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1Q25 to be a key inflection point

Retain Buy and raise TP to W54,000

We raise our target price for HanAll Biopharma by 20% to W54,000 (from W45,000) based on a sum-of-the-parts (SOTP) valuation. To estimate operating value, we applied an EV/EBITDA of 9.7x―a discount to the average multiple of the top five domestic pharma companies (16.2x)―to our 2025F EBITDA of W8.6bn. We valued the firm’s autoimmune disease treatment pipeline at W2.5tr, up from W2.1tr previously.

We believe the stock’s trajectory this year will largely depend on key upcoming events related to batoclimab. In 1Q25, Immunovant (US partner) is set to announce results from a phase 3 trial of batoclimab for the treatment of myasthenia gravis (MG) as well as outline its strategy for expanding indications beyond MG. Until that announcement, we believe a cautious approach is warranted.

If the trial results are positive and Immunovant announces plans for swift commercialization, the stock is likely to rally on the elimination of uncertainties. However, disappointing trial results or delays in commercialization could negatively affect the stock in the short term.

2024 earnings review and 2025 outlook

For 2024, HanAll Biopharma reported revenue of W138.9bn (+3% YoY). Drug revenue increased 11.1% YoY to W119bn, driven by growing sales of flagship products such as BioTop, Eligard, and hair loss treatments. However, licensing income was only W6.9bn, affected by the absence of new milestone payments and adjustments to deferred revenue recognition.

Operating profit fell sharply to W230mn (-89.6% YoY), mainly due to a 56% YoY decline in licensing income, which led to a drop in gross margin (from 55.7% to 52.8%). SG&A expenses inched up 0.2% YoY to W73.1bn.

For 2025, we look for revenue of W152.6bn (+9.8% YoY) and operating profit of W6.4bn (+2,672% YoY). As licensing income is a key variable affecting operating profit, we may revise our earnings estimates after Immunovant’s update in 1Q25.