GC Biopharma
The author is an analyst for NH Investment & Securities. He can be reached at pk.park@nhqv.com -- Ed.
GC Biopharma delivered solid 2Q23 OP of W23.7bn, backed by: 1) advance recognition of 3Q23 domestic vaccine sales; and 2) cost control efforts at the nutritional foods business. In 3Q23, some earnings slowdown is likely. Expecting US approval of IVIG in January of next year, we recommend keeping an eye on the firm’s US IVIG sales strategy for 2H24.
Logs solid 2Q23 earnings; temporary earnings lull expected in 3Q23
We maintain a Buy rating and TP of W155,000 on GC Biopharma. The firm posted consolidated 2Q23 sales of W432.9bn (+2% y-y) and OP of W23.7bn (+81% y-y).
The healthy 2Q23 results were driven by: 1) domestic vaccine sales of W39.5bn (+145% y-y); and 2) cost control at the nutritional foods business (cost reduction of W7bn q-q). Despite the presence of off-seasonality for domestic vaccine sales (around W1bn in 2Q21 and 2Q22), 2Q23 vaccine sales came in solid on the advance reflection of 3Q23 (peak season) sales volume. However, the 3Q23 figure is likely to arrive somewhat soft as a result. In 2Q23, overseas vaccine sales totaled W57.8bn (-15% y-y), impacted by reduced vaccine demand in the fading of Covid-19.
We forecast that GC Biopharma will report consolidated 3Q23 sales of W444.8bn (-3% y-y) and OP of W38.7bn (-21% y-y).
IVIG-SN 10%: FDA approval decision set for Jan 2024; sales strategy to be key factor
On Jul 14, the company completed its US FDA BLA submission for IVIG-SN 10%, a highly-anticipated next-gen product. FDA approval results are to be released around Jan 13 of next year, and if approved, the drug is likely to be rolled out in 2H24. Considering the impacts of: 1) M/S expansion for competing drugs FcRn and SCIG (subcutaneous injection); and 2) the case of competing firm BPL, we estimate the value of IVIG-SN 10% at W368.8bn (2029F US sales of W182.9bn, M/S of 1.4% out of IV+SCIG market, M/S of 3% out of IVIG market).
US IVIG is planned to be sold directly through Green Cross’s US subsidiary. Our estimates reflect minimum M/S assumptions, which could change based on news disclosure regarding US direct sales personnel and PBM listing.