SEOUL, November 9 (AJP) — Shares of South Korean biotechnology company Alteogen plunged more than 14 percent on Monday as investors worried that new U.S. drug pricing rules and a European patent dispute could threaten its future royalty revenue.
The stock fell as much as 23.94 percent to 152,500 won ($112.64) before recovering to 169,000 won as of 3:11 p.m., down 15.71 percent from Friday's close of 200,500 won, according to the Korea Exchange (KRX).
Alteogen develops technology that allows drugs normally administered through intravenous (IV) infusions to be given as quicker injections under the skin, known as subcutaneous (SC) injections. Its technology uses an enzyme to help drugs spread through tissue, shortening treatment times and making treatment easier for patients.
The selloff followed a 15.72 percent plunge in shares of U.S. rival Halozyme Therapeutics on Friday, when the stock closed at $103.63. The U.S. company develops similar technology for converting intravenous drugs into injections under the skin.
The concerns stemmed from new rules announced Thursday by the U.S. Centers for Medicare & Medicaid Services (CMS), which oversees government health insurance programs. Under the rules, drugmakers may no longer be able to avoid price cuts simply by changing how an existing medicine is administered.
From 2029, certain drugs converted into injections under the skin will be treated as the same medicine as their original versions when determining eligibility for U.S. government price negotiations. This could make it harder for drugmakers to avoid price cuts by changing how a medicine is given.
The change raised concerns over Alteogen's future royalty revenue from Keytruda Qlex, an injectable version of U.S. pharmaceutical giant Merck's blockbuster cancer drug Keytruda. Alteogen supplies technology used in the product and receives payments linked to its sales.
A European patent dispute added to the concerns. Halozyme, which develops competing injection technology, filed for a preliminary injunction in Italy in September against Merck's local subsidiary and a contract manufacturer. A hearing is scheduled for December 2.
Alteogen defended its business outlook in a statement Monday, saying demand for its technology remained strong because faster injections reduce treatment times and improve patient convenience.
The company also said U.S. drug price cuts could have a smaller impact on actual sales than the announced discounts suggest. Although negotiated discounts on the first 10 Medicare drugs range from 38 to 79 percent compared with 2023 list prices, Alteogen estimated the impact on actual sales would generally be within 20 percent after accounting for existing rebates and discounts.
The company pointed to $830 million in global third-quarter sales of Keytruda Qlex and said it would continue expanding global partnerships.
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