Q3 revenue hits 119.8 billion won, operating profit 78.9 billion won—both all-time highs; nine-month figures eclipse full-year 2023 results
Keytruda SC sales growth and successful licensing deals yield initial $25 million milestone payment
Alteogen (196170) nearly tripled its operating profit in the third quarter compared to a year earlier, fueled by the commercial success of its subcutaneous (SC) formulation of Keytruda and new technology exports. Quarterly revenue surpassed 100 billion won for the first time in the company's history, while the operating margin reached 66%.
Alteogen announced on the 3rd that its preliminary consolidated revenue for the third quarter stood at 119.8 billion won, with operating profit coming in at 78.9 billion won. These figures represent year-on-year increases of 144.4% and 195.8%, respectively. Compared to the previous quarter, revenue expanded from 68.9 billion won to 119.8 billion won, and operating profit rose from 34.2 billion won to 78.9 billion won.
The operating margin climbed 11.4 percentage points to 65.9%, up from 54.5% in the same period last year. It also marked a 16.3 percentage-point increase from 49.6% in the prior quarter. A notable improvement in profitability was evident as an increase of 50.9 billion won in revenue generated an additional 447 billion won in operating profit.
Cumulative revenue for the first three quarters of the year reached 260.3 billion won, with operating profit totaling 152.4 billion won. Both figures surpassed the company's full-year 2023 results—revenue of 215.9 billion won and operating profit of 106.9 billion won—within just nine months. Cumulative net profit also surged 102.8% year-on-year to 143.5 billion won.
Keytruda SC Sales Accelerate, Q3 Revenue Outpaces First Half
The earnings expansion was propelled by Hybrozyme, Alteogen’s proprietary subcutaneous formulation-switching technology. This technology was applied to Keytruda Qrex, the SC formulation of the immuno-oncology drug Keytruda sold by U.S.-based Merck & Co. (MSD).
Third-quarter sales of Keytruda SC reached $830 million, representing an approximately 79% increase from $463 million in the previous quarter. Sales in the single quarter outpaced the entire first-half revenue of $590 million, with roughly 58% of this year’s cumulative $1.42 billion in sales generated in the third quarter.
While these represent product sales for MSD and are distinct from Alteogen’s top-line revenue, Alteogen receives royalties tied to product sales performance under its licensing agreement with MSD.
Alteogen secured its first commercial milestone of $25 million (approximately 34.4 billion won) tied to Keytruda SC sales. This marks the initial payoff from a total of $1.0 billion in sales milestones included in the contract with MSD. The achievement is significant as it adds revenue generated from actual drug sales to the upfront development and regulatory milestone payments received previously.
The company explained that its third-quarter performance reflects the influx of commercial sales milestones from Keytruda SC and new technology export achievements. However, because revenue recognition amounts per contract are not disclosed, it is difficult to isolate the exact contribution of individual items to the overall financials.
Licensing Deals Expand to Novartis, Bringing 2024 Exports to $4.4 Billion
The company also maintained momentum in closing new licensing agreements. In August, Alteogen signed a deal worth up to $365 million with an undisclosed global pharmaceutical company, followed by a subcutaneous formulation development and commercialization agreement worth up to $3.223 billion with Novartis in September.
As of the third quarter of this year, Alteogen has signed a total of four Hybrozyme licensing agreements with a combined potential value of up to $4.452 billion. The scope of applications continues to widen alongside MSD's commercialization of Keytruda SC and expanding partnerships with major global drugmakers.
Total contract values encompass development, regulatory, and commercialization milestones. Actual revenue recognition will vary depending on the fulfillment conditions of each contract, and sales-based royalties may accrue separately following commercialization.
"This earnings performance is the result of combined tailwinds from the commercial success of our Hybrozyme platform by our partners and our new technology exports," said Alteogen CEO Jeon Tae-yeon.
