Global Pharma Companies Lining Up at Alteogen's Door – Why?

"By the 2030s, I envision Alteogen joining the ranks of companies with annual revenue in the trillions of won. We’ll see significant revenue from royalties and milestone payments tied to our subcutaneous (SC) injection technology licensed out to multiple global companies. This will be complemented by revenue from proprietary products like Terugase, establishing a robust revenue structure," said Alteogen CEO Park Soon-Jae.

When asked about the company's future and projected figures, Park replied cautiously, “Discussing numbers can be sensitive," though he conveyed optimism.

This approach contrasts with more optimistic industry predictions. Analysts estimate that Alteogen’s licensing deal for an SC formulation of Keytruda with U.S.-based MSD, signed in February, could bring in annual royalties nearing KRW 1 trillion (USD 750 million) within 4-5 years. Given Alteogen’s additional technology transfer contracts, some expect revenues to far exceed KRW 1 trillion by 2030. However, Park’s conservative response aligns with his reputation for restraint and keeping his promises.

Alteogen has become a hot topic among investors, especially as its stock surged from KRW 90,000 in February to KRW 439,500 by October, with a market capitalization of around KRW 23 trillion, solidifying its leadership on KOSDAQ.

This surge is largely due to ALT-B4, a recombinant human hyaluronidase developed by Alteogen in 2019, which enables IV drugs to be administered subcutaneously.

“A Game-Changer for the Global Injection Market”

Alteogen’s ALT-B4 is indeed a “golden egg” platform. Companies like MSD, Sandoz, Daiichi Sankyo, and India’s Intas Pharma are developing SC formulations of existing IV drugs using this technology. By 2040, when ALT-B4's patents expire, Alteogen could see billions in revenue from licensing fees and royalties.

Alteogen’s partnership with MSD for the exclusive SC formulation of Keytruda has elevated the company’s profile. Keytruda, a blockbuster immunotherapy with 2022 sales of USD 25 billion (KRW 34 trillion), will be enhanced with ALT-B4 for subcutaneous delivery. This deal alone could bring Alteogen USD 1.3 billion (KRW 1.7 trillion) in milestone payments, with annual royalties beginning as early as 2027.

“This partnership with MSD shifted global pharma’s perception of Alteogen,” Park said.

Keytruda Expected to Transition Over 80% to SC Formulation

-Why did MSD select Alteogen over Halozyme, known for SC formulation technology?

“While Halozyme’s PH-20 patent expires in 2027, ALT-B4 offers higher enzymatic activity, better thermal stability, and lower immunogenicity. Additionally, Halozyme’s licenses include exclusivity for certain targets. For instance, BMS holds exclusive SC rights for Opdivo targeting PD-1. This meant MSD, which uses PD-1 with Keytruda, sought us instead.”

-How much of Keytruda’s sales do you expect will transition to the SC formulation?

“With Keytruda’s patent expiring in 2028, MSD will want to convert as much of the IV formulation to SC as possible before biosimilars emerge. We expect that 80% of Keytruda’s market could switch to the SC version by 2028-2029, as seen with J&J’s leukemia drug, Darzalex, which reached a 95% SC conversion rate.”

With Keytruda’s 2022 revenue of KRW 34 trillion, an 80% SC conversion would yield sales of KRW 27 trillion. Assuming a 3% royalty rate, Alteogen could earn over KRW 800 billion (USD 600 million) annually, with an additional KRW 70-100 billion (USD 52-75 million) from ALT-B4 raw material sales.

ADCs for Cancer Treatment: A New Frontier in SC Formulations

-How far has Alteogen progressed with SC formulations of ADCs?

“Subcutaneous ADCs are poised to be revolutionary. While traditional thinking held that SC administration of ADCs would cause severe side effects, our extensive animal trials have shown ALT-B4's viability, and we’re moving toward clinical trials with patents already filed.”

-Are there ongoing licensing talks for ADC SC formulations?

“Yes, as we’ve refined the technology, we’re receiving substantial interest.”

Following this interview at Alteogen’s Daejeon headquarters, news broke during my bus ride to Seoul: "Alteogen Signs USD 300 Million (KRW 420 billion) ADC SC Formulation Deal with Daiichi Sankyo."

Alteogen announced on the 8th that it had signed a deal to apply ALT-B4 in the SC formulation of Daiichi Sankyo’s ADC drug, Enhertu, with milestone payments and royalties to follow. Park later stated, “This contract could spark more SC ADC development projects, and we’re receiving inquiries from global media for exclusive coverage.”

“A Balanced Revenue Stream from Licensing and Products”

-What do you envision for Alteogen’s position and revenue in 5-10 years?

“Predicting future revenue is tricky with so many variables. But I’ll say this: like other bioventures, Alteogen has grown through technology licensing. However, we aim to balance licensing revenue with product sales. Our goal is for 70% of revenue to come from royalties and milestones, and 30% from products as we evolve into a global company.”

When pressed for specifics, Park smiled and suggested that Alteogen could become a company with annual revenue in the trillions within 5-10 years.

-Will Terugase (ALT-BB4), approved this year, play a major role in product revenue?

“Terugase is our first finished product, targeting aesthetic, cosmetic, and pain management markets by breaking down hyaluronic acid in the skin. We’re also developing long-acting human growth hormones and an Eylea biosimilar for age-related macular degeneration, and we plan to handle local sales once approvals are granted. Alteogen is set to evolve into a company with a complete value chain spanning R&D, manufacturing, and sales.”