K-Bio Giants: The Secret Behind South Korea's Biotech Powerhouses

The latter half of the year is packed with pivotal events for Korea's leading biotech stocks. We analyze the core technologies and future catalysts for four major players: Alteogen, Rgene Bio, ABL Bio, and Peptron.

1. Alteogen: Revolutionizing Drug Delivery

Alteogen stands as the undisputed leader on the KOSDAQ by market cap, a position fueled by its groundbreaking proprietary technology. Its share price has soared approximately 12-fold over two years, driven by a competitive edge in a niche but crucial market.

The Core Technology: Subcutaneous Formulation

Many vital drugs, including chemotherapies, are administered intravenously (IV), a process that can take patients 4-5 hours per session in a hospital. Alteogen's technology converts these IV drugs into subcutaneous (SC) formulations, allowing for administration via a simple injection in the arm, thigh, or abdomen in just 3-5 minutes.

This leap significantly enhances patient convenience and allows healthcare facilities to treat hundreds more patients in the same time frame, unlocking immense value for the healthcare system.

A Formidable Patent Advantage

Globally, only Alteogen and the U.S. company Halozyme possess this technology. However, Alteogen's key advantage lies in its patent life. While Halozyme's patents expire around 2030, Alteogen's are protected until the mid-2040s.

For Big Pharma, adopting this technology serves a dual purpose: improving patient convenience and, more importantly, extending the commercial life of their blockbuster drugs. By converting an IV drug to SC before its patent expires, a company can effectively renew its market exclusivity and fend off generic competition.

With Halozyme's patents winding down, global pharmaceutical giants are increasingly motivated to partner with Alteogen for the long term.

The Key Near-Term Catalyst: Merck's Keytruda

The most significant immediate catalyst is the U.S. FDA's decision on the SC formulation of Merck's Keytruda (pembrolizumab), the world's top-selling drug with 2023 sales of approximately ₩41 trillion. The FDA must issue its approval decision by September 23, 2024.

Market expectations are high for a positive outcome, with an aggressive commercial launch by Merck projected for October 1st. For Alteogen, the financial terms are structured uniquely: it will receive milestone payments totaling ₩1.4 trillion as Keytruda SC hits specific sales targets, transitioning to a royalty model only after the full amount is received. CEO Park Soon-jae targets achieving this by 2028, which would represent a monumental shift for a company that reported revenues of around ₩100 billion last year.

Expansion and Potential KOSPI Listing

Anticipating growing demand, Alteogen is investing ₩250 billion to build its own production facility in South Korea, moving away from relying on European and Chinese contract manufacturers. Furthermore, a potential listing upgrade from KOSDAQ to the main KOSPI exchange is on the horizon, likely after the successful commercialization of Keytruda SC is confirmed. The company is already internally aligning with the stricter governance requirements of the KOSPI.

2. Rgene Bio: A Leader in ADC Innovation

Rgene Bio is a standout developer in the hot field of Antibody-Drug Conjugates (ADCs), a next-generation targeted cancer therapy.

The ADC Trinity and Rgene's Specialty

ADCs consist of three components:

• Antibody: Acts as a guidance system, seeking out and binding specifically to cancer cells.
• Payload: An extremely potent cytotoxic drug (the "warhead") that kills the cancer cell.
• Linker: The critical component that connects the antibody to the payload.

Rgene Bio's core expertise lies in its proprietary linker technology. Its linkers are designed to remain stable in the bloodstream but cleave precisely upon entering the target cancer cell, ensuring the potent payload is released only where it needs to be, maximizing efficacy and minimizing side effects.

A Track Record of Deals and Future Expectations

Rgene Bio has demonstrated an exceptional ability to secure technology out-licensing deals, achieving this feat for six consecutive years since 2019—a unique record in the Korean biotech sector.

The market widely expects at least one new deal to be announced before the end of the year, with speculation pointing towards two potential agreements: one with a global Big Pharma company and another with a solid partner under favorable terms.

3. ABL Bio: Targeting the Brain with Bispecifics

ABL Bio is pioneering the development of bispecific antibodies. Unlike monoclonal antibodies like Keytruda that target a single antigen, bispecifics can engage two different targets simultaneously, creating sophisticated mechanisms of action.

Conquering the Blood-Brain Barrier (BBB)

A major focus for ABL Bio is treating neurological diseases. The primary challenge is the blood-brain barrier (BBB), a protective layer that prevents most substances, including drugs, from entering the brain from the bloodstream. This has historically made drug development for brain diseases extremely difficult.

ABL Bio's bispecific platform includes a "shuttle" technology designed to transport therapeutic antibodies across the BBB. One arm of the antibody binds to a receptor that facilitates crossing the BBB, while the other arm targets the disease-causing agent within the brain.

Validated by Global Partnerships

The potential of this technology has attracted major players:

• Sanofi (2022): A platform licensing agreement, earning ABL Bio an upfront payment of ₩70 billion. Recent Phase I results (Sept 1, 2024) confirmed the safety profile in humans, though BBB penetration data remains undisclosed.
GSK (May 2024): Another significant deal, bringing another ₩70 billion upfront, with an additional ₩70 billion in near-term milestones expected soon.

The high level of interest from Big Pharma in BBB-penetrating technology is intense. ABL Bio's management has indicated that discussions with other large pharmaceutical companies are ongoing, and additional partnerships are expected in the near future.

4. Peptron: Extending the Reach of Obesity Treatments

Peptron is focused on long-acting peptide delivery technologies, placing it at the center of the obesity treatment theme, popularized by drugs like Wegovy and Mounjaro.

The Collaboration with Eli Lilly

In October 2024, Peptron entered a Material Transfer Agreement (MTA) with Eli Lilly. The subject, though not officially confirmed, is widely believed to be Mounjaro (tirzepatide). The goal is to test whether Peptron's technology can convert the current weekly injection into a long-acting monthly formulation.

Understanding the MTA Hurdle

An MTA is an early-stage testing agreement, far from a guaranteed full licensing deal. Over 90% of MTAs do not progress to a major partnership, as companies continuously request additional data, potentially prolonging the process for years.

However, the market is optimistic. The companies are scheduled to decide on moving to a full license agreement by December 2025. Success here would be a major breakthrough, significantly enhancing patient convenience for a blockbuster drug and validating Peptron's platform.