[Click eStock] Yuhan Corporation "Expecting Success Potential for Global New Drugs"

[Asia Economy Reporter Lee Seon-ae] Kiwoom Securities raised the target price for Yuhan Corporation to 99,000 KRW on the 20th, citing expectations for the success potential of its global new drug.

On the 18th, Yuhan Corporation received conditional approval from the Ministry of Food and Drug Safety for the Phase 3 trial of "Reclaza (Lazertinib)" for patients with advanced lung cancer harboring the EGFR T790M mutation who have previously been treated with the targeted therapy "EGFR-TKI." Tagrisso, a drug with the same mechanism, recorded domestic sales of approximately 100 billion KRW (+26%) in 2020 and global sales of $4.3 billion (about 4.7 trillion KRW, +35%). It is estimated to reach $8.4 billion (about 9.2 trillion KRW) by 2025. Reclaza is expected to generate about 10 billion KRW in sales starting from the second half of this year as it is the first year of its launch. Considering future approval as a first-line treatment and the anticipated success of combination clinical trials with Amivantamab (expected in 2023), domestic sales could potentially exceed 100 billion KRW.

At the recent JP Morgan Healthcare conference, J&J announced that the combination of its bispecific antibody new drug Amivantamab (EGFR/cMet) and Lazertinib is expected to be more effective in non-small cell lung cancer. Having obtained conditional approval from the Korean MFDS, the likelihood of global new drug success has increased, and it is anticipated to become the first global blockbuster drug among domestically licensed new drugs.

Fourth-quarter sales are expected to be 445.2 billion KRW (+13%) and operating profit 36.9 billion KRW (+333%), generally in line with market consensus.

Kiwoom Securities analyst Heo Hye-min stated, “Although operating profit may fall short of the 2020 level due to a decrease in expected milestones in 2021 (65.3 billion KRW) compared to milestone inflows in 2020 (about 41.5 billion KRW), this is already recognized by the market,” adding, “With the domestic launch of Lazertinib this year and growth of existing high-margin improved new drugs, an improvement in the ETC (+11%) product mix is expected, and synergy with Amivantamab in combination therapy is anticipated, leading to the upward revision of the target price.”