[Edaily Reporter Hong Ju-yeon] #SK Bioscience is aiming for a turnaround in its earnings by focusing on its contract development and manufacturing (CDMO) business and its 21-valent pneumococcal vaccine candidate, “GBP410.” As the company breaks the downward trend in earnings that followed the COVID-19 endemic and begins to expand its business in earnest, analysts predict that its earnings structure could undergo a fundamental shift if it succeeds in commercializing its next-generation vaccine.

Growth Driven by Increased CDMO Operations in Germany and Vaccine Distribution by Subsidiary

According to the Financial Supervisory Service’s electronic disclosure system on the 10th, SK Bioscience’s first-quarter revenue this year reached 1686억 won, a 9.1% increase compared to the same period last year. Growth was driven by expanded CDMO revenue from its German subsidiary, IDT Biologica (IDT), and increased revenue from vaccine distribution. IDT’s first-quarter revenue reached 1283억 won, an 8% increase from the same period last year. The CDMO segment accounted for 75.8% of consolidated revenue.

However, the company posted an operating loss of 44.5 billion won as R&D expenses more than doubled year-over-year, including 36.7 billion won in future growth investments such as expanding the vaccine portfolio and upgrading R&D and manufacturing infrastructure. With the CDMO business driving revenue growth, IDT is strengthening its presence as the central pillar of that growth.

IDT, a European CDMO company capable of end-to-end production from drug substance (DS) to drug product (DP), was acquired by SK Bioscience in 2024. Although the company posted losses for the first year following the acquisition, it successfully returned to profitability last year through expanded sales to key customers and productivity improvements. Through the acquisition of IDT, SK Bioscience secured a European production base and expertise in navigating global regulatory requirements.

Building on this foundation, SK Bioscience is accelerating its efforts to secure global projects. Last March, SK Bioscience signed a contract with IDT for the contract development and manufacturing of finished products related to the development of a second-generation Zaire Ebola vaccine, a project being pursued in collaboration with MSD and the Hilleman Laboratories. Under this arrangement, SK Bioscience produces the Ebola vaccine bulk, while IDT is responsible for the development and production of the finished product. This follow-up agreement was signed after the international organization CEPI announced approximately $30 million in development funding for the project.

In February of this year, the company also secured a contract for Phase 1 of the Next-Generation Vaccine Development Initiative, led by the Health and Digital Executive Agency (HaDEA) under the European Commission, in collaboration with IDT. This signifies that IDT is expanding its role as a key hub within SK Bioscience’s global vaccine development and manufacturing network.

The 21-valent pneumococcal vaccine is set to be the driver of mid- to long-term growth

While the CDMO business is solidifying a stable revenue base, analysts predict that a leap in mid- to long-term performance will depend on the 21-valent pneumococcal protein-conjugate vaccine “GBP410.” Following the signing of a joint development agreement with Sanofi in 2014, GBP410 entered Phase 1 clinical trials in 2018, Phase 2 in 2020, and is now set to begin global Phase 3 trials in 2024.

For pneumococcal vaccines, the number of serotypes included is directly linked to competitiveness. While a greater number of serotypes broadens the scope of protection against invasive pneumococcal disease (IPD), the complexity of antigen design and the protein-conjugation process increases exponentially. SK Bioscience is credited with overcoming this challenge by leveraging the technological expertise it built up after becoming the second company in the world to successfully develop a 13-valent pneumococcal protein-conjugate vaccine. Although commercialization failed at the time due to global patent barriers, that experience was a key factor in Sanofi’s decision to select SK Bioscience as a partner.

GBP410 is the first candidate among those entering Phase 3 clinical trials for infants and young children to include more than 20 serotypes. A multinational Phase 3 clinical trial is currently underway in South Korea, the United States, China, and Australia, involving approximately 7,700 participants ranging in age from 6 weeks to 17 years. In Phase 2 trials, the vaccine demonstrated immunogenicity and safety equivalent to that of the comparator vaccine, Prevenar 13.

Equivalent results were also observed when administered in combination with the recommended vaccine for infants and young children. Expectations in the biotech industry are high, as it is rare for a candidate that has demonstrated equivalence in a Phase 2 clinical trial for a protein-conjugated vaccine to see those results reversed in Phase 3. The two companies plan to announce topline data next year and begin the regulatory submission process with the U.S. Food and Drug Administration (FDA) and the European Medicines Agency (EMA). GBP410 is targeting commercialization between 2028 and 2029. The securities industry estimates that GBP410’s sales will grow from approximately 400억 won in 2028 to 2200억 won by 2030.

The market opportunity is substantial. The global pneumococcal vaccine market is projected to grow from approximately $8.15 billion (about 12.4736 trillion won) in 2024 to approximately $15.59 billion (about 23.8605 trillion won) in 2034. The pediatric pneumococcal vaccine market, which GBP410 directly targets, is projected to grow to approximately 13 trillion won by 2030.

Currently, Pfizer and Merck (MSD) effectively split this market between them. GBP410 is positioned to compete directly with Pfizer’s Prevenar 20 in the infant, toddler, and adolescent markets. SK Bioscience and Sanofi further expanded the scope of their collaboration by signing an additional agreement in December 2024 to jointly develop a next-generation pneumococcal vaccine that goes beyond the 21-valent formulation.

SK Bioscience received an upfront payment of 50 million euros (88.8 billion won) from Sanofi. The agreement is structured so that SK Bioscience will receive up to 300 million euros (533.1 billion won) in additional milestone payments. The fact that the contract for the next-generation vaccine was signed simultaneously with the start of Phase 3 clinical trials for GBP410 demonstrates that Sanofi has high confidence in the project’s success.

The National Growth Fund has also joined the effort. On the 28th of last month, the Fund Management Committee approved a 3000억 won low-interest loan for SK Bioscience. Comprising 2500억 won from the government’s High-Tech Strategic Industries Fund and 500억 won from the Korea Development Bank, this marks the first instance of a new drug or vaccine developer receiving support from the National Growth Fund.

The funds are scheduled to be invested in R&D costs for the Phase 3 clinical trial of GBP410 and the expansion of the vaccine production plant located in Andong, North Gyeongsang Province. With global big pharma and now government funds placing their bets on the project, observers note that external confidence in GBP410 is growing.

An SK Bioscience official stated, “We will expand our CDMO business centered on IDT while accelerating the development of our core pipeline to prepare for full-scale growth in the global market.”