An analyst said SK Biopharmaceuticals needs to expand its product portfolio not only just with new drugs developed in-house but also by licensing in new candidate substances from outside for the company to grow.

"I expect SK Biopharmaceuticals will be able to secure a stable cash flow until 2032, when the patent for cenobamate (brand name: Xcopri), an epilepsy treatment, is expected to expire," said Jang Se-hoon, an analyst at Shinhan Investment Corp.

However, considering selling, general, and administrative (SG&A) expenses, including the company's plans to directly market cenobamate in the U.S., it seems necessary for the company to license in a new candidate substance, Jang added.

Jang also stressed the need to license in new candidates as the company's other pipelines will require more time for development.

"While the company is currently developing Carisbamate, a treatment for Lennox-Gasto syndrome, a rare epilepsy in children, the company had said it would release the treatment in 2025," Jang said. "Also, the company's next-generation epilepsy treatment SKL24741 is expected to enter phase 2 clinical trials within this year."

As SK Biopharmaceuticals has a direct sales system in the U.S., the company will be able to increase its business effect if it introduces a candidate substance from outside the company, Jang added.

Considering the marketing synergy, Jang explained that the company might need to secure a new epilepsy drug with a mechanism that does not overlap with cenobamate, or secure assets for rare epilepsy indications, including Dravet's syndrome, CDKL5 Deficiency Disorder, where no treatments are available.

However, Jung stressed that when considering the current net cash level of the company, which is about 200 billion won ($145.7 million), there will be some restrictions on the items that the company can license in.

"However, even for an item with a small expected sales volume, if it is an epilepsy-related treatment, the company will be able to reduce additional costs while expanding its profits through its U.S. direct sales system, which is focused on the central nervous system," Jang said.

Meanwhile, Jang also expects the company will turn profitable in 2024.

"In 2022, consolidated sales of SK Biopharmaceuticals are estimated at 235 billion won and an operating loss of 117.8 billion won," Jang said. "As one-off service sales related to the cenobamate partnership in 2021 act as a negative base, sales in 2022 are expected to decrease compared to the previous year."

The operating loss is attributable to the high SG&A expenses, Jang added.

Jang noted that while the high SG&A expenses of 2022 are expected to continue next year, even if one-off factors are removed, it is possible for the company to turn profitable purely based on its operating power, given cenobamate's U.S. sales growth.

"Although the share price has recently declined due to deterioration in the Korean biopharmaceutical market and earnings, the deterioration in earnings is due to increased SG&A expenses and not due to sluggish cenobamate sales in the U.S.," Jang said. "I expect full-fledged prescription growth for cenobamate from next year following the normalization of local marketing."

Taken together, Kim said his brokerage issued a new "buy" opinion on SK Biopharmaceuticals' shares at 100,000 won.

As of market close on Monday, SK Biopharmaceuticals' shares stood at 69,300 won, down 1.14 percent from the previous trading day.