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Pipeline progress needed

Maintain Buy; lower TP to W50,000

We lower our target price for Dong-A ST to W50,000 (vs. the previous adjusted target price of W64,854, which reflects the share count change following the Mar. 3 cancellation of treasury shares). Our revised target price is based on an operating value of W814.8bn minus net debt of W331.8bn. In deriving our operating value estimate, we applied an EV/EBITDA of 11.2x, the average multiple of top Korean pharmas, to our 12-month forward EBITDA estimate. Top-line growth remains solid, while profitability, which deteriorated in 2025, is recovering through cost controls and other measures. That said, tangible pipeline progress is needed. Key points to watch are: 1) the completion of the additional cohort study for DA-1726 (GLP-1/GCG dual agonist) and subsequent data release; and 2) the clinical development strategy for DA-1241 (GPR119 agonist).

2026 outlook

For 2026, we look for revenue of W824.2bn (+11% YoY) and operating profit of W41.0bn (+49% YoY). We expect ETC revenue to grow 14% YoY, led by Growtropin (growth hormone), Jaqbo (gastroesophageal reflux disease treatment), and Diphereline (precocious puberty treatment). Overseas revenue should also continue to grow (+6% YoY), supported by stronger demand for beverages such as Bacchus. Despite a rising contribution from in-licensed products, cost controls should lift OP margin to 5% (+1.3%p YoY).

Pipeline update

Progress in clinical development is the key area to watch. For DA-1726, 48mg cohort data showed an average weight loss of 9.1% after eight weeks. In the ongoing higher-dose Phase 1 study, dose titration to the 64mg target has been completed, with top-line data expected in 4Q26. Meanwhile, in a preclinical study of DA-1241 in combination with the MASH treatment resmetirom (THR-beta agonist), the combination reduced body weight by 23.6% and hepatic lipid accumulation by 84.6%, indicating potential synergistic effects on weight loss and liver protection (ADA 2026). The clinical development strategy for DA-1241 therefore warrants attention.