Alteogen Expected to Benefit from Expanded Technology Fees as Global Pharma Companies Switch to Subcutaneous Injections

[Financial News] IBK Securities initiated a Buy rating on Alteogen on the 21st, with a target price of KRW 400,000, saying the company is expected to benefit as global pharmaceutical companies switch to subcutaneous (SC) formulations.
Jeong Yi-su, a researcher at IBK Securities, explained, "Demand for technologies that convert major biologic drugs to SC formulations is expected to grow ahead of patent expirations. Originator pharmaceutical companies are working to secure products with greater administration convenience in preparation for the entry of biosimilars."
Alteogen's core technology, ALT-B4, is an enzyme that facilitates the subcutaneous absorption of high-volume drugs. It is used to convert intravenous drugs into SC formulations. Its U.S. composition patent remains in force until early 2043. Jeong forecast, "As some of competitor Halozyme's key U.S. patents related to its enzyme expire in 2027, pharmaceutical companies seeking long-term patent protection are expected to continue adopting the technology."
Growth in earnings is expected to be led by Merck Sharp & Dohme (MSD)'s SC product KEYTRUDA QLEX. Revenue from KEYTRUDA QLEX reached $463 million in the second quarter of this year, up 262% from the previous quarter. It accounted for 5.5% of total KEYTRUDA revenue. MSD plans to convert 30% to 40% of KEYTRUDA prescriptions in the United States to SC formulations by the end of 2027.
IBK Securities estimated that Alteogen will receive a total of $1 billion in KEYTRUDA-related sales milestones from this year through 2028. The estimated amounts by year are $200 million this year, $350 million in 2027, and $450 million in 2028. Sales-linked royalties are expected to ramp up from 2029. Royalty revenue in 2030 was estimated at approximately $460 million, assuming an SC conversion rate of 65% and a royalty rate of 2%.
Jeong explained, "If positive results emerge from a Phase 1 clinical trial of an SC formulation of Enhertu using ALT-B4, technology licensing could expand to other ADC treatments. The agreement worth up to approximately $3.2 billion signed with Novartis this month also demonstrates that the scope of ALT-B4's applications is expanding."
[email protected] Choi Do-seon Reporter