Pharmaceutical and biotech stocks could be reappraised ahead of the government's planned introduction of a KOSDAQ tier system, according to a brokerage analysis. As the selection of KOSDAQ premium stocks converges with technology transfers and major conference schedules, investor sentiment is expected to improve from the fourth quarter.
Kim Sun-ah, an analyst at Hana Securities, said in a report Monday that the KOSDAQ tier system being pursued by the government will likely be designed to boost the confidence of foreign and institutional investors. The KOSDAQ tier system classifies about 1,800 KOSDAQ-listed companies into premium, standard, and management groups. Specific selection criteria are expected to be announced as early as September-October and take effect from the first half of next year.
"To differentiate from the existing KOSDAQ segment, there is a high possibility that criteria will be established to evaluate technology transfer performance and corporate competitiveness more clearly and strictly," Kim said. "Even a newly listed company can be included in the premium tier if it has outstanding technology, so continued attention to IPO stocks is needed." She cited Ingenia Therapeutics as a representative example.
She also advised paying preemptive attention to companies with a high possibility of premium-tier inclusion. "Even if a company does not meet the premium requirements at the time the tier system takes effect, if it is expected to meet them by year-end or the first half of next year, its stock price could rise significantly on rebalancing expectations," Kim said. "For now, an approach centered on large biotech companies with a high possibility of premium inclusion is valid."
She named Dongkook Pharmaceutical, LigaChem Biosciences (141080), Alteogen (196170), STPharm, ABL Bio, OliX (226950), and HK inno.N—all current KOSDAQ segment stocks—as companies likely to be included in the premium group. "Since the buying timing differs by stock, a strategy of using active bio funds or ETFs rather than individual stocks is also worth considering," Kim advised.
While momentum is limited in the third quarter, when global big pharma technology transfers are fewest and there are no major conferences, she forecast that investor sentiment will recover with the September notification of late-breaking abstract (LBA) presentations for the European Society for Medical Oncology (ESMO) meeting and the fourth-quarter technology transfer and conference season.
"The third quarter is traditionally the period with the fewest technology transfer and conference events," Kim said. "But from the time of the September ESMO LBA presentation notifications, there is a high possibility of stock-boosting events, and in the fourth quarter, technology transfers and conferences will be concentrated, drawing funds into the biotech sector." She added, "If the upward momentum of major sectors slows, there is a high possibility that funds will move to the pharmaceutical and biotech sector, which has been relatively sluggish this year."
For July recommendations, she named Hanmi Pharmaceutical on the KOSPI and Alteogen, OliX, and LigaChem Biosciences on the KOSDAQ. "For Hanmi Pharmaceutical, the technology transfer value of sonepegludutide is not yet sufficiently reflected in its stock price," Kim said. "Since the stock price has fallen excessively on concerns over the return of efinopegdutide, it is more likely to be perceived as the clearing of a negative factor, and the possibility of additional technology transfers remains."
She continued, "For Alteogen, the growth of Keytruda's subcutaneous (SC) formulation will be confirmable at MSD's earnings announcement in early August. The possibility of additional technology transfers before the summer vacation season is also anticipated."
"OliX is highly likely to draw market attention as it discloses the development status of obesity and hair-loss treatments at its R&D Day on July 14," Kim said. "LigaChem Biosciences will also highlight its second-half development schedule and technology transfer expectations through its R&D Day on the 8th."
