[Click e-Stock] "UbioLogics to See Significant Earnings Growth This Year"

On May 28, Sangsangin Securities initiated coverage of UbioLogics, a vaccine-focused biotech company, with a "BUY" investment rating and a target price of 19,000 won, stating that "sales of its flagship cholera vaccine are expected to increase significantly."

UbioLogics has developed the Ubichol series of cholera vaccines (Ubichol, Ubichol-Plus, Ubichol-S), which are currently supplied primarily to UNICEF. In addition, vaccines for respiratory syncytial virus (RSV), shingles, typhoid, and meningococcal (pentavalent vaccine) are in clinical trials.

Ubichol, which accounts for about 95% of total sales, saw a sharp increase in revenue, with first-quarter sales this year reaching 39.5 billion won, up 160.1% year-on-year, and operating profit reaching 16.9 billion won, up 611.7% from the same period last year.

Sangsangin Securities projects that UbioLogics' annual cholera vaccine sales this year will reach 60 million doses, or 141.5 billion won (a 53.6% increase from last year), based on a conservative estimate that about 83% of total contracts will be supplied. Operating profit is estimated at 59.1 billion won, up 72.1%, due to increased sales and reduced R&D expenses.

Demand for cholera vaccines is rising sharply due to global warming. In April last year, UbioLogics received WHO prequalification (PQ) approval for its improved cholera vaccine Ubichol-S, which allows for increased bulk supply through improved production yield. If UbioLogics completes its second plant and receives approval from the Ministry of Food and Drug Safety in the fourth quarter of this year, production capacity will increase from 33 million doses to 88 million doses.

However, a key weakness is that most of the company's revenue relies on a single product, the cholera vaccine, while new drugs under development will still take time to reach the market. In particular, there are concerns as UNICEF purchased cholera vaccines with support from GAVI, the international vaccine alliance funded by the Gates Foundation, and the U.S. government, but the U.S. government, which provides about 15% of the funding, has announced its intention to withdraw. Analyst Ha Taegi stated, "GAVI 6.0 will finalize the five-year procurement budget in June, so it is important to closely monitor any changes in the budget."

There are also concerns about the emergence of competitors. Bharat Biotech of India has completed phase 3 clinical trials for its cholera vaccine and has applied for WHO PQ. He noted, "Certification is expected around the third quarter of next year, with possible sales starting in 2027," and estimated that new entrants could impact about 30% of the cholera vaccine supply in the long term.

Positive news from clinical trials of new vaccines could also act as a catalyst. Sangsangin Securities analyzed that interim phase 1 results for the RSV vaccine could be received in the third quarter of this year, and for the shingles vaccine in the fourth quarter. If meaningful data are generated in phase 2 trials, there is potential for a re-rating of the stock.