[Into the Stocks] Hanmi Pharm Unable to Smile Despite 'Earnings Surprise'

Operating Profit Soars 160%
But Burden of Compensation Ruling for Delayed Disclosure

[Asia Economy Reporter Ji Yeon-jin] Hanmi Pharmaceutical is the first stock in the domestic market to achieve a "blockbuster new drug." Hanmi Pharmaceutical's stock price soared as it licensed its self-developed new drug candidates to global pharmaceutical companies for billions of won, once even dreaming of becoming a royal stock. However, the stock price plummeted due to loss of investor trust after the delayed disclosure of the termination of the licensing contract. Since then, despite successive new licensing deals and a quantum jump in performance, the stock price has barely moved. Recently, attention has focused on the future stock price trend as the Supreme Court issued a final ruling on the delayed disclosure of adverse news, which had held back the stock price and led to a damages lawsuit.

According to the Financial Supervisory Service's electronic disclosure system on the 3rd, Hanmi Pharmaceutical announced surprise earnings on the 27th of last month. Last year's consolidated sales increased by 12.1% to 1.206 trillion won, operating profit surged 160.1% to 127.3 billion won, and net profit rose 368.9% to 81 billion won. This exceeded market expectations by more than 30%. The technology fee income of 22.7 billion won included 21.9 billion won from the licensing of the leukemia treatment drug (HM43239) to the U.S. pharmaceutical company Aptose in Q4 last year, and the growth of Beijing Hanmi Pharmaceutical contributed to the strong performance.

Coincidentally, on the same day, the Supreme Court confirmed a partial victory for 125 minority shareholders who filed a damages lawsuit claiming they suffered losses due to Hanmi Pharmaceutical's delayed disclosure of adverse news. The ruling was based on the fact that after Hanmi Pharmaceutical announced on September 29, 2016, after the stock market closed, that it had licensed a 1 trillion won-class anticancer drug technology to a global pharmaceutical company, it disclosed the next day that another licensing contract worth 850 billion won was canceled, which caused the stock price to drop more than 18% in one day, leading to a sharp decline.

This Supreme Court ruling is the first case recognizing liability for damages due to delayed disclosure by a listed company and is expected to influence other ongoing damages lawsuits filed by Hanmi Pharmaceutical minority shareholders with similar claims. Currently, lawsuits filed by 199 and 44 Hanmi Pharmaceutical minority shareholders are in progress. There is also a possibility of new damages lawsuits. Attorney Yoon Je-seon of Law Firm Changcheon, who is handling this case, said, "Victims who did not participate in the lawsuit are also planning to file new lawsuits."

Hanmi Pharmaceutical's stock price is currently supported by strong earnings. On the 27th of last month, when the domestic stock market plunged, Hanmi Pharmaceutical fell to 232,500 won, hitting a 52-week low again. However, it rebounded 6% the next day thanks to last year's strong earnings and recorded a 3% increase as of 10 a.m. that day. Researcher Lee Dong-geon of Shinhan Investment Corp. analyzed, "This year, a stock price revaluation based on R&D achievements is expected."

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