Alteogen Secures 4-6% Royalty Rate in Biogen SC Formulation Deal

Overturning the "2% Royalty Controversy" of Keytruda SC

Alteogen will receive royalties in the range of 4% to 6% of net sales from the subcutaneous (SC) formulation conversion technology license agreement signed with Biogen in the United States. This is seen as a return to normalcy, compared to the market disappointment when the royalty rate for the Keytruda SC formulation deal with Merck (MSD) was revealed to be in the 2% range.

Alteogen Corporate Logo Image. Alteogen

According to Biogen's first quarter report (10-Q) submitted to the U.S. Securities and Exchange Commission (SEC) on May 4, the agreement between the two companies includes a clause allowing Alteogen to receive stepwise royalties at a mid-single-digit percentage of combination product net sales. Typically, 'mid-single-digit' is interpreted as 4% to 6% annually.

An Alteogen official stated, "The Keytruda SC agreement with Merck was an exceptional case due to the large milestone payments involved," and added, "For future agreements, we expect to receive royalties in the 4% to 6% range."

In March this year, Biogen and Alteogen signed an exclusive license agreement to develop a subcutaneous formulation of the anti-CD38 antibody felzartamab using Alteogen's hyaluronidase platform 'ALT-B4.' The upfront payment for the deal was $20 million (approximately KRW 29.4 billion), which Biogen recognized as an expense in its first quarter accounting and fully paid out in April. The maximum milestone payments for development, approval, and commercialization are $39 million, $80 million, and $430 million, respectively, making the total potential contract value up to $579 million.

Felzartamab is a monoclonal antibody targeting CD38 expressed on plasma cells. Its mechanism involves eliminating plasma cells that produce autoantibodies, and it is being developed for indications such as antibody-mediated rejection (AMR), IgA nephropathy (IgAN), and primary membranous nephropathy (PMN), which are renal immune diseases. In July 2024, Biogen secured its pipeline by acquiring Human Immunology Biosciences (HI-Bio). The company classifies felzartamab as a core growth pipeline asset, alongside Skyclarys (ingredient: omaveloxolone), a rare disease treatment, and Spinraza (ingredient: nusinersen).

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