GBP510 on Track for Approval in 1H22
The author is an analyst of NH Investment & Securities. He can be reached at pk.park@nhqv.co. -- Ed.
Although adhering to a Buy rating, we lower our TP on SK Bioscience to W260,000. The firm reported 4Q21 OP of W253.9bn, meeting consensus. In 2022, sales of W1.33tn and OP of W579.1bn are expected. GBP510 is on track for approval in 1H22. In addition, the company’s partnership with CEPI (general-purpose vaccine, etc) looks set to expand further.
4Q21 review
Although adhering to a Buy rating, we lower our TP on SK Bioscience to W260,000. The firm logged 4Q21 sales of W450.9bn (+573% y-y) and OP of W253.9bn (+2,227% y-y), with OP arriving in line with our estimate of W262.6bn. The lion’s share of sales was accounted for by the production of undiluted solutions (licensed by Novavax). Backed by rapid sales growth, OPM climbed to 56%. Due to delays in overseas approval of the Novavax vaccine, about 50~60 batches of production are to be reflected in 2022 sales.
Our downward TP revision stems from: 1) a cut to our GBP510 value estimate to W3.7tn due to a rise in the portion of Covax supply at low prices; and 2) a lowering of our C(D)MO value estimate to W2.8tn due to a delay in expected new plant start-up to 2025 and likely reduced utilization rate. However, the firm’s EV should improve once visibility is secured for: 1) Andong plant expansion; 2) top-line growth through M&As; and 3) the Songdo R&PD center. Expecting its net cash to rise and leaving our capex multiple unchanged, we hike our estimate for the value of the firm’s net cash holdings accordingly.
We expect SK Bioscience to pull in 2022 sales of W1,333.1bn (+44% y-y) and OP of W579.1bn (+22% y-y), with sales dividing as: 1) Novavax vaccine CMO (including licensing) sales of W641.1bn; 2) GBP510 sales of W592bn; and 3) existing business sales of W100bn.
Starting with GBP510, long-term big picture emerging together with CEPI
Regarding GBP510, we expect data for Omicron in early March, phase III data in April, and approval in Korea and Europe in 1H22. Of note, both homogeneous and heterogeneous booster vaccination is being tested with the goal of securing permissions/recommendations at the time of initial approval (likely within 1H22). For homogeneous vaccination, third dose administration under domestic phase III was completed in January, and global phase III is being prepared. For heterogeneous vaccination, recruitment should be completed within 1Q22. For vaccines which have already been approved, booster shots are recommended based on uncontrolled data (ie, real-world data) rather than data from separately conducted clinical trials. Together with CEPI, SK Bioscience is developing a general-purpose vaccine for the Sabecovirus subgenus that includes a mutation of Covid-19. CEPI selected SK Bioscience as a partner to address the emergence of possible mutations.