[Click eStock] SK Biopharm, Target Price 120,000 Won 'Coverage Initiated'

[Asia Economy Reporter Lee Seon-ae] Hana Financial Investment announced on the 21st that it has initiated coverage on SK Biopharm with a buy rating and a target price of 120,000 KRW. The target price was calculated based on a DCF valuation.

SK Biopharm is expected to record sales of 239.8 billion KRW (-42.7% YoY) and an operating loss of 79.6 billion KRW (turning to deficit) this year. The deficit is anticipated due to the absence of one-time service revenue recognized last year. However, product sales including Xcopri's US sales are projected at 186.7 billion KRW (+109.3% YoY), and excluding approximately 120 billion KRW in ordinary development expenses, the company is expected to return to profitability starting this year.

Jae-young Park, a researcher at Hana Financial Investment, emphasized, "SK Biopharm is expected to become the first domestic company to start generating revenue from new drugs in the second half of 2023."

SK Biopharm's product sales have been steadily growing, recording 10.9 billion KRW in 2020 and 89.2 billion KRW in 2021. Xcopri is estimated to grow at an average annual rate of 30.8%, reaching about 1 trillion KRW in US sales by 2031. Epilepsy new drugs penetrate the market by being added to or replacing existing drugs for patients whose seizures are not sufficiently controlled by current treatments. Therefore, sales tend to increase linearly. Xcopri is steadily increasing its market share based on its advantage of a high seizure-free rate, and its growth speed is comparable to other epilepsy blockbuster drugs.

As a comprehensive pharmaceutical company capable of sales and marketing in the US market, SK Biopharm can engage in open innovation through late-stage candidate introductions and licensing agreements. If efficiency in the sales organization is enhanced through the introduction of late-stage central nervous system pipelines or improved drug licensing, a faster-than-expected return to profitability is possible.

SK Biopharm's next pipeline, carisbamate, entered Phase 3 clinical trials in February. Researcher Park stated, "If progress continues smoothly, clinical trials could conclude in 2024, with US launch possible in 2025." He also noted, "It is positive that Jazz's new drug Epidiolex, indicated for Lennox-Gastaut syndrome, has been performing well, recording sales of $460 million in 2021 after its approval in 2019."

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