[Edaily Reporter Kim Jinsoo ] GCGreen Cross Corporation(006280)has continued its downward trend since announcing the sale of its stake in Curevo. Although the stock price has rebounded slightly over the past few days, analysts say it still lacks upward momentum. Consequently, securing the next pipeline and growth drivers are expected to be key factors in driving the stock price higher.

Is the Lack of “Future Growth Drivers” Behind the Stock Price Decline?

Late last month, GC Biopharma Corp. announced the sale of its U.S.-based vaccine subsidiary, Curevo, to global pharmaceutical company Eli Lilly, in a deal valued at a total of $303.92 million (approximately 459.9 billion won). This is viewed as a positive development for GC Biopharma Corp., as it will secure nearly 460 billion won in cash over the medium to long term.

However, GC Biopharma Corp.’s stock price fell from 150,200 won on May 27—the day the sale was announced—to 142,700 won on May 28, the day after the announcement. The stock continued to decline through June 12, closing at 126,400 won on that day. This represents a drop of approximately 18% since the sale announcement, bringing the price close to its 52-week low.

Analysts attribute the decline in GC Biopharma Corp.’s stock price to concerns regarding its R&D pipeline and growth drivers. First, CRV-101 (amezosvatine), the shingles vaccine pipeline previously held by Curevo, was expected to be a key driver of GC Biopharma Corp.’s next-generation growth; however, the rights to this pipeline were transferred to Lilly under this agreement.

In particular, CRV-101 was a highly valuable asset that had demonstrated non-inferior immunogenicity in a head-to-head comparison with GlaxoSmithKline’s (GSK) Shingrix during Phase 2 clinical trials. Furthermore, its value had recently increased as a series of studies were published suggesting that shingles vaccines may reduce the risk of dementia.

Apart from CRV-101, there are concerns that GC Biopharma Corp.’s in-house new drug pipeline is somewhat insufficient to drive future growth. GC Biopharma Corp. primarily holds a pipeline of new drugs related to immunology, vaccines, and rare diseases. Excluding clinical trials aimed at expanding the indications of existing approved products, GC Biopharma Corp. has no late-stage clinical candidates in its new drug pipeline with future value.

Specifically, within the immunology pipeline, GC5107D is being studied to expand the indications for Aliglo to include pediatric immunodeficiency, while MG1111C and MG1111D are understood to be clinical trials for the dosage and administration of the varicella vaccine, Varicella. Regarding GC1138A, which is being developed as a treatment for the rare disease Glanzmann’s thrombasthenia, the company announced plans to begin Phase 3 clinical trials in 2024. However, it has been confirmed that no separate clinical trials are currently underway.

As for GC3111B, which is being developed as a tetanus, diphtheria, and pertussis (Tdap) vaccine, the company must secure competitiveness as a latecomer, given that GSK’s Boostrix and Sanofi’s Adacel already dominate the market.

A GC Biopharma Corp. official stated, “MG1111C is a research-stage clinical trial aimed at conducting additional studies on safety and immunogenicity in 4- to 6-year-olds who have received their first dose of the varicella vaccine,” adding, “We are currently reviewing the development strategy for GC1138A.”

GC Biopharma Corp.’s investment in research and development is also understood to be very limited. As of last year, GC Biopharma Corp. invested 17.187 billion won in R&D. This amounts to just 8.6% of total revenue. As of the first quarter of this year, GC Biopharma Corp.’s R&D expenditure stood at 4.145 billion won, representing 9.5% of revenue.

This makes the company relatively passive in R&D compared to the traditional “Big 5” pharmaceutical firms— HanmiPharm(128940), and Yuhan(000100) —which, excluding GC Biopharma Corp., all allocate double-digit percentages of their total revenue to R&D. It is projected that greater investment in R&D will be necessary for future stock price growth.

Furthermore, although a contract totaling 4599억 won was signed in connection with this equity sale, the fact that the company did not secure the entire amount at once is also believed to have contributed to the decline in its stock price. Of the 4599억 won contract amount, the advance payment is reported to be 2억 261만 달러 (3066억 won), accounting for two-thirds of the total, while the remaining one-third—approximately 1억 8811만 달러 (1533억 won)—is tied to milestones related to product development and sales. This implies that there are risks associated with the success of clinical trials and sales.

Securing a ‘Post-Aliglo’ Successor Is Key

Currently, GC Biopharma Corp. is focused on sales of Aliglo, an immunoglobulin blood product; however, the lack of a clear major pipeline to succeed Aliglo has been cited as a weakness. Consequently, securing the next growth engine is expected to be the key driver for future growth in GC Biopharma Corp.’s stock price.

GC Biopharma Corp. plans to actively utilize the funds secured through this round to expand its research and development efforts. In particular, the company intends to accelerate R&D on compounds currently in the preclinical or early clinical stages to enhance their value.

A GC Biopharma Corp. official stated, “To strengthen our R&D capabilities, we plan to focus on accelerating clinical trials for our in-house pipeline, including GC1134A—which is being developed as a treatment for Fabry disease—and messenger RNA (mRNA) vaccines.”