[This Week's Industry Insight] Alteogen Takes First Step Toward Global Leap

Global Attention on Change in Subcutaneous Injection Formulation
Hybrozyme Platform Licensed to 4 Global Companies
Patent Barriers in Major Countries Worldwide
Stable Revenue Structure Expected After 2026

Founded in 2008, Alteogen is a bio company that researches and develops next-generation biobetters with improved efficacy compared to existing biopharmaceuticals, antibody-drug conjugate (ADC) therapeutics, biosimilars, and more. It possesses various platforms including the drug sustained-release platform (NexP™-fusion) and ADC platform (NexMab™).

Its main pipelines include ▲Hybrozyme™ which converts intravenous injection (iv) to subcutaneous injection (sc) ▲sustained-release human growth hormone therapeutic (ALT-P1) ▲Ailia biosimilar (ALT-L9) ▲Herceptin biosimilar (ALT-L2) ▲hyaluronidase standalone product Tergase (ALT-BB4), among others.

The technology to convert intravenous antibody drug formulations to subcutaneous injections using hyaluronidase is held by only two companies worldwide: the US-based Halozyme Therapeutics and Alteogen. Alteogen’s independently developed Hybrozyme platform technology utilizes hyaluronidase to change antibody drugs into a subcutaneous injection method by injecting them into the extracellular matrix (ECM) beneath the skin. It has licensed this technology to four companies including the global pharmaceutical company Merck (MSD), Intas, and Sandoz. Two of these products are currently undergoing clinical trials for regulatory approval.

An Alteogen representative explained, "There are various reasons for converting to subcutaneous formulations," adding, "Subcutaneous formulations made using Alteogen’s technology are subject to new patents, allowing for an extension of exclusive rights." They continued, "There is demand to switch to subcutaneous formulations ahead of the expiration of major antibody therapeutic patents," and added, "Subcutaneous formulations are expected to be excluded from drug price negotiations under the US Inflation Reduction Act (IRA)."

Worldwide Exclusive Rights Granted to MSD...Proof of Technological Capability

On the 25th of last month, Alteogen received a $20 million upfront payment from MSD. MSD secured worldwide exclusive rights to Alteogen’s human recombinant hyaluronidase enzyme (ALT-B4) for the development and commercialization of a subcutaneous formulation of the immuno-oncology drug Keytruda (pembrolizumab).

The reasons MSD is pursuing the conversion of Keytruda, originally an intravenous formulation, to a subcutaneous formulation are diverse. Hyunmyung Yong, a researcher at Hyundai Motor Securities, explained, "By launching a subcutaneous injection formulation, it can replace the intravenous injection market and block biosimilar entry," and added, "Subcutaneous injections offer advantages in terms of time and cost efficiency for patients and medical staff, as well as benefits for national health insurance finances." He further stated, "Starting next year, when subcutaneous formulations of Keytruda, Opdivo, and Tecentriq are all launched, a major transformation will begin in the global oncology market," emphasizing, "MSD’s Keytruda is just the beginning."

Although Alteogen and MSD have not disclosed the full details of the contract, the securities market in Yeouido estimates that the annual royalty scale will be substantial. Lee Dong-geon, a researcher at SK Securities, said, "The royalty rate under the contract has not been disclosed, but the market average estimate is around 3%," and added, "The subcutaneous formulation of Keytruda is expected to generate sales about half the size of the intravenous formulation," and "Royalties are expected to be received starting in 2029."

Assuming that about 50% of Keytruda’s sales, which reach 40 trillion KRW, are replaced, the sales of the subcutaneous formulation can be estimated at 20 trillion KRW. Receiving 3% of sales as royalties would bring in 600 billion KRW annually. Some expect that royalties could reach up to 5%, amounting to 1 trillion KRW.

An Alteogen representative stated, "To prove technological capability, clinical trials requiring huge costs must be conducted," and added, "Since globally trusted big pharma companies are conducting the clinical trials, Alteogen bears no cost burden and its credibility has increased."

Expansion of Pipeline Applying Platform Technology

Having established a cash-generating base through the Hybrozyme platform technology, Alteogen continues efforts to discover future growth engines. Starting with the recombinant hyaluronidase standalone product 'Tergase,' expected to receive regulatory approval and be marketed this year, commercialization of the Herceptin biosimilar licensed to overseas pharmaceutical companies is also anticipated.

Alteogen received a milestone payment from China’s Chiru Pharmaceutical upon completion of ALT-L2 clinical trials. Chiru Pharmaceutical paid the milestone as promised during the process of conducting Phase 3 trials, receiving the clinical study report (CSR), and obtaining regulatory approval for marketing. ALT-L2 is expected to become a competitive product thanks to the capabilities of its partner, one of the top 10 pharmaceutical companies in China.

Active patent registration to build technological barriers is also underway. Recently, a US patent was registered for the sustained-release acromegaly therapeutic (ALT-B5). Acromegaly is a disease caused by excessive production of growth hormone secreted by the pituitary gland, resulting in enlarged facial features and extremities. The treatment market size is predicted to grow to approximately 2.9 trillion KRW by 2028. Alteogen is developing this by applying sustained-release biobetter core technology to growth hormone antagonists. A company representative said, "To grow into a sustainable global pharmaceutical company, we continue to develop pipelines applying platform technology," and added, "We plan to present a poster at the endocrinology conference in June."

Alteogen has completed domestic patent registration for mixed formulations of ALT-B4, a variant of human hyaluronidase (PH20), combined with antibody drugs, small molecules, aptamers, and other various pharmaceuticals. To collaborate smoothly with pharmaceutical companies developing antibody therapeutics, it is advantageous to secure patents guaranteeing exclusive rights in advance.

Alteogen also possesses antibody-drug conjugate (ADC) technology, considered a next-generation cancer treatment. ADCs are structures in which cytotoxic drugs are linked to antibodies via linkers. When ADCs recognize and bind to receptors on the surface of cancer cells, they are internalized, and the drug is released to induce cancer cell death. Alteogen aims to combine the advantages of antibody therapeutics and synthetic drugs to achieve efficacy superior to antibody drugs while reducing side effects caused by toxicity compared to synthetic drugs.

The biosimilar of the wet age-related macular degeneration treatment 'Ailia' is also one of the anticipated products. Clinical Phase 3 trials for the Ailia biosimilar (ALT-L9), whose patent is nearing expiration, are being conducted in 12 countries worldwide. The wet age-related macular degeneration treatment market is dominated globally by Lucentis and Ailia. As of 2022, the market sizes for Ailia and Lucentis were $9.76 billion and $2.98 billion, respectively.

While expanding its pipeline, Alteogen recorded sales of 96.5 billion KRW and an operating loss of 9.7 billion KRW last year. The debt ratio increased from 68.9% in 2022 to 73.2%.

An Alteogen representative said, "Continuous expenditures on research and development costs are ongoing," adding, "Milestone payments generate temporary revenue but do not lead to sustained sales." They continued, "Sales from the first technology-applied products are expected to begin in 2026," and added, "The integration of artificial intelligence (AI) technology and biopharmaceutical production technology could bring a future with subcutaneous formulations without hyaluronidase and oral formulations, which poses a threat."

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