[Click eStock] Celltrion Adjusted Amid Uncertainty... When Will the Rebound Come?

"Rapid Growth Last Year, This Year May Be Difficult... Must Rely on New Products"

[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] Despite expectations of solid performance in the fourth quarter of last year and no negative results from the global Phase 2 clinical trial of the COVID-19 antibody treatment, Celltrion's stock price is undergoing a correction. This is interpreted as uncertainty about entering the U.S. market leading to doubts about high growth.

On the 28th, Hana Financial Investment maintained its 'Buy' rating and target price of 364,000 KRW for Celltrion, citing this background. This is largely unchanged from the 363,000 KRW target price presented on August 10 last year. The closing price the previous day was 329,000 KRW.

First, the fourth-quarter performance of last year is expected to be favorable. Hana Financial Investment estimated that Celltrion would achieve consolidated sales of 504.4 billion KRW and operating profit of 210.6 billion KRW in the fourth quarter of last year, representing increases of approximately 32% and 84% respectively compared to the previous year. Minjung Seon, a researcher at Hana Financial Investment, explained, "As the unbalanced product mix in the previous quarter normalizes, the proportion of Remsima and Remsima SC, which were oversupplied in the third quarter, is expected to decrease, and the supply volume of Truxima is expected to normalize."

Celltrion's Humira biosimilar 'Yuflyma (CT-P17)', which received a positive opinion for marketing authorization from the Committee for Medicinal Products for Human Use (CHMP) under the European Medicines Agency (EMA) on December 10 last year, began production from the fourth quarter of last year and is being supplied to Celltrion Healthcare. However, due to the execution of research and development expenses for the global Phase 2 clinical trial of the COVID-19 antibody treatment 'Rekkirona', the increase rate of ordinary R&D expenses is estimated to remain at about 50 billion KRW, similar to the third quarter.

Even after the announcement of the Phase 2 clinical trial results of Rekkirona on the 13th, the stock price has not recovered. Researcher Seon stated, "Although there was much controversy regarding the global Phase 2 clinical trial results of Rekkirona, it is analyzed that it is not inferior to the antibody treatments from Regeneron and Eli Lilly, which have already obtained Emergency Use Authorization (EUA) from the U.S. Food and Drug Administration (FDA)." He added, "Nevertheless, Celltrion's stock price plunged about 18% after the clinical trial results were announced." This is because, compared to conditional approval in the domestic market with a small patient population and market size, entry into the U.S. market is more important for performance improvement, and it is still uncertain whether an EUA application will actually be submitted to the U.S. FDA.

There is an analysis that it will be difficult to expect the same high growth as last year. Growth rates have already declined, and Pfizer's competitor, Ruxience, is expanding its market share with a lower price. Researcher Seon said, "If even Remsima SC, a promising product of the Celltrion group, shows sluggish sales growth, it will be difficult for the Celltrion group to achieve a top-line growth rate of 20%." However, he explained, "Due to the nature of the biosimilar business, growth can be expected with new product launches every year, and since Celltrion plans to sequentially launch new products annually, including Yuflyma, the Humira biosimilar newly launched in Europe this year, it is necessary to consider buying at the low point during short-term corrections."