Alteogen shares plunge on U.S. drug pricing concerns

Résumé détaillé

Shares of South Korean biopharmaceutical company Alteogen Inc. plunged Monday amid concerns that tighter U.S. drug pricing rules could threaten revenue from its technology used in…

Shares of South Korean biopharmaceutical company Alteogen Inc. plunged Monday amid concerns that tighter U.S. drug pricing rules could threaten revenue from its technology used in Keytruda’s subcutaneous (SC) formulation, a key source of income for the company.

Alteogen closed down 16.01 percent at 168,400 won ($125.53) on Monday. The decline came despite record third-quarter revenue of 119.8 billion won, marking the first time the company had generated more than 100 billion won in a single quarter. Its shares have fallen 36 percent from 265,000 won on October 1.

The immediate catalyst for the sell-off was a U.S. government move to tighten drug pricing rules.

The Centers for Medicare and Medicaid Services (CMS) finalized a rule Thursday under which certain drugs converted from intravenous (IV) to SC formulations may still be treated as the same drug as their original IV versions when determining eligibility for Medicare price negotiations.

The change could make it harder for drugmakers to avoid or delay price negotiations by launching new formulations with different methods of administration.

The rule has raised concerns that Keytruda SC could face pricing pressure earlier than expected. Keytruda, a cancer drug developed by MSD, generated about $31.7 billion in sales last year, making it the world’s top-selling drug. MSD began transitioning patients from the intravenous (IV) version to the SC formulation in the second half of last year. The SC version accounted for about 10 percent of Keytruda’s total sales in the third quarter of this year.

Alteogen licensed its Hybrozyme platform technology to MSD, enabling existing cancer drugs to be converted from IV to SC formulations. The technology is used in Keytruda SC, linking Alteogen’s revenue to the drug’s sales.

Under the licensing agreement, Alteogen receives milestone payments as Keytruda SC reaches specified sales targets.

U.S. biotechnology company Halozyme Therapeutics Inc.

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