Yuhan Corporation's Leclaza: 2 Years Since US Approval... Expectations for Rapid Growth in Year 3

Yuhan Corporation's non-small cell lung cancer drug 'Leclaza' (ingredient name: Lazertinib) marked the second anniversary of its approval by the U.S. Food and Drug Administration (FDA). As new drugs typically show visible revenue growth in their third year of launch, further growth is expected for Leclaza, which has surpassed $300 million (approximately 420 billion won) in milestone payments (technology fees by stage).

Leclaza obtained FDA item approval on August 19, 2024, as the first Korean anti-cancer drug to do so. Later that year in December, it received approval from the European Commission (EC), and last year, it secured consecutive approvals in the UK, Japan, Canada, and China, expanding its presence in the global market.

Since signing a technology export contract with Johnson & Johnson (J&J) in November 2018, Yuhan Corporation has achieved a cumulative milestone receipt of $300 million. By country, this includes $60 million from the US, $45 million from China, $30 million from Europe, and $15 million from Japan. The remaining milestones to be received upon achieving global sales targets stand at $650 million (approximately 910 billion won).

Separate from milestones, running royalties—known to be over 10% of net sales—have become a core profit source for Yuhan Corporation. Royalties received each quarter increased from 5.4 billion won in the first quarter of this year to 7 billion won in the second quarter. Yuhan Corporation recorded annual sales of 2.2 trillion won and operating profit of 100 billion won last year, and in the second quarter of this year, it posted consolidated sales of 639.5 billion won and operating profit of 66.9 billion won, setting a new quarterly record.

According to J&J's earnings report, the global cumulative sales of the Leclaza-Librivant combination therapy reached $546 million (approximately 750 billion won) in the first half of this year, growing about 70% compared to the same period last year. J&J presented a global sales target of approximately $5 billion (approximately 7 trillion won) for this combination therapy next year.

Factors contributing to the expansion of prescriptions include the National Comprehensive Cancer Network (NCCN) guidelines listing the Leclaza combination therapy as the preferred first-line treatment for EGFR-mutated non-small cell lung cancer, thereby establishing it as a standard treatment; the approval of the Librivant subcutaneous injection (SC) formulation; and the assignment of a 'J-code' to simplify US insurance claims. Jeong Jae-won, a researcher at iM Securities, stated, "The actual revenue increase effect following the J-code implementation will be visible from the third or fourth quarter of this year onwards," and raised the valuation of Leclaza from 7.6 trillion won to 7.8 trillion won.

Yuhan Corporation plans to expand its research and development (R&D) investment for the development of next-generation new drugs, based on the cash flow secured through Leclaza. The company has set a goal to increase its R&D investment, which has traditionally been over 10% of sales, to the 20% level.

A Yuhan Corporation official stated, "We will continue the entrepreneurial spirit of founder Dr. Il-han Yu, who dedicated the fruits of new drug development to patients and society," adding, "We are proving that we have built a virtuous cycle model where we create high value-added profits through global blockbuster new drugs and reinvest them back into R&D and society." The growth of Leclaza is expected to bring not only economic ripple effects, such as expanded technology export income and increased R&D reinvestment, but also social effects like improved access to treatment with domestically developed drugs.