[Click eStock] "Green Cross Target Price Lowered to 160,000 Won"

On April 21, Korea Investment & Securities lowered its target price for Green Cross from 180,000 won to 160,000 won.

The company projected Green Cross's consolidated sales for the first quarter to be 368.3 billion won, which is 8.1% below the consensus forecast from securities firms. It also anticipated an operating loss of 17 billion won, marking a return to the red.

The firm forecasted that sales of Hunterase (a treatment for Hunter syndrome) would decline by about 60% compared to the first quarter of last year, limiting overall growth. In addition, it expected that the performance of its subsidiary GC Cell would decrease due to a reduction in COVID-19 specimen testing. On the operating profit side, it projected that Green Cross would post an operating loss as research and development expenses would temporarily increase, citing licensing fees for pipeline assets from Catalyst in the United States and rights fees for the use of Aquitas lipid nanoparticles (LNPs).

The U.S. Food and Drug Administration (FDA) inspection of the immunodeficiency treatment IVIG-SN 10% is reportedly underway as of mid-April. Typically, such inspections are conducted after the submission of a Biologics License Application (BLA). Green Cross had experienced delays in the inspection process due to the COVID-19 pandemic. The FDA acknowledged these exceptional circumstances and agreed to conduct the inspection first and accept the BLA submission afterward. As a result, the time required for approval is expected to be relatively short, and results could be confirmed as early as the second half of this year. The pipeline introduced from Catalyst is based on a different mechanism of action than Green Cross's existing hemophilia treatments, Advate and GreenGene-F, and is expected to help Green Cross strengthen its position in the hemophilia market.

While Korea Investment & Securities maintained its "Buy" rating on Green Cross, it lowered the target price by approximately 11%. Oh Uirim, a researcher at Korea Investment & Securities, explained, "Competition in the domestic vaccine business is intensifying, and research and development (R&D) expenses are expected to increase for the time being." He added, "The rise in procurement costs for raw materials due to last year's high exchange rate, which led to an increase in the cost ratio, was also a reason for the downward revision." Oh also noted, "The impact of the high exchange rate is likely to persist through the third quarter of this year, but with various R&D momentum expected, we maintain a positive long-term outlook."