A new contract manufacturing deal bagged by Samsung BioLogics, potentially worth 86 billion won ($72 million), has boosted its target stock price.

SK Securities on Wednesday adjusted its target price for Samsung BioLogics shares to 470,000 won, from the previous 400,000 won.

“Samsung BioLogics’ 2020 unconsolidated operating profit is anticipated to increase 684.5 percent on-year to 234 billion won,” said analyst Lee Dal-mi, along with forecasting that its 2019 operating profit would be around 29.8 billion won. 

“The increased use of its second and the third plants will propel Samsung BioLogics’ revenue growth,” the analyst said, explaining the reason behind her upward adjustment of the 2020 and 2021 operating profit by 16.2 percent and 15.2 percent, respectively.

Lee assessed the accounting fraud allegations against Samsung BioLogics are beginning to shed uncertainty on the ongoing final trials of eight of its high-level officials.

The analyst added that should the company’s US partner Biogen gets approval from the Food and Drug Administration for its Alzheimer’s disease drug aducanumab, it would buoy its stocks.

Samsung BioLogics has recently been piling up contract manufacturing deals.

Its latest deal involving an unspecified US pharmaceuticals firm was worth 55.2 billion won, which is 10.3 percent of the company’s 2018 revenue. There is a chance the deal could increase to 86 billion won on further orders from the client, Samsung BioLogics said.

Last week, the company bagged a 22.5 billion-won biopharmaceuticals contract manufacturing deal from another Asian firm.

In 2019, Samsung BioLogics has inked at least eight contract manufacturing deals, with companies such as UCB, CytoDyn and Ichnos Sciences.

The company declined to share how many projects it is concurrently running at its facilities. Its three plants are capable of producing 362,000 liters in one output.

Apart from contract manufacturing -- the production of clients’ end products -- Samsung BioLogics is expanding its value chain to cover contract development and research.

Its contract development deals are with local bioventure firms GI Innovation, Eutilex and ImmuneOncia therapeutics. These small-scale research firms create their clinical pharmaceutical batches at Samsung BioLogics’ plants.

Small and midsized bio firms