[Edaily Reporter Shin Ha-yeon ] On the 13th, NH INVESTMENT & SECURITIES projected that Yuhan(000100)’s third-quarter earnings this year would exceed market expectations. However, the firm assessed that a sustained rebound in the stock price would require growth in royalties from the new lung cancer drug Lazertinib (U.S. brand names Lecraza and Razcluz) as well as successful global technology exports of follow-on new drugs. It maintained its “Buy” investment rating and a target price of 110,000 won.

Han Seung-yeon, an analyst at NH INVESTMENT & SECURITIES, noted, “The stock’s year-to-date return has been a disappointing minus (-) 35%,” adding, “Although the stock rebounded in July and August—a period when pharmaceutical companies were in the spotlight as defensive stocks—as the company demonstrated a strong commitment to boosting its share price, it fell again starting in September as the sector lost investor favor.”

Han identified three conditions necessary for a sustained rebound in Yuhan Corporation’s stock price: a renewed interest in the pharmaceutical sector as a whole, an expansion of royalty revenue from Lazertinib, and tangible results from next-generation new drugs. In particular, the analysis identifies the global expansion of Lazertinib prescriptions and the recognition of milestone payments (stage-based royalties) in 2027 as key variables.

Yuhan Corporation’s third-quarter consolidated revenue is estimated at 618.3 billion won, an 8.5% increase year-over-year, while operating profit is projected to rise 62.2% to 35.7 billion won. The operating profit margin is expected to improve by 1.9 percentage points year-over-year to 5.8%. Operating profit is approximately 20% higher than the market consensus of 29.8 billion won.

The improvement in earnings is expected to be driven by the high-margin overseas and pharmaceuticals divisions. Third-quarter revenue from the overseas division is estimated at 137 billion won, up approximately 2% year-over-year, while revenue from the pharmaceuticals division is estimated at 379.7 billion won, up 6%.

However, the company maintained its previous forecast for Lazertinib royalty revenue, which is a key factor for the stock price. Third-quarter royalties are expected to reach 10.6 billion won, continuing the upward trend from 5.4 billion won in the first quarter and 7.0 billion won in the second quarter.

An analyst explained, “We are maintaining our previous forecast of 10.6 billion won for quarterly royalty revenue from Lazcluze, which is key to the stock price,” adding, “Based on Bloomberg’s monthly prescription data, no significant change in the growth rate trend has been observed yet.”

The pace of global sales and prescription growth for Lazertinib is expected to be confirmed in detail through Johnson & Johnson’s (JNJ) earnings report. NH INVESTMENT & SECURITIES estimated that global sales of Lazertinib will reach $280 million this year and increase to $866 million next year.

Recently released clinical data is positive. In the Paloma-2 Phase 2 clinical trial presented last September at the World Conference on Lung Cancer (WCLC), the combination therapy of Lazertinib and Libravant subcutaneous (SC) injection demonstrated an objective response rate (ORR) of 90% and a median progression-free survival (mPFS) of 26.1 months. The 3-year overall survival (OS) rate was 70%, higher than the 60% observed in the previous Mariposa clinical trial.

Improved safety results were also observed. In the COPERNICUS trial, the application of prophylactic measures for adverse effects in the combination therapy with subcutaneous (SC) Librivant reduced the incidence of rash to 25%, lower than the 55% observed in the previous Mariposa trial. The incidence of venous thromboembolism (VTE) also decreased from 23% to 3%.

One researcher commented on these results, stating, “This demonstrates superior safety compared to Mariposa and provides a basis for expanding actual prescribing.”

Additional clinical results are scheduled to be presented at the European Society for Medical Oncology (ESMO) Congress, taking place from the 23rd to the 27th of this month. Johnson & Johnson plans to deliver a fast-track oral presentation on the results of the COCCCON Phase 2 clinical trial, which evaluated improvements in skin toxicity with the LibriVant subcutaneous injection combination therapy.

However, analysts note that the most critical factor in the medium to long term is the confirmed median overall survival (mOS) data from the Mariposa trial, which is expected to be released in 2027. If this data supports a survival benefit over competing treatments, it could serve as crucial evidence for expanding global prescriptions and increasing royalty revenues.

The global technology export of its next-generation pipeline was also cited as a condition for a stock price rebound. Analysts note that a successful global technology export of the allergy treatment candidate Resigercept (YH35324) is necessary.

Meanwhile, Yuhan Corporation’s consolidated revenue for this year is projected at 2.4057 trillion won, with operating profit at 157.7 billion won. These figures represent year-over-year increases of 10.0% and 51.1%, respectively. For next year, the firm forecasts that growth will accelerate, with revenue reaching 2.7803 trillion won and operating profit reaching 312.7 billion won.