April 25, 2024

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[THE INVESTOR] Daewoong Pharmaceutical has hold its first ever non-deal roadshow to promote its botulinum toxin which is expected to be the first Botox biosimilar to hit the US market. The roadshow was held between July 10-13 in Singapore and Hong Kong.

Although Daewoong is a leading drug maker here with nearly 60 years of operation, foreign investors’ awareness of the company is far lower than other Korean biotech firms that are developing botulinum toxin products, according to NH Investment & Securities. 

Foreign investors’ ownership of Daewoong stands at around 5 percent, significantly below its rivals Medytox and Hugel, with foreign equity stake exceeding 50 percent.

The roadshow comes as the company is shifting its business focus to overseas markets with its wrinkle treatment toxin Nabota, which awaits the Food and Drug Agency’s approval for US sale.

“Investors who were new to the toxin market were paying attention to the potential of Nabota as a first-mover in the Allergan’s Botox biosimilars market in the US just like Celltrion penetrated into the J&J’s Remicade market with its Inflectra,” NH Investment & Securities analyst Ku Wan-sung said.

The company had submitted a biologic license application for Nabota in May 2017 hoping to bring the wrinkle treatment to the US by end-2018.

But as the FDA rejected its application by issuing a complete response letter FDA in May, its entry to the key market has been delayed till next year.

While Daewoong’s traditional pharma business makes around 5 percent profit margin, the new growth engine Nabota is expected to have a profit margin of 50 percent.

“Investors showed interest in a long hedge in particular as the company’s margin level can be dramatically boosted if the portion of Nabota’s sales increases,” Ku said.

He added that the only risk that Nabota has is the ongoing litigation with Medytox over the origins of the bacterial strain used to produce its botulinum toxin products.

Since 2016, Medytox has claimed that Daewoong stole its strain and related manufacturing secrets to develop Nabota. Medytox filed a civil lawsuit in the US against Daewoong in July last year, but the court dismissed the case.

A civil suit in Korea between the companies remains to be settled, with a ruling expected to be made next year.

By Park Han-na (hnpark@heraldcorp.com)