[Edaily Reporter Shin Ha-yeon ] On the 4th, Hana Securities projected that Alteogen Inc.(196170)’s annual operating profit would exceed 300 billion won this year, driven by sales growth of “Qlex,” a subcutaneous (SC) formulation of Keytruda. However, the firm lowered its target price from 450,000 won to 410,000 won to reflect the decline in valuations of comparable companies. It maintained its “Buy” investment rating.

Kim Seon-ah, an analyst at Hana Securities, stated in a report released today, “The company’s earnings and outlook clearly demonstrate a growth trend,” analyzing that the rapid expansion of Qlex sales is driving earnings improvement.

Alteogen Inc.’s consolidated revenue for the third quarter of this year was 119.8 billion won, up 144% year-over-year and 74% quarter-over-quarter. Operating profit reached 78.9 billion won, with an operating profit margin of 65.9%. Compared to market consensus, these results were a positive surprise, with revenue exceeding expectations by 4% and operating profit by 5%.

However, net income came in at 43 billion won, falling 28% short of market expectations. Analysts attribute this to valuation losses on derivatives, as well as foreign currency translation losses and foreign exchange losses resulting from a weakening exchange rate.

The key driver of the improved performance is revenue growth from Qurex. Qurex’s third-quarter revenue increased by 79.3% compared to the previous quarter, and its share of total Keytruda revenue expanded by 3.8 percentage points to 9.7%. Consequently, it is estimated that Alteogen Inc. received a sales milestone payment from Merck (MSD) in the U.S. this quarter as well. Hana Securities estimates the amount at approximately $43.7 million.

Analyst Kim projected that Qurex’s share of total Keytruda sales this year would exceed 15%. Accordingly, he forecast that the sales milestone payment from MSD in the fourth quarter would also exceed $50 million.

Reflecting this, the estimated operating profit for the fourth quarter is 152.6 billion won, an increase of approximately 93% compared to the previous quarter. Annual operating profit is projected to reach 305.0 billion won, up 185.3% from last year, with an operating margin of 66.7%. This year’s revenue forecast stands at 457.1 billion won.

Another key variable to watch is that the method for receiving sales milestones will change starting next year. Currently, under the contract with MSD, milestones are divided into two categories: those paid based on annual sales performance and those paid when cumulative sales exceed a certain threshold. If all annual sales milestone conditions are met this year, the company is expected to switch to a cumulative sales-based system starting next year.

Analyst Kim explained, “While the total amount will continue to increase on an annual basis, quarterly performance fluctuations may be more pronounced.”

Hana Securities projected that, as Qurex’s growth momentum continues, cumulative sales will exceed $25 billion by 2028. However, the firm cited the expiration of Keytruda’s patent term starting in 2029 and the possibility of drug price reductions as key variables. Accordingly, the earnings outlook may vary depending on whether the total $1 billion in contracted milestones is received in full during 2029 or 2030.

In the medium to long term, the commercialization of the pipeline beyond Keytruda is expected to serve as a new growth driver. Analyst Kim predicted, “With pipeline products such as Dupixent, Imfinzi, and Enhertu expected to be commercialized starting in 2031, royalty revenue from these products—including Keytruda—will underpin revenue.”

Meanwhile, the downward revision of the target price stems from a valuation adjustment rather than a deterioration in earnings outlook. Hana Securities maintained a 25% discount to fair enterprise value, considering Alteogen Inc.’s high dependence on its ALT-B4 technology. Additionally, as the valuation multiples of comparable companies declined, the applied EV/EBIT multiple was lowered from 39.2x to 33.7x.

Nevertheless, the new target price of 410,000 won represents an upside potential of approximately 92% compared to the closing price of 213,500 won on the 3rd.

Analyst Kim commented, “If there is a recovery in the stock index or an event that allows us to further raise our cash flow estimates for 2029, it is entirely possible that the target price could be raised again.”