Alteogen (196170.KQ) surged in early trading Friday to overtake EcoPro BM (247540.KQ) and reclaim its position as the most valuable company on South Korea's secondary KOSDAQ market. The U.S. Patent Trial and Appeal Board (PTAB) invalidated a patent held by rival Halozyme, removing a major source of uncertainty that had weighed on the stock.
As of 9:37 a.m. Friday, Alteogen was up 6.36% from the previous trading day, at one point surging more than 8%. EcoPro BM, the previous market cap leader, rose 3.25% at the same time, but Alteogen's sharper gains flipped the leaderboard on the KOSDAQ.
The rally followed a decision from the U.S. Patent Trial and Appeal Board. On Wednesday local time, the board issued a final ruling in a post-grant review (PGR) filed by multinational pharmaceutical company MSD, determining that Halozyme's U.S.-registered patent was invalid. The market views the decision as overwhelmingly favorable to Alteogen and MSD. With Halozyme's core patent losing its defensive power, the patent infringement lawsuit currently underway in a U.S. civil court is also more likely to be invalidated and dismissed.
The ruling is also fueling expectations for a revaluation of Alteogen's subcutaneous injection formulation platform "ALT-B4" and additional technology licensing deals. The invalidation raises the likelihood that ALT-B4's patent protection can be stably maintained through 2043. Expectations are also emerging that large-scale cash flow could be generated if Keytruda SC achieves a high market conversion rate.
Brokerages are raising their targets, saying Alteogen's valuation needs to be reassessed. Shinhan Securities on Friday raised its target price for Alteogen by 8.8% to 620,000 won from 570,000 won. "The argument that Alteogen would have to split Keytruda subcutaneous (SC) formulation royalties with Halozyme due to patent infringement has effectively become impossible with this ruling," said Eom Min-yong, a research fellow at Shinhan Securities. "The three existing discount factors on the stock — patent risk, Biogen's mid-single-digit royalty disclosure, and a steep Keytruda SC conversion — have all been removed."
The KOSDAQ index was up 0.11% at 1,178.21. By investor type, retail investors net bought 86.4 billion won and institutions net bought 20.8 billion won, while foreign investors took profits with net selling of 114.8 billion won.
