[Click eStock] "Samil Pharmaceutical Reassessed Amid New Drug Launch and CMO Operation Expectations"

On the 18th, KB Securities analyzed that Samil Pharmaceutical is expected to undergo a gradual revaluation ahead of the new drug launch and the full-scale commencement of its CMO (Contract Manufacturing Organization) business.

Last March, Formosa signed a supply and exclusive licensing agreement for the ophthalmic new drug 'APP13007' covering 4 regions and 11 countries with Indian pharmaceutical company CiplA. The supply target countries include India, Nepal, Sri Lanka, Bangladesh, Malaysia, Myanmar, Kenya, Nigeria, South Africa, Argentina, and Colombia, mainly non-Western regions.

Han Jeyoon, a researcher at KB Securities, explained, "CiplA is the third largest pharmaceutical company in India and has a strong distribution network in non-Western regions such as India, South Africa, Argentina, and Colombia, so it is expected to drive APP13007 sales in these non-Western markets."

He also stated, "The countries targeted by CiplA for sales are regions where supply is possible solely with Samil Pharmaceutical's WHO GMP certification. This contract can also be interpreted as confirming Samil Pharmaceutical's initial sales channels, and as the Formosa new drug launch process progresses, Samil Pharmaceutical's stock price is expected to undergo gradual re-rating."

APP13007 is a new drug highly valued for its market potential and inherently possesses high growth prospects. The ophthalmic steroid market is projected to grow from 23 trillion KRW in 2022 to 42 trillion KRW by 2031. APP13007 is an ophthalmic eye drop that received FDA approval for the first time in 15 years and is used to treat inflammation after ophthalmic surgeries such as cataracts and glaucoma.

It is characterized by maximizing efficacy while reducing steroid dosage by half compared to existing treatments. Consequently, the risk of side effects is reduced, and the frequency and duration of administration are shortened, greatly improving patient convenience.

U.S. pharmaceutical company Eyenovia has signed a U.S. licensing agreement for APP13007 worth up to 86 million USD. Regarding this, the researcher said, "In the case of new ophthalmic eye drop drugs, unless they are blockbuster-level, it is rare for a single-region licensing agreement to approach 100 million USD. Considering the most recent contracts with CiplA and several other companies, the total licensing agreement scale is estimated to exceed 100 million USD."

He added, "The scale of contracts signed with companies like Eyenovia indicates that APP13007's market potential is highly valued, and sales are expected to grow rapidly upon product commercialization."

Samil Pharmaceutical holds WHO GMP certification, enabling supply to most regions except North America and Europe. It also has sufficient production capacity (CAPA), so it is expected to align with the global growth of APP13007.

Meanwhile, in October last year, Samil Pharmaceutical signed a 5-year APP13007 CMO contract worth 20 million USD with Formosa. At that time, the contract size fell short of market expectations, causing the stock price to peak. Regarding this, the researcher analyzed, "Since APP13007 is an unlaunched new drug, it is reasonable to sign contracts at the MoQ (Minimum Order Quantity) level because annual sales volume cannot be estimated. The reason for the proactive contract was that it is impossible to produce the volume simultaneously with the CMO contract."

He continued, "A preparation period before full-scale production is necessary, including recipe transfer, yield securing, and mass production practice, and a documented contract would have been essential for this. The previously signed contract amount is not very meaningful, and spot contracts that follow sales volume after product launch will determine the actual sales scale."