[Edaily Reporter Kim Seung-kwon ] “We’ve entered Phase 2 clinical trials,” “We’ve signed a contract with a global pharmaceutical company”

Just a year ago, a single line like this was enough to double a biotech company’s stock price. But now, the yardstick for evaluating domestic biotech firms developing new drugs has changed. Rather than the number of drugs in the pipeline or news of clinical trials, the figures on the income statement have become the starting point for assessing a company’s value. If the semiconductor sector opened the first act of this earnings-driven market, biotech companies that are actually turning a profit are being cited as one of the key players opening the second act—and this is why.

Leading the pack under these criteria are SK BIOPHARMACEUTICALS(326030)and Alteogen Inc.(196170). Although their approaches differ, both companies share the common trait of having begun to operate using cash they’ve generated themselves, rather than money borrowed from the capital markets. LigaChem Biosciences(141080), ABL Bio Inc.(298380), and AprilBio Co.,Ltd.(397030)are viewed as companies at a turning point—they have secured major technology export contracts but have not yet reached the stage where those contracts are fully reflected on their income statements. Edaily’s pharmaceutical and biotech premium content platform, PharmEdaily, analyzed the path for domestic biotech companies to become true “big biotechs” based on the financial figures of these five companies.

The Two Pillars of Revenue Models: “Direct Global Sales” vs. “Platform Milestones”

The ways in which domestic biotech companies generate actual operating profit can be broadly divided into two categories. First is the “global direct sales” model, exemplified by SK BIOPHARMACEUTICALS, which sells drugs directly in the U.S. market. The other approach is the “platform business” model, as seen with Alteogen Inc., where a company’s proprietary technology platform is integrated into the pipelines of global big pharma to generate milestone payments and royalties. These two models differ fundamentally in terms of financial statement structure and risk-reward profiles.

SK BIOPHARMACEUTICALS’ growth trajectory most clearly illustrates “how a global direct-sales biotech company changes after crossing the breakeven point.” The company, which directly markets the epilepsy treatment cenobamate (U.S. brand name XCOPRI) in the United States, posted operating losses in 2022 and 2023. However, it successfully turned a profit for the first time in 2024 with an operating profit of 963억 won. Last year, it further improved its performance, posting revenue of 7067억 won and an operating profit of 2039억 won (a 112% increase year-over-year).

The key to this success is what is known as profit leverage. SK BIOPHARMACEUTICALS already has fixed costs in place, such as its U.S. sales organization and headquarters infrastructure. Under this structure, as XCOPRI prescriptions increase one by one, additional selling, general, and administrative (SG&A) expenses remain virtually unchanged, allowing revenue to be directly converted into operating profit. This is evidenced by the leverage effect seen between 2024 and last year, when revenue increased by 29% while operating profit jumped by 112%. SK BIOPHARMACEUTICALS is demonstrating the kind of results that can be achieved once a model of directly selling a single innovative drug in the U.S. gets on track.

Alteogen Inc. takes a different approach, but the results are similarly striking. Alteogen Inc. has neither a manufacturing facility nor a sales team in the U.S. Yet, the company has secured a series of global contracts worth trillions of won. Its secret is Hybrozyme (ALT-B4), a platform technology for converting subcutaneous (SC) formulations.

Converting intravenous anticancer drugs or immunotherapies to subcutaneous injections significantly improves patient convenience. Keytruda Qlex™, the subcutaneous formulation of Keytruda—the world’s top-selling anticancer drug—was developed using Alteogen Inc.’s platform technology. Keytruda Qlex™ received approval from the U.S. Food and Drug Administration (FDA) and the European Medicines Agency (EMA) last year, marking the start of full-scale commercialization.

Alteogen Inc.’s revenue structure is straightforward. When global big pharma companies use the company’s platform to develop drugs and sell them worldwide, Alteogen Inc. receives royalties tied to sales and milestone payments. There are no production or sales costs. It is a pure platform business with a cost ratio that is effectively close to zero.

Last year’s improved performance was driven by the receipt of commercialization milestones for Keytruda Qurex and an upfront payment from the subcutaneous (SC) conversion license agreement with AstraZeneca. Based on its consolidated financial statements, Alteogen Inc. achieved record-high results last year, with revenue of 2159억 won and operating profit of 1069억 won.

