Hanmi Pharm hits upper limit, then tumbles — analysts still see 810,000-won upside

Hanmi Pharm shares hit the daily upper price limit Monday before tumbling more than 10 percent the following day. The stock surged Monday on news that the company had licensed out a new obesity drug candidate designed to selectively burn fat while minimizing muscle loss, but the sharp one-day rally gave way to profit-taking and post-surge fatigue. Securities firms, however, all raised their target prices, signaling confidence in the company's medium- to long-term growth prospects.

Hanmi Pharm was trading down 11.48 percent at 478,000 won ($346) as of 9:35 a.m. Tuesday, according to Korea Exchange, a day after hitting the upper limit of 540,000 won on the technology export news.

Hanmi Pharm disclosed Monday that it had signed an exclusive license agreement with Genentech, a subsidiary of the Roche Group, for HM17321 (a UCN2 analogue), a new drug candidate targeting metabolic disease treatment. Under the deal, Genentech secures exclusive rights to develop, manufacture and commercialize HM17321 worldwide, excluding South Korea.

The total deal is valued at up to $2.3 billion, including clinical development and commercialization milestones. Hanmi Pharm will receive an upfront payment of $190 million, with additional sales royalties to follow after commercialization. The company also signed a technology licensing deal worth $1.3 billion with Eli Lilly for sonepeglutide in the first half of this year.

Securities firms all raised their target prices for Hanmi Pharm on Tuesday. Korea Investment & Securities set the highest target at 810,000 won, followed by NH Investment at 760,000 won, Mirae Asset and Kiwoom Securities at 730,000 won, DS Investment & Securities at 720,000 won, Meritz Securities at 710,000 won, and Yuanta Securities Korea at 700,000 won. Analysts noted that even compared with Monday's closing price of 540,000 won, the stock still has more than 30 percent upside.

Wi Hye-ju, an analyst at Korea Investment & Securities, said the company is currently conducting a Phase 1 trial in the United States involving healthy volunteers and obese patients. While no interim results have been made public, she said the deal is the largest technology licensing transaction ever recorded among listed companies. She forecast that the upfront payment and rising sales of high-margin core products would drive Hanmi Pharm to record annual sales of 2 trillion won and operating profit of 578.1 billion won this year.

Han Seung-yeon, an analyst at NH Investment, said Hanmi Pharm had reclaimed its position as the country's top pharmaceutical company by closing two landmark technology export deals — with Eli Lilly and Roche — this year. Han valued the company's proprietary new drug pipeline at approximately 2.3 trillion won and projected that risk-unadjusted sales attributable to those assets could reach $7.9 billion by 2046.

Kim Jun-young, an analyst at Meritz Securities, noted that the upfront payment of $190 million represents about 8.2 percent of the total deal value. Given that the drug is still in Phase 1 trials and that the global average upfront ratio is 6 to 7 percent, Kim said the terms are highly favorable for Hanmi Pharm.

Some analysts, however, downgraded their investment opinion to "neutral" (hold), citing fatigue from the sharp short-term rally. Seo Geun-hee, an analyst at Samsung Securities, said that with the share price having surged 30 percent on Monday, near-term upside relative to the short-term target price is limited. Seo raised the target price but cut the investment rating from buy to neutral.