On the 31st, Alteogen's annual general meeting of shareholders continued for about two hours amid palpable tension. With the recent share price drop, controversy over disclosure of Merck (MSD) royalties, and poor IR responses piling up, the venue resembled a "forum of denunciation," with complaints erupting throughout.
Alteogen's share price hit a 52-week high of 569,000 won on Nov. 14 last year, then continued to fall, closing at 354,500 won on the 30th.
This fallout also shook the KOSDAQ market capitalization rankings. Alteogen, which once held the No. 1 spot, recently ceded the position to Sam Chun Dang Pharm and was pushed down to No. 4.
Chief Executive Jeon Tae-yeon and other executives repeatedly bowed their heads to shareholders' sharp questions but stressed their resolve to restore corporate value, saying, "This year is when contracts will be concentrated at an all-time high scale."
◇ Ahead of CFO reappointment, a flood of "share price accountability" claims… CEO steps in to defend
Tensions rose as soon as the agenda to reappoint Chief Financial Officer (CFO) Kim Hang-yeon was introduced.
Shareholders demanded that he clarify his future role and responsibilities, given the opposition to reappointment.
Earlier, Hyung In-woo, head of Smart & Growth and the second-largest shareholder, publicly said he would vote against. The reason, he said, was to "hold management accountable for failing to prevent a decline in corporate value, including share price stagnation and increased volatility."
Kim, the CFO, said, "We will enhance the corporations' fundamentals through securing new pipelines and strategies for mergers and acquisitions (M&A) and in-licensing using accumulated cash," adding, "We will actively push to strengthen IR and, as a result, bolster shareholder return policies."
However, some shareholders again asked, "Please explain in more concrete terms."
CEO Jeon stepped in personally. Jeon said, "When pursuing global contracts, country-by-country tax and accounting issues are constant stumbling blocks. CFO Kim has provided clear guidance on these matters," adding, "He plays a very important role within the company."
The reappointment agenda ultimately passed, but the mood did not calm easily.
◇ "Was 2% royalty for Keytruda SC the best we could do?" vs. "Judge by long-term value"
In the ensuing Q&A, the top issue was royalties for the subcutaneous (SC) formulation of Keytruda.
One shareholder said, "You can't conclude that 2% is low in itself, but the gap with expectations was large," and asked, "If other deals have a similar structure, doesn't that distort corporate value assessment itself?"
Another shareholder demanded, "Clarify whether you have plans to resolve the information asymmetry issue."
In response, Jeon emphasized the limits on what can be disclosed. Jeon said, "To build shareholder trust, trust with partners must come first," adding, "Big pharma companies are extremely reluctant to disclose financial terms because they are mindful of competitors."
He also shared the circumstances before and after the disclosure. Jeon said, "Because it was year-end, it was hard to reach the partner, and we responded around the time of the JPMorgan event in January," adding, "MSD apologized, and the report was corrected."
Jeon particularly stressed that the deal structure changed during negotiations.
He said, "Originally, there were no royalties," adding, "The fact that it became a royalty structure itself is meaningful."
Jeon said, "The milestone total is about 1.5 trillion won, and we expect to receive a significant portion within three years." After that, the calculation is that annual royalty revenue of 500 billion to 600 billion won can also be expected.
He said, "The U.S. patent is valid through 2043. In the long term, the royalty is by no means low."
◇ Criticism of "startup-level IR"… "Considering stock dividends and other return measures"
The IR issues foreshadowed during the CFO reappointment process continued into the Q&A.
One shareholder said, "Alteogen's IR is at a startup level," and pointed out, "Isn't there a bottleneck in the decision-making structure?" Another shareholder took issue with a structure that does not transparently disclose pipeline progress.
The company said, "Because partners often require product names to remain undisclosed, we are responding by citing external materials as much as possible."
They also mentioned a lack of personnel. Still, they said, "We will improve communication methods."
The timing of the recent disclosure of the deal with Biogen also came under scrutiny. It was criticized that the disclosure came after the market closed.
Jeon explained, "There were many poison-pill clauses, such as 'returnable milestones,' so adjustments continued until the last minute," adding, "It was delayed as we verified the contract and reviewed the exchange's disclosure requirements."
Complaints about the expansion of short selling also continued.
The company explained, "We believe factors such as portfolio weight adjustments by KOSDAQ ETF managers during the process of preparing to transfer to the KOSPI had an impact."
They added, "To reduce short selling, we can consider shareholder return policies such as a stock dividend at an appropriate time."
However, they were cautious about a share buyback. Jeon said, "In the short term, it boosts the share price, but sustainability is another matter," adding, "What matters is the fundamentals."
◇ "No issues with the Halozyme lawsuit… discussing 'multi-asset deals' with big pharma"
Even in the chilly atmosphere, the company repeatedly emphasized confidence in its technology.
Jeon said, "We are seeing more cases where a material transfer agreement follows immediately after signing a non-disclosure agreement," adding, "This year could see the highest number of deals in the company's history."
He added, "Several global pharmaceutical companies are proposing bundled, multi-asset contracts."
They also expressed optimism about the dispute with Halozyme.
MSD has filed 15 post-grant reviews (PGRs) with the U.S. Patent Trial and Appeal Board, challenging patents for Halozyme's SC platform "Enhanze."
Jeon said, "The situation is favorable," adding, "Overseas analysts are predicting we will gain the upper hand."
They also expressed confidence in new pipelines.
Regarding the long-acting obesity treatment under development, Jeon said, "In animal studies, results are similar to or better than existing drugs," and said they are preparing a patent. He added, "We are also looking forward to Best-in-Class potential."