model dedicated to candidate in-licensing, clinical development, and technology transfer. It has also successively hired as executives personnel from Bridge Biotherapeutics (now Parataxis Korea), long cited as a leading NRDO player in Korea.
◇ Making results visible is a long game… clinical trials, Baegot, and Accela are all "variables"
The variable is whether CKD-510 succeeds in phase 2. According to the Biotechnology Innovation Organization, phase 2 is the biggest hurdle in drug development. From 2011 to 2020, only 28.9% of phase 2 candidates advanced to phase 3.
A Chong Kun Dang pharmaceutical official said, "Since transferring the development rights, we have not been communicating separately with Novartis about the clinical development process," adding, "However, because we are structured to receive milestones as the clinical stage advances, procedural communication will occur if related events arise."
In May last year, Chong Kun Dang pharmaceutical received about 6.9 billion won upon Novartis' entry into phase 2. The specific milestone payment structure is not disclosed under the contract.
The official added, "If development succeeds, we will also receive royalties based on sales," and said, "We expect a re-rating of value once results become visible."
The official continued, "Ultimately, the goal is to leap forward as a company developing its own new drugs, but to do that we need a stable performance base," adding, "For now, it will be a process of strengthening both R&D capabilities and financial muscle."
However, the explanation is that time is needed before results become visible. Accela, the subsidiary specializing in new drug development, is pursuing the out-licensing of three pipelines held by Chong Kun Dang pharmaceutical, but further clinical progress must come first.
Whether the Baegot complex will contribute to earnings immediately after completion is also uncertain. For drug manufacturing facilities, various approval and licensing procedures are key, and the start of operations may vary after completion depending on the approval timeline.
Last year, Chong Kun Dang pharmaceutical posted 1.6924 trillion won in sales and 80.5 billion won in operating profit. Sales rose 6.67% from a year earlier, but operating profit fell 18.9%. Compared with the 59.7% decline in operating profit in 2024, the drop narrowed, but the trend of weakening profitability continues.