Data on In-house Vaccine GBP510 to Be Released in 2H21
The author is an analyst of NH Investment & Securities. He can be reached at pk.park@nhqv.co. -- Ed.
SK Bioscience booked consolidated 2Q21 sales of W144.6bn and OP of W66.2bn, achieving solid Covid-19-related sales. Earnings should grow further in 2H21 thanks to government contracts and CMO/CDMO production for Novavax. This month, data for phase I trials for the firm’s in-house Covid-19 vaccine are expected and phase III trials should begin.
Achieved sound 2Q21 results
SK Bioscience booked 2Q21 sales of W144.6bn (+277.2% y-y) and OP of W66.2bn (TTP y-y). We note that Covid-19 related earnings, which were reflected in earnest from 1Q21, came in sound again. GPM decreased q-q to 57%, due to a different sales structure for each quarter. OPM reached 46% thanks to reduced SG&A expenses.
The firm produced only 8 CMO/CDMO batches in 2Q21 due to maintenance performed in February and March, down from 22 batches in 1Q21. However, along with the chickenpox vaccine, the process performance qualification (PPQ) for some Novavax APIs, which are being produced under government contracts, have been completed, contributing to sales. The government contract is for the delivery of finished products, but sales can be recognized at the time of raw material production if quality control standards are met.
Earnings should improve further in 2H21. At the CMO/CDMO business, an additional CEPI suite has been contracted with Novavax, bringing total related production to 100 batches pa. Sales should begin in earnest from 2H21 for the 40mn dose Novavax-government contract. That said, the fact that the Novavax vaccine has yet to be approved is a risk for finished product sales. As it is part of a government contract, the vaccine also has to receive approval from the Ministry of Food and Drug Safety. In order to replace flu vaccine production, which has been discontinued due to the production of the Covid-19 vaccine, the firm plans to sell products from a global pharma.
Data on in-house vaccine GBP510 to be released in 2H21
Data on SK Bioscience’s in-house Covid-19 vaccine, which will likely be key to 2022 earnings, is set to be released in 2H21. In detail, domestic phase 1 data is due to be announced this month and a decision on whether to approve a phase III IND application will be made. For the phase III trials for 4,000 people, the firm plans to use a previously approved drug as a control group, and although it has yet to be confirmed, we believe that the company is making progress in securing the AstraZeneca vaccine for the control group.