Only Spectrum and Genentech Remain as Partners
The author is an analyst of NH Investment & Securities. He can be reached at william.ku@nhqv.com. -- Ed.
Sanofi returns Efpeglenatide rights; only Spectrum and Genentech remain as partners
Due to Sanofi’s returning of rights for Efpeglenatide, the drug is excluded from our calculation of Hanmi Pharm’s new drug value. We lower our TP to W290,000. But, with HM15211 clinical results slated to be announced in 2H20 and expectations in place for US Rolontis approval, we maintain a Buy rating on the play.
Efpeglenatide excluded from calculation of new drug value
We lower our TP on Hanmi Pharm from W330,000 to W290,000 but maintain a Buy rating. On May 14, the company announced that Sanofi had made clear its intention to return global rights for Efpeglenatide (diabetes, phase III clinical trials). The value of Efpeglenatide previously reflected in our new drug value calculation stood at W593.7bn. Excluding this amount, combined new drug value (includes Rolontis (neutropenia), Poziotinib (lung cancer, breast cancer), and HM95573 (pan-RAF)) comes to W1,081.3bn. Considering the subsidiaries’ value of W572.4bn and operating value of W2,438.2bn, Hanmi Pharm’s EV is estimated at W3,418.3bn. Of note, results of US phase I trials of NASH treatment HM15211 (triple agonist) are expected in August. And, final approval of Rolontis (neutropenia) in the US is anticipated in 4Q20. We maintain our investment rating at Buy, believing that the 9.5% share price drop witnessed on May 14 already reflects the relevant unfortunate news.
Change estimates considering SG&A expense increase
As it is unclear whether Sanofi will pay the remainder of clinical development costs related to Efpeglenatide, it is likely that Hanmi Pharm’s ordinary development expenses will increase. Also, even if that is not the case, the possibility exists of legal expenses being incurred in the process of potential lawsuits against Sanofi. Against this backdrop, we estimate that the firm’s SG&A expense will widen this year by W16bn to W565.1bn. We revise down our 2020 and 2021 OP forecasts by 14.3% and 10.1%, respectively. Currently, a total of five global phase III trials of Efpeglenatide are underway. The original plan was to announce clinical results and apply for permissions in 2H21, and the firm is still aiming to wrap up the ongoing clinical trials as scheduled. We estimate that 30~50% of Hanmi Pharm’s planned clinical expenditure for 2020 has been executed thus far.