May 2, 2022

Yuhan Corp.: 1Q22 Review: Plenty More Than Lazertinib Share Yuhan Corp.: 1Q22 Review: Plenty More Than Lazertinib By Kim Tae-hee   Maintain BUY, target price of KRW75,000        We maintain BUY and TP of KRW75,000 on Yuhan Corp. The company’s appeal lies in: (1) the self-developed drug Leclaza (lazertinib), which has established a presence in the domestic market and is expected to fare well overseas; (2) a candidate substance currently licensed out to pharmas (incl. Gilread, Boehringer Ingelheim, Spine BioPharma); and (3) potential technology transfers of drugs in the pipeline. However, earnings momentum may slow on increased ad spending on new business. 1Q22 revenue in line with estimates; sluggish OP due to ad spending      Yuhan posted 1Q22 consolidated revenue/OP of KRW410.9bn (+8.4% YoY)/KRW6.1bn (-56.1% YoY); revenue was in line but OP fell well below. There was growth across the board: +8.7% YoY for Pharmaceuticals, +19.1% YoY for Household & Healthcare, +65.0% YoY for Overseas and +61.5% YoY for special-purpose segments. OPM dropped to 1.5% on plunging license fees (KRW14.0bn in 1Q21→KRW1.5bn in 1Q22) and surging ad spending for Y’s Biome and the pet business. Plenty of candidate substances aside from lazertinib  Lazertinib, which accounts for the largest portion of Yuhan EV, has standalone Phase 3 trial/concomitant test results (with amivantamab) pending. Attention should now be turned to candidate substances other than lazertinib. YH12852 (Processa Pharmaceuticals-licensed gastrointestinal disorder drug) began Phase 2a tests, and YH14618 (Spine BioPharma degenerative disc drug) passed Phase 2 (Phase 3 approved). Others include YH32367 (HER2 x 4-1BB; ABL Bio-licensed bispecific antibody; Phase 1 trials beginning) and YH25724 (Boehringer Ingelheim NASH drug; Phase 1a trials ended). POPULAR