Homegrown drug powers SK Biopharm to 39% operating margin

Operating profit rises 56.9% to KRW 97.1 billion; revenue climbs 40.3% to KRW 247.4 billion

Profitability remains strong despite increased R&D and marketing investment… company accelerates development of future pipeline

SK Biopharmaceuticals maintained an operating margin of approximately 39% in Q2, once again demonstrating the profitability of its homegrown innovative drug business. Despite lower one-off licensing revenue and increased marketing investment, the company continued to grow earnings on the strength of epilepsy drug sales alone, highlighting the improving quality of its earnings.

According to the Financial Supervisory Service on Aug. 5, SK Biopharmaceuticals posted KRW 97.1 billion in consolidated operating profit for Q2, up 56.9% year over year. Revenue rose 40.3% year over year to KRW 247.4 billion. The operating margin remained stable at 39.2%, compared with 39.4% in the previous quarter.

The company's epilepsy treatment cenobamate (marketed as Xcopri in the U.S.) drove earnings growth. Cenobamate is an innovative epilepsy drug independently developed and commercialized by SK Biopharmaceuticals, with the company taking charge of the entire process from discovery and clinical development to regulatory approval and commercialization. The company obtained U.S. Food and Drug Administration (FDA) approval in November 2019 and has marketed the drug directly in the United States through its subsidiary SK Life Science since May 2020.

Q2 U.S. sales of cenobamate reached KRW 224.4 billion, up 45.6% from the same period last year. Cumulative U.S. sales for the first half totaled KRW 422.1 billion. Prescription growth also continued. Total prescriptions (TRx) in the United States increased 8.4% quarter over quarter to approximately 143,000 in the second quarter, while new-to-brand prescriptions (NBRx) remained above 1,800 per month on average. Monthly prescriptions reached a record 49,155 in June.

Change in quarterly SK Biopharmaceuticals performance (Source: SK Biopharmaceuticals)

The company said the latest results were particularly meaningful because earnings growth was achieved without one-off gains. Profit growth was sustained solely through the sales of Xcopri, even in a situation where the contribution of technology fee revenues decreased, and expenses increased.

In Q1, one-off milestone payments related to overseas approvals of cenobamate contributed KRW 17.1 billion in service revenue. No comparable milestone revenue was recognized in Q2, resulting in a KRW 7.4 billion sequential decline in service revenue.

Selling and administrative expenses also increased during the quarter. SG&A expenses rose 9.3% from the previous quarter to KRW 135.3 billion, reflecting expanded marketing activities, including the resumption of direct-to-consumer (DTC) advertising in April and the launch of a new DTC campaign in June.

SK Biopharmaceuticals attributed its strong profitability to operating leverage. While fixed costs associated with establishing its U.S. commercial infrastructure and sales organization were substantial during the early launch period, rapidly increasing prescriptions have driven revenue growth while SG&A and other fixed costs have remained relatively stable. As a result, incremental revenue has translated directly into earnings growth, allowing profits to increase faster than sales.

During the company's earnings conference call held the same day, Hyungrae Cho, Head of Communications at SK Biopharmaceuticals, said, "The fact that operating profit increased despite the absence of one-off milestone revenue and higher SG&A expenses once again demonstrates that expanding U.S. sales of cenobamate directly translate into earnings growth.”

In addition to seeking sales growth of cenobamate, SK Biopharmaceuticals is also accelerating development of its pipeline.

First, the company is seeking to expand the presence of cenobamate in the global market through label expansions across additional indications and age groups. A New Drug Application (NDA) for an oral suspension formulation of cenobamate was submitted to the FDA in March. The liquid formulation is expected to improve treatment convenience for patients who have difficulty swallowing tablets, including pediatric patients. The company anticipates its approval in early 2027.

The company also plans to submit a supplemental NDA (sNDA) later this year to expand indications to include primary generalized tonic-clonic seizures (PGTC) and pediatric patients. In Asia, cenobamate has already been approved in Korea and launched in China. The regulatory process for its approval is ongoing in Japan, with approval targeted for within the year. In Latin America, launches have already taken place in Peru and Chile, with Brazil scheduled to follow this month.

SK Biopharmaceuticals’ early-stage pipeline review (Source: SK Biopharmaceuticals)

The company is also actively working to secure its next growth engine. Beyond cenobamate, SK Biopharmaceuticals is building its next-generation pipeline around three strategic areas: central nervous system (CNS) small molecules, radiopharmaceutical therapy (RPT), and targeted protein degradation (TPD).

In RPT, the company is pursuing both in-licensed assets and internally discovered candidates. SKL35501 (FL-091), an Actinium-225-based NTSR1-targeted radiopharmaceutical, is currently in a Phase I clinical trial in the United States. Another candidate, SKL37321 (WT-7695), a Lutetium-177-based CA9-targeted radiopharmaceutical, is undergoing preclinical development with an Investigational New Drug (IND) application planned for 2027. The company is also developing its proprietary Noble Chelator platform, designed to overcome the stability and scalability limitations of existing chelators while enabling compatibility with a broader range of radioisotopes and targeting molecules. The platform is intended to support repeated generation of multiple RPT candidates rather than a single candidate.

In TPD, SK Biopharmaceuticals is advancing SKT-18416, a selective p300 degrader. This TPD is designed to target the p300 protein involved in cancer cell growth and survival. Unlike conventional dual p300/CBP inhibitors, which have raised safety concerns such as thrombocytopenia because they inhibit both proteins simultaneously, SKT-18416 is designed to selectively degrade p300 while minimizing effects on CBP. An IND submission is targeted for the first half of 2027.

The company has also established MOPED, a molecular glue discovery and analysis platform, to generate additional TPD pipeline candidates. In June, SK Biopharmaceuticals entered into an AI-driven drug discovery collaboration with Insilico Medicine, aiming to shorten early-stage candidate discovery timelines, reduce development costs, and improve the probability of success.

Cho said, “Insilico Medicine signed AI-based drug discovery partnerships with global top-tier pharmaceutical companies for other disease areas in both March and July this year. By combining our in-house AI drug discovery platform with our collaboration with Insilico Medicine, we expect to significantly reduce both the time and cost required for early-stage candidate discovery."

Cho added, “The company plans to provide updates on pipeline progress and R&D achievements over the first 9 months of the year during our Q3 earnings announcement in early November. We will continue reinforcing a virtuous cycle in which cash generated from cenobamate funds development costs and risks, with the resulting returns reinvested into future innovative drug development."