"Why Is the Stock Falling Despite Such Strong Results?"... SK Biopharmaceuticals' 'Next Cenobamate' Put to the Test

Record Third-Quarter Revenue of 253.2 Billion Won
U.S. Rival Xenon Files for Approval of Competing Drug
SK Biopharmaceuticals’ Candidate to Counter Rival Drug Faces Clinical Hold

SK Biopharmaceuticals has been setting quarterly sales records with its epilepsy drug cenobamate (brand name Xcopri), which is on track to generate 800 billion won in U.S. sales this year. However, its share price has fallen nearly 40% since the start of the year. The decline is thought to reflect factors including a competing new drug with a different mechanism of action having been submitted for approval in the United States, and the U.S. Food and Drug Administration (FDA) having blocked a drug candidate that SK Biopharmaceuticals had planned to acquire in response. With the competing drug nearing launch and the development timeline for SK Biopharmaceuticals’ candidate now uncertain, the market is focusing on the company’s growth drivers beyond cenobamate.

According to industry sources on Oct. 21, cenobamate is expected to become eligible for coverage by South Korea’s National Health Insurance as early as November, raising expectations that its market share will grow further in both domestic and international epilepsy markets. In a report dated Oct. 19, Hana Securities estimated SK Biopharmaceuticals’ third-quarter revenue at 253.2 billion won and operating profit at 96.8 billion won. These figures represent increases of 32% and 38%, respectively, from the same period last year.

Despite the outlook for continued earnings growth, the share price has instead been declining. SK Biopharmaceuticals closed at 74,100 won on Oct. 20, down 39.7% from 122,900 won at the start of the year. Its market capitalization has fallen by about 3.8 trillion won this year to 5.803 trillion won. Analysts say concerns that no product is poised to follow cenobamate are being reflected in the share price, even as earnings continue to surge. Of the 247.4 billion won in consolidated revenue in the second quarter, U.S. sales of cenobamate accounted for 224.4 billion won, or 91%.

Meanwhile, a competing new drug has emerged in the United States. Canadian company Xenon Pharmaceuticals applied to the FDA last month for approval of azetukalner, a next-generation epilepsy drug with a different mechanism of action from cenobamate. In a Phase 3 trial in which nearly 60% of participants were patients who were taking or had previously taken cenobamate before discontinuing it, azetukalner reduced seizure frequency by more than half (53.2%). Last month, Xenon Chief Financial Officer Tucker Kelly said, “Cenobamate is essentially the only branded drug left in the U.S. epilepsy market,” and said the company would price azetukalner higher than cenobamate.

In August, SK Biopharmaceuticals agreed to acquire opakalim from U.S.-based Biohaven for up to $795 million (about 1.0549 trillion won) as a candidate to compete with azetukalner, but the deal has yet to be finalized nearly two months later. Like azetukalner, opakalim is designed to open potassium channels while reducing dizziness and drowsiness. Nine days after the agreement, the FDA halted enrollment of new patients in opakalim’s Phase 2 and Phase 3 trials. Abnormal findings were observed in toxicity studies in which rats were given a substance produced when opakalim breaks down in the body, known as a metabolite, and the FDA requested additional data to determine whether the same issue could occur in humans. SK Biopharmaceuticals has not yet paid the upfront fee and is discussing with Biohaven an arrangement under which it would pay and take over the rights after the clinical hold is lifted.

SK Biopharmaceuticals is working to expand the market for cenobamate while accelerating efforts to identify new growth areas. Earlier this month, it completed a Phase 3 trial of cenobamate in pediatric patients and began pursuing an expansion of the drug’s indications. Recently, it eliminated the chief technology officer (CTO) position that had overseen research and development, and reorganized its R&D division around leaders responsible for individual fields, including neuroscience, radiopharmaceuticals (RPT), and targeted protein degradation. In its core neuroscience field, the company recruited Kim Taeho, who led neuroscience R&D at Novartis for 12 years, to head a division reporting directly to the CEO. A SK Biopharmaceuticals representative said, “The reorganization is intended to build expertise in each field.”

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