Graphy, Celltrion rally on global revenue prospects[K-Bio Pulse]

[Song Young Doo, Edaily Reporter] Graphy and Celltrion posted strong gains from the first trading session of the new year. Graphy’s shares surged on expectations of revenue expansion and increased corporate value in its targeted global markets.

Celltrion also traded sharply higher following forecasts of record fourth-quarter earnings and news that it has completed the acquisition of a U.S. manufacturing facility. In contrast Cellumed hit the daily limit down as the fallout from the cancellation of its planned acquisition by L&C Bio continued.

Graphy share price trend.(Source=KG Zeroin MP Doctor)

◇Graphy Expects Expansion in Global Market Sales



According to KG Zeroin’s MP Doctor(formerly MarketPoint) on Jan. 2, Graphy shares closed at 28,300 won up 15.27%, or 3,750 won, from the previous session. The rally was largely attributed to growing expectations of revenue expansion in global markets.

Graphy is a 3D bioprinting materials specialist that has developed the world’s first shape memory material. Based on this technology the company has developed transparent orthodontic aligners that automatically restore their shape at specific intraoral temperatures earning recognition for overcoming the limitations of conventional clear aligners.

The global orthodontics market is estimated at approximately 110 trillion won, with the clear aligner segment alone valued at around 33 trillion won.

In a research report, analyst Ha Tae gi of SangSangIn Securities said that the primary global market targeted by Graphy is worth about 10 trillion won, adding that confirmation of revenue growth in this segment could significantly increase the company’s valuation.

Graphy is expected to accelerate its global expansion starting this year, with key events including ODM exports to Europe, full-scale revenue generation in the U.S. market in the second half and mid to long term expansion into Japan, China and Latin America.

Ha said “The competitiveness of shape memory clear aligners lies in their ability to enhance aesthetics and convenience while accurately moving teeth in the desired direction.”

adding “The key question is whether Graphy can expand exports to markets such as the U.S., China, Japan and Latin America. This year will be an important one in confirming that potential through concrete figures or contracts.”

Graphy has already signed an exclusive supply agreement for clear aligners with a U.S. 3D bioprinting company. The company entered into a strategic exclusive partnership and large scale supply contract with FUGO Precision 3D(FUGO), a U.S. firm that owns proprietary layer less 3D printing technology.

Through the partnership the two companies plan to establish a mass production system for shape memory aligners(SMA) using 3D printing. The collaboration with FUGO is expected to provide Graphy with a foothold to establish a meaningful presence in the U.S. orthodontics market.

Graphy also cited its collaboration with FUGO and expectations of global revenue growth as key drivers behind the stock’s sharp rise. A Graphy official said “We believe the securities firm report projecting global revenue expansion also had an impact on the share price.”

adding “More than that, the announcement of the supply agreement with FUGO is believed to have had a positive effect.”

FUGO has developed a proprietary layer-less printing technology that uses centrifugal force to continuously form outputs without layers. The technology enables ultra transparent prints with precision down to 10 micrometers(μm), making it well suited for orthodontic applications that require high aesthetics and precision.

In particular production speeds are up to 10 times faster than conventional 3D printers, and surface quality is regarded as world-class with virtually no defects. A new shape memory clear aligner incorporating the two companies’ technologies is scheduled to be unveiled at the Chicago Dental Society(CDS) Midwinter Meeting one of the world’s three major dental exhibitions later this year.



◇Celltrion hits 52 week high on record Q4 outlook completion of U.S. plant acquisition



Celltrion shares rose sharply as forecasts pointed to record fourth-quarter earnings and the company completed the acquisition of a U.S. manufacturing facility in just five months. During intraday trading on Jan. 2, the stock broke above its 52 week high, marking the first time in several years that Celltrion shares have gained more than 10% in a single session.

Celltrion closed at 202,500 won, up 11.88%, or 21,500 won, from the previous session. Market observers attributed the surge to the company’s fourth quarter earnings outlook.

A market source said “Celltrion’s stock rally appears to be driven by the fourth quarter earnings guidance announced on Dec. 31."

adding “Investor sentiment was boosted by expectations of the highest ever quarterly performance along with new revenue prospects from the contract manufacturing organization(CMO) business following the U.S. facility acquisition.”

According to Celltrion’s fourth-quarter earnings guidance released on Dec. 31, consolidated revenue is expected to reach 1.2839 trillion won with operating profit projected at 472.2 billion won.

This represents year on year increases of 20.7% in revenue and 140.4% in operating profit, marking record quarterly highs for both metrics. If confirmed full year revenue is forecast to reach 4.1163 trillion won up 15.7% while operating profit is expected to surge 136.9% to 1.1655 trillion won surpassing 4 trillion won in annual sales and 1 trillion won in operating profit for the first time.

This year will also see the generation of new CMO revenue that did not exist last year. Celltrion was named preferred bidder for the U.S. facility in July, signed a definitive agreement with Eli Lilly and Company in September, and completed the acquisition on Jan. 2.

Through the deal Celltrion secured a contract to supply biologic drugs worth a total of 678.7 billion won over three years through 2029. Excluding facility operating costs the company expects to recover more than its $330 million investment in the acquisition within a few years solely through CMO revenue.

Celltrion plans to expand the acquired U.S. manufacturing facility’s capacity from 66,000 liters to 132,000 liters. Through this expansion, the company aims to proactively respond to growing demand for its own products in the U.S. and global markets while actively rolling out contract development and manufacturing organization(CDMO) services for global pharmaceutical companies.



◇Cellumed plunges on cancellation of L&C Bio acquisition



Cellumed hit the daily limit down after L&C Bio Group withdrew from its planned acquisition. Cellumed shares closed at 808 won, down 29.98%, or 346 won, from the previous session.

L&C Bio had planned to acquire a 33.9% stake in Cellumed through a capital increase via its subsidiary L&C ES, positioning itself as the largest shareholder. The stock had previously surged to its daily upper limit on the acquisition news, but uncertainty resurfaced following L&C Bio’s decision to scrap the deal.

Cellumed lost a royalty lawsuit last year against U.S. medical device company Viewcel Papas, resulting in a court ruling ordering compensation of approximately 16.6 billion won which triggered concerns over liquidity.

The company pursued a merger and acquisition deal with L&C Bio to address the liquidity crunch but the plan ultimately fell through. Cellumed now plans to proceed with a third party capital increase under the same terms targeting TD Landmark Consortium No. 1 instead of L&C Bio.