Why Alteogen's Stock Price Remains Unfazed Despite 'Triple Positive Catalysts'

Waiting for J-code Effects and Undisclosed Contracts
First Milestone Payment and Third-Quarter Conversion Rate Will Be Key

Although Alteogen has announced a series of 'major favorable events,' including a large-scale technology transfer agreement, the market reaction has remained relatively subdued. While some anticipated the possibility of an upper limit rise in stock price, Alteogen's shares closed at 277,000 won on the 5th, up just 3.75% from the previous trading day. This tepid response has been attributed to a mix of factors, including a surge in Qurex sales and the effects of the unique J-code granted by U.S. insurance in April, as well as the difficulty in assessing the practical benefits of the new contract due to undisclosed counterparties and indications.

On August 4 (local time), Alteogen's partner, U.S.-based Merck (MSD), announced that the second-quarter sales of Keytruda Qurex, which utilizes Alteogen’s subcutaneous (SC) formulation conversion platform 'ALT-B4,' soared to $463 million (approximately 659.8 billion won), marking a 262% increase from the previous quarter. This figure is 64% higher than Wall Street’s consensus estimate of $283 million (about 403.3 billion won).

Some analysts have suggested that much of this growth is attributable to the unique J-code granted in the U.S. last April, which has streamlined the insurance claim process and lowered the barrier to prescription entry. As a result, pure prescription growth is expected to become clearer only from the third quarter onward.

The conversion rate is still at an early stage. Qurex currently accounts for a little over 5% of the total Keytruda sales, which falls short of MSD's goal of reaching 30-40% by 2028. MSD is pursuing a strategy to shift patients to the SC formulation ahead of the expiration of the U.S. substance patent for Keytruda in 2028, before the entry of biosimilars. The rate of conversion is directly linked to the timing of Alteogen's receipt of sales milestone payments.

The technology transfer agreement announced on the same day is the third one this year. However, as both the counterparty and indications have not been disclosed, it is difficult to estimate the expected sales and royalty scale from this product. The proportion of upfront payments within the total contract amount also remains unknown.

The deal structure, which ties contract size to the number of items involved, has also been cited as a limiting factor for expectations. An Alteogen representative explained, "The value of recent deals is about $300 million per item. For example, the contract with GSK in January involved one item and amounted to $285 million (around 406.1 billion won), while the contract with Biogen in March involved two items and increased proportionally to $578 million (about 923.7 billion won)." The representative added, "Some of the deals being discussed in the second half of the year involve companies looking to contract for multiple items at once, which could lead to a proportional increase in scale."

The stock split due to the free capital increase carried out today has also been evaluated as unrelated to the company's intrinsic value. A free capital increase involves issuing new shares by transferring additional paid-in capital or retained earnings to capital stock, which increases the number of shares but does not affect the company’s net asset value—and therefore does not directly impact corporate value itself.

The market now considers receiving the first sales milestone for Keytruda SC as a prerequisite for any meaningful rebound. Alteogen will receive up to $1 billion (about 1.4251 trillion won) in sales milestones in stages based on annual and cumulative sales performance. Once all milestones are met, Alteogen will also receive 2% of net sales as royalties.

This content was produced with the assistance of AI translation services.