Alteogen’s breakout Q1 overshadowed by US scrutiny of subcutaneous drug combos

Alteogen shattered its own sales record in the first quarter of 2025, riding a $45 million upfront payment from AstraZeneca and a surge in ALT-B4 product sales. Still, investors pulled back, as new U.S. drug pricing rules threaten to narrow what qualifies as a "new" combination therapy.

Shares fell 3.88 percent on Wednesday to close at 334,500 won ($239) on the Kosdaq, even after the Korean biotech reported a 253 percent year-over-year increase in operating profit to 61 billion won ($44 million) and total revenue reaching a record 83.7 billion won. 

The stock dropped as low as 319,500 won during intraday trading and had recovered slightly to 329,500 won as of 11:50 a.m. on Thursday.

The sell-off followed earnings released post-market Tuesday, highlighting a breakout quarter for the company’s Hybrozyme platform. ALT-B4, the centerpiece of that platform, is a recombinant human hyaluronidase that breaks down hyaluronic acid in subcutaneous tissue, allowing intravenous (IV) drugs to be reformulated as subcutaneous (SC) injections. The technology is currently licensed to six global pharmaceutical partners.

The company says it’s seeing royalty inflows from China for its Herceptin biosimilar ALT-L2, and revenue from Terugase -- its standalone ALT-B4 product -- is helping “steadily expand” its base, a spokesperson said. “Our vision of transforming from a biotech company into a global biopharmaceutical player is becoming more tangible,” the spokesperson said, adding that the company aims to sign two new licensing deals each year.

The March licensing deal with British pharma AstraZeneca, worth up to $1.35 billion, granted exclusive rights to ALT-B4 for three oncology programs and delivered Alteogen the largest upfront payment in its history. Additional revenue came from raw material supply ahead of the expected launch of the first ALT-B4-enabled SC drug—a reformulated version of Keytruda (pembrolizumab) that is currently under FDA review, with a decision anticipated by Sept. 23 and commercial launch planned for Oct 1.

Despite the commercial momentum, regulatory uncertainty is mounting. On Tuesday, local time, the U.S. Centers for Medicare & Medicaid Services (CMS) released revised draft guidance under the Inflation Reduction Act’s drug price negotiation program, tightening the criteria for fixed-dose combination therapies to be considered new drugs. 

Under the updated framework, only combinations that offer a “clinically meaningful difference” will be exempt from being grouped with single-agent products. Otherwise, they will be evaluated alongside existing drugs that share the same active moiety, potentially undermining pricing power.

“There may exist fixed combination drugs for which one of the active ingredients... is not biologically active against the disease state,” CMS wrote. “In such cases, the addition does not result in a clinically meaningful difference.”

That clarification could cloud the outlook for SC reformulations -- unless, as Alteogen maintains, the clinical benefits are substantial.

“SC formulations developed using ALT-B4 meet the current criteria to be considered new drugs,” the company said in a shareholder update Wednesday. “These formulations not only reduce administration time but also regulate drug absorption, potentially reducing side effects compared to IV. These attributes may lead to safer, more effective treatments and constitute what we believe to be a clinically meaningful difference.”

The company added that its partners are not solely focused on extending patent life. “We’re seeing interest rooted in therapeutic benefit,” Alteogen wrote. While CMS has tightened its language, Alteogen believes its case remains strong. “We believe the revised guidance will have limited impact on our future licensing deals.”

Keytruda SC, the furthest along in development, could appear on CMS’s 2026 negotiation list. However, with its patent nearing expiration and IV biosimilars approaching launch, Alteogen noted it “may be excluded.”

Alteogen is already shifting its focus to follow-on programs, including ALT-B4-enabled antibody-drug conjugates (ADCs), which the company says could improve outcomes by reducing toxicity and enabling higher dosing. If proven in clinical trials, those benefits could strengthen ALT-B4’s therapeutic profile and help protect its pricing.

The company also noted that many of its prospective partners are preparing to apply SC formulations “from the new drug development stage,” meaning they’d fall outside current IRA pricing rules altogether.