SK Biopharmaceuticals (326030.KS) posted first-quarter results that beat market expectations, with analysts projecting continued revenue growth driven by its in-house epilepsy treatment Cenobamate (sold as Xcopri in the U.S.). However, intensifying competition in the epilepsy treatment market remains a variable.
According to industry sources Thursday, SK Biopharmaceuticals' first-quarter consolidated revenue reached 227.9 billion won ($168 million) and operating profit stood at 89.8 billion won ($66 million), up 57.8% and 249.7% year-on-year, respectively. Net profit rose 423.5% from the same period last year to 102.7 billion won. Revenue and operating profit exceeded consensus estimates by approximately 7.0% and 24.8%, respectively.
The earnings growth is attributed to Cenobamate. Meritz Securities said in a report that SK Biopharmaceuticals achieved its highest quarterly operating profit despite increased research and development (R&D) and marketing expenses. The brokerage predicted that short-term prescription growth is likely to continue once Cenobamate's direct-to-consumer (DTC) advertising resumes and marketing to medical professionals expands in earnest. Cenobamate's U.S. sales in the first quarter grew 48.4% year-on-year to 197.7 billion won. Daol Investment & Securities explained that milestone revenue from Cenobamate's U.S. approval contributed to the profit improvement.
Analysts expect Cenobamate's revenue growth to continue this year. SK Biopharmaceuticals has completed the U.S. new drug application (NDA) for Cenobamate's suspension formulation and plans to pursue additional approval applications within this year to expand indications for generalized seizures and pediatric use. "Revenue growth centered on high-margin Cenobamate will continue," said Lee Ji-soo, a researcher at Daol Investment & Securities. "Indirect benefits from generic entry of competing drugs are also expected." She also predicted that securing follow-up products within the year would serve as additional growth momentum.
China business value is also cited as a re-rating factor. Meritz Securities presented the Hong Kong listing push by Ignis Therapeutics, a Chinese joint venture in which SK Biopharmaceuticals holds approximately 41% stake, as a factor for re-evaluating non-operating value. The brokerage assessed that listing visibility has increased following Chinese approval of Cenobamate and sleep disorder treatment Solriamfetol.
However, clinical trial results from competing drugs are cited as a future variable. "The epilepsy market has a high proportion of combination therapies, so the possibility that the emergence of new drugs will immediately lead to a decline in Cenobamate sales is limited," said Kim Joon-young, a researcher at Meritz Securities. "However, if efficacy and safety data from competing drugs lead to approval and commercialization, competition intensity in the new prescription market could intensify." Lee Ji-soo of Daol Investment & Securities also analyzed, "There is a possibility of intensified competition going forward as the competing new drug 'XEN1101' pursues U.S. Food and Drug Administration (FDA) approval," adding, "If indications are expanded by that time, the company can secure competitive responsiveness."
