[Click eStock] "Chong Kun Dang, Recovering Core Business and Resuming Clinical Trials in 2022"

Growth Recovery Expected at 5-10% Range Next Year

[Asia Economy Reporter Minwoo Lee] There is a forecast that the somewhat sluggish growth of Chong Kun Dang will regain momentum starting next year. This is expected due to the expansion of existing products through sales capabilities and the resumption of new drug clinical trials.

On the 29th, Cape Investment & Securities newly issued a 'Buy' rating and a target price of 151,000 KRW for Chong Kun Dang based on this background. The closing price on the previous trading day was 111,500 KRW. Seungtaek Oh, a researcher at Cape Investment & Securities, explained, "This year's stock price was sluggish due to the rejection of the emergency use authorization application for 'Napabeltan,' a COVID-19 treatment developed through drug repositioning, but even when evaluated solely on the core business value, the current stock price is undervalued."

Next year, it is expected that performance recovery will be possible based on traditionally strong sales capabilities. Researcher Oh said, "This year's performance, affected by a deteriorated sales environment for drugs other than COVID-19 vaccines or treatments, is expected to grow by about 2%. However, with the trend of 'gradual recovery to normal life,' existing medical treatments will be revitalized, and from next year, the previous growth rate of 5-10% will be regained."

High profits are also expected from products introduced and sold from other companies. Representative examples include 'K-CAB,' a treatment for gastroesophageal reflux disease, and 'Proliaju,' a treatment for osteoporosis. In particular, 'K-CAB,' introduced from HK Innoen, is expected to generate high profits despite being an introduced product due to the contract structure, which includes a high revenue-sharing (RS) rate on sales exceeding 100 billion KRW.

New drug development is also expected to accelerate. Chong Kun Dang possesses various new drug product lines such as 'CKD-510,' a treatment for Charcot-Marie-Tooth (CMT) disease, and 'CKD-702,' a treatment for non-small cell lung cancer (NSCLC). Additionally, 'CKD-701,' a biosimilar of the macular degeneration treatment 'Lucentis,' has applied for product approval after announcing Phase 3 clinical trial results in July. Market expansion into Southeast Asia and the Middle East is anticipated.

Researcher Oh analyzed, "Chong Kun Dang invested 98.6 billion KRW in R&D in 2019, 147.6 billion KRW last year, and is estimated to spend 151.8 billion KRW this year. Next year, as many clinical trials resume following the COVID-19 pandemic, corporate value will be reflected each time performance goals are achieved."