Can Investor Sentiment in Bio Stocks Revive in Q2 After Samchundang's Impact? [Weekend Money]

Although bio stocks showed weak performance in the first quarter of this year, there is momentum building for a recovery in the second quarter, raising attention on whether stock prices will rebound.

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According to NH Investment & Securities on April 18, the share prices of the healthcare sector underperformed the index in the first quarter. While the KOSPI rose 39%, KOSPI pharmaceutical stocks fell by 3%. During the same period, the KOSDAQ gained 20%, but KOSDAQ pharmaceutical stocks increased by only 2%.

This sluggishness is attributed to credibility issues involving leading KOSDAQ stocks. Researcher Han Seung-yeon at NH Investment & Securities explained, "In the KOSDAQ biotech space, whenever a leading stock steps back, it is common for a new stock with momentum to take its place. For example, when Celltrion Healthcare, the leading KOSDAQ stock from 2020 to 2023, was merged and dissolved, Alteogen took the top spot in 2024 after announcing a revised contract with MSD (Merck). When Alteogen's share price plummeted early this year due to royalty issues, Samchundang Pharm rose to the number one position in KOSDAQ after disclosing its S-PASS (oral formulation conversion technology) contract." She added, "However, business and clinical strategy issues, as well as patent concerns, have been raised, and the repeated credibility damage among leading stocks in the first quarter has frozen investor sentiment in the sector."

For a recovery in bio investment sentiment, strong sector-wide momentum is essential. Major technology licensing-out deals and academic conference data are expected to provide this momentum. Han commented, "Traditionally, the second quarter is the peak season for the pharmaceutical and biotech sectors, making a rebound possible through the realization of these two types of momentum. Companies expected to secure large-scale technology licensing-out deals-worth trillions of won-in the second and third quarters include LigChemBio and Hanmi Pharm, with additional potential for key biotechs such as Alteogen, OliX, Qurient, ABL Bio, HK Inno.N, and Tiombio."

Additionally, the annual meeting of the American Association for Cancer Research (AACR) will begin this weekend. Han said, "AACR, traditionally a preclinical and early-phase cancer conference, was not previously considered highly significant. However, this year, key data from major domestic biotechs will be released, making it a highly important conference that could drive a sector rebound depending on the data outcomes." She added, "The conference is scheduled for April 17-22 local time, and clinical abstract data will be announced at dawn on Saturday, Korean time."

Particularly noteworthy clinical data are expected from Algenomics and HLB Innovation. Han said, "Algenomics (RNA editing) and HLB Innovation (solid tumor CAR-T) will both present proof-of-concept for their platform technologies (demonstrating efficacy and safety), with both scheduled for oral presentations at AACR."

In addition, the European Association for the Study of the Liver (EASL), the American Society of Clinical Oncology (ASCO), and the American Diabetes Association (ADA) meetings are also scheduled for May.

EASL is a major global liver disease conference, along with the American Association for the Study of Liver Diseases (AASLD) held in November. Scheduled for May 27-30, attention should be paid to the release of global data on metabolic dysfunction-associated steatohepatitis (MASH). Han pointed out, "Although the titles for the latest late-breaking abstracts have not yet been released, there are expectations for the announcement of phase 2 MASH data for Hanmi Pharm (in partnership with MSD-efinopegdutide) and D&D Pharmatech (DD01)."

ASCO is the world's largest oncology conference, noted for the release of late-stage clinical data that can change the global standard of care. This year's event is scheduled for May 29 to June 2. Han said, "The titles of the abstracts will be announced next Tuesday night, and a preview of the key clinical trials to be presented at ASCO will be available. From a domestic perspective, companies to watch for ASCO presentations are Yuhan Corporation (MARIPOSA OS) and LigChemBio (ROR1 ADC)."

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