Daewoong Pharmaceutical, COVID-19 Oral Treatment as a 'Bonus'... Growth Trajectory

Repurposing Pancreatitis Treatments... High Commercialization Potential
Global Bestsellers Like Nabota and Pexuprazan
New Drug Pipeline Expected for Dry Eye Syndrome and Diabetes Therapies

COVID-19 variant viruses, including Delta and Omicron, are once again threatening daily life. Although vaccination rates are rising day by day, breakthrough infections are increasing, leading to an explosive rise in confirmed cases. In this situation, stock investors' attention has shifted to companies developing oral antiviral treatments in pill form. This shift was influenced by investors’ experience seeing the stock prices of companies involved in vaccine development, manufacturing, and distribution rise faster than the speed of vaccine rollout. Among domestic companies, Daewoong Pharmaceutical, Ildong Pharmaceutical, Hyundai Bio, Shinpoong Pharmaceutical, and Korea BNC are considered representative firms. However, the situation changed as oral antiviral treatments developed by U.S. companies Pfizer (Paxlovid) and Merck (Molnupiravir) received consecutive approvals from the U.S. Food and Drug Administration (FDA). Domestic companies, still in clinical stages, suddenly became latecomers. Uncertainties about clinical success and unfavorable market conditions as late entrants emerged as risk factors. Amid expectations and concerns about domestic pharmaceutical companies, Asia Economy analyzed the business and financial status of Daewoong Pharmaceutical and Ildong Pharmaceutical, which are progressing rapidly in oral antiviral clinical trials, to gauge their growth potential.

COVID-19 treatments under development in Korea. Daewoong Pharmaceutical's Hoistar tablets, Shinpung Pharmaceutical's Piramex tablets, Chong Kun Dang's Napabeltan injection. Photo by Lee Chunhee.

[Asia Economy Reporter Lim Jeong-su] Daewoong Pharmaceutical, widely known to the public for 'Urusa,' has recently attracted attention as a developer of oral COVID-19 treatments. It is evaluated as the fastest developing domestic company with a high possibility of product commercialization. In addition to COVID-19 treatments, sales of the wrinkle-improving botulinum toxin product 'Nabota' and the gastroesophageal reflux disease treatment 'Pexuprazan' are increasing, and sales and profitability improvements are expected to accelerate next year.

Phase 3 Clinical Oral COVID-19 Treatment Likely to be Commercialized Next Year

Daewoong Pharmaceutical is developing 'DWJ1248' (tentatively named Coviblock), an oral COVID-19 treatment, from 'Hoistar tablets' (active ingredient camostat mesylate), originally a pancreatitis treatment. It is the first domestic oral treatment developed using drug repositioning. Drug repositioning is a new drug development method that changes the use of existing drugs used for other diseases to create new applications.

Daewoong Pharmaceutical was conducting a phase 3 clinical trial to evaluate the preventive effect of DWJ1248 against COVID-19 but declared on the 8th that it would discontinue the trial due to difficulties recruiting unvaccinated subjects amid rising domestic COVID-19 vaccination rates. Currently, two clinical trials evaluating treatment effects on mild to moderate and severe patients are ongoing.

An industry insider said, "The oral COVID-19 treatment developed by Daewoong Pharmaceutical has already been used as a pancreatitis treatment, so its safety has been proven. The clinical stages evaluating treatment effects on mild to moderate and severe patients are in the final stages, making it considerably faster than other pharmaceutical companies, and commercialization is highly likely soon."

Sales of Nabota and Pexuprazan Accelerate... Driving Performance Growth

Besides COVID-19 treatments, Daewoong Pharmaceutical is evaluated to have sufficient growth drivers for sales and profit.

One of the flagship products, Nabota, is rapidly increasing overseas sales, mainly through exports to the United States. Securities analysts expect Nabota’s single-item sales this year to reach 80 billion KRW, up 30 billion KRW from 50 billion KRW last year. Sales growth is expected to accelerate with the European launch next year. Adding European sales to U.S. exports, Nabota’s sales are likely to exceed 100 billion KRW next year. The China business is also expected to become more visible next year, including selecting a sales partner in China.

The gastroesophageal reflux disease treatment Pexuprazan is another growth driver for next year. Daewoong Pharmaceutical has signed technology export contracts for Pexuprazan with the U.S. and China and plans to launch it domestically by the second quarter of next year. Cape Investment & Securities researcher Oh Seung-taek predicted, "Pexuprazan has advantages over existing treatments, such as faster efficacy and blocking excessive nighttime gastric acid secretion, so sales are expected to grow rapidly upon launch."

As sales of Nabota and Pexuprazan increase, profitability improvement is also expected to accelerate. Both products have low cost ratios, so profitability improves significantly as sales grow. The securities industry forecasts operating profit margins for Nabota and Pexuprazan to exceed 50% and 30%, respectively, supported by increased sales next year. Additionally, litigation costs related to Nabota will significantly decrease as lawsuits are settled.

Extensive New Drug Pipeline

In addition to COVID-19 treatment development, Daewoong Pharmaceutical possesses several new drug development pipelines. In the third quarter of next year, a topline (key indicator) announcement is scheduled for the phase 3-2 clinical trial of an eye dryness treatment jointly developed with HanAll Biopharma. Also, the diabetes treatment 'Inavogliflozin' is undergoing clinical trials aiming for phase 3 completion in the first half of next year and domestic launch in 2023.

Daewoong Pharmaceutical’s performance consensus has also taken a steep upward trajectory. The securities industry forecasts Daewoong Pharmaceutical’s consolidated annual sales and operating profit this year at 1.12 trillion KRW and 82.7 billion KRW, respectively. Sales are expected to increase by 64.6 billion KRW and operating profit by 65.7 billion KRW compared to last year. An industry insider said, "Considering the performance trends of key products, the improvement trend is expected to continue through 2023."

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