The securities industry expects Alteogen Inc.’s earnings growth to accelerate even further as a result of this agreement. Hana Securities estimates that Alteogen Inc.’s revenue this year will surge 133% year-over-year to 4712억원, with operating profit reaching 3082억원. In particular, the firm analyzed that once royalty revenue begins in earnest, the operating profit margin will exceed 65%.

Kim Seon-ah, an analyst at Hana Securities, stated, “With this agreement, Alteogen Inc. has secured approximately 59.5 billion won in upfront payments for the first quarter of this year alone,” adding, “While there may be some disappointment regarding the royalty terms, it is encouraging that the company is fulfilling its commitment to the market to continuously expand its global partner network.” She added, “There is also the potential for ALT-B4 to be utilized in the development of a high-dose subcutaneous (SC) formulation of the Alzheimer’s treatment LEQEMBI, which is expected to provide additional upside.”

Realizing Trillion-Won Technology Exports: “Real Revenue” Generated by Milestones and Their Prerequisites

While news of technology exports by domestic biotech companies floods the market every year, the total contract value is never directly reflected in the company’s revenue. The reality of trillion-won contracts is usually as follows: At the time of signing, the company receives only an upfront payment, which accounts for about 5–10% of the total. The remainder is paid out in installments as milestone payments at each stage, such as △completion of Phase 1 clinical trials △entry into Phase 2 △success in Phase 3 △submission of a marketing authorization application △final marketing authorization △achievement of commercial sales. In essence, these are conditional revenues that can only be received if pipeline development proceeds successfully. The speed and sufficiency with which these conditions are met determine the biotech company’s financial statements.

Leading with its proprietary antibody-drug conjugate (ADC) platform, ConjuAll, LigaChem Biosciences secured a total of 14 technology export agreements—at least one per year—over the six-year period from 2019 to 2024. Consolidated revenue in 2024 reached 1259억 원, a 269% surge from the previous year. The operating loss was 20.9 billion won, representing a significant reduction in the loss margin.

However, the situation changed last year. Aggressive research and development (R&D) investments caused R&D expenses to surge to 1957억 won—equivalent to 150% of revenue—resulting in an expanded operating loss of 1065억 won. New technology exports also totaled zero last year. However, LigaChem Biosciences explained that an opportunity to receive a milestone payment of $200 million (approximately 2600억 won) remains pending should Janssen exercise its option.

ABL Bio Inc. attracted market attention last November by securing a major technology export deal worth up to 9 trillion won with Sanofi for its cerebrovascular disease platform technology, leveraging its bispecific antibody platform. Consolidated revenue last year reached 79.3 billion won, a 137.6% surge compared to the previous year (33.4 billion won). The operating loss also narrowed by 32% to 40.4 billion won compared to the previous year (59.4 billion won).

AprilBio Co.,Ltd. posted surprise results in 2024—revenue of 27.5 billion won and operating profit of 16.8 billion won (operating profit margin of 61.3%)—driven by the technology transfer of its autoimmune disease protein platform. This is cited as an example of how a one-time milestone completely transformed a company’s annual financial statements.

However, last year, with no new royalty income, revenue plummeted to 2.2 billion won, and the company slipped into the red with an operating loss of 7.3 billion won. AprilBio Co.,Ltd. continues to pursue the development of its follow-up pipeline and technology transfers. However, to be considered a virtuous cycle model, establishing a self-sustaining pipeline that generates a steady stream of milestone payments is seen as a prerequisite.

The fact that these five companies are on different trajectories paradoxically highlights even more clearly what constitutes a true “big biotech” company. The conditions the capital market currently demands of biotech firms include sustainability, repeatable technology exports, and improved cash flow.

Indeed, the case of AprilBio Co.,Ltd.—which posted strong results in 2024 but saw its stock price plummet sharply last year—demonstrates that sustainability is just as important as the size of milestone payments. Similarly, with ABL Bio Inc.’s 9 trillion won contract, cash flows only materialize when conditions are met at each stage, making the speed of clinical success a key determinant of performance.

An official at a domestic biotech company stated, “While the total value of technology exports used to be the benchmark for market capitalization a few years ago, now investors first look at when and how much cash will be received from a contract, as well as whether there are follow-up contracts.” The official added, “The valuation gap between biotech companies that stay afloat by issuing shares and those that fund their R&D with their own earnings is likely to widen further in the future.”