[Edaily Reporter Park Jung-Soo ] On the 8th, Hana Securities projected that Alteogen Inc.(196170)would continue to see earnings growth through the fourth quarter of this year, following a large-scale technology transfer agreement with Novartis. The firm maintained its “Buy” rating but lowered the target price by 22.4% from the previous 580,000 won to 450,000 won. However, the firm explained that the target price reduction reflects a stock split and does not indicate a change in the company’s intrinsic value. The previous day’s closing price was 286,000 won.
Kim Seon-ah, an analyst at Hana Securities, stated, “As expectations for high interest rates and a liquidity-driven market have faded, the biotech sector as a whole is now focusing on the actual pace and timing of cash inflows.” She added, “Alteogen Inc. is expected to see earnings growth through the fourth quarter, as it has scheduled technology transfer upfront payments, sales milestones for Qlex (a subcutaneous formulation of Keytruda), and development milestones from existing partnerships in the second half of the year.”
On the 2nd, Alteogen Inc. signed a technology transfer agreement with Novartis totaling $3.233 billion (approximately 4.4165 trillion won), including upfront payments and milestones. Royalties are separate. Hana Securities estimated that, considering recent agreements were valued at $285 million to $365 million per product, this agreement likely covers approximately 10 to 11 products, valued at $294 million to $322 million per product.
The firm analyzed that the limited market reaction to this large-scale deal stemmed from uncertainty regarding the timing of cash inflows. Given the administration methods of Novartis’ major blockbuster products, it is highly likely that most of the 10 to 11 products covered by the agreement are in the clinical development pipeline; therefore, the firm believes it is difficult to expect cash inflows as rapid as those from the Keytruda or Imfinzi deals.
However, in the medium to long term, analysts predicted that this agreement would have a positive impact on both earnings and the stock price. The analysis suggests that, since Novartis possesses a late-stage clinical pipeline spanning various modalities—including antibodies, antibody-drug conjugates (ADCs), and antibody-oligonucleotide conjugates (AOCs)—it is highly likely to exercise at least one option annually. Consequently, milestones related to option exercises and clinical successes are expected to occur on an ongoing basis.
In particular, Hana Securities estimated that AOCs were included in this Novartis agreement. This is because three of the key candidate compounds for which Novartis plans to file for approval within the next three years are AOCs, and all of them require a change in administration route from intravenous (IV) to subcutaneous (SC). Among these, “del-zota,” a treatment for Duchenne muscular dystrophy (DMD), has completed Phase 2 clinical trials and filed for accelerated approval with the U.S. Food and Drug Administration (FDA); its launch is expected in the first half of 2027.
Earnings growth is also expected to accelerate. Hana Securities estimates that Alteogen Inc.’s revenue this year will reach 580.7 billion won, a 169% increase year-over-year, while operating profit will rise 244% to 368.2 billion won. For 2027, the firm forecasts revenue of 829.5 billion won and operating profit of 494.9 billion won.
In particular, the firm estimated service revenue for the third and fourth quarters at 171.8 billion won and 191.0 billion won, respectively. For the third quarter, the firm expects to see the impact of a milestone payment for reaching $1 billion in Qlex sales, the initiation of the Phase 1 clinical trial for Dupixent SC, and an upfront payment from a confidential technology transfer agreement signed last month. For the fourth quarter, it anticipates a milestone payment for reaching $3 billion in Qlex sales, an upfront payment from Novartis for a technology transfer, the initiation of the Phase 1 clinical trial by Sandoz, and milestones related to FDA approval for Intas.
Analyst Kim noted, “Qlex is now just one of several products,” adding, “By 2030, three or more products—including Imfinzi and Dupixent—will already be on the market, and three additional products are expected to launch in 2031.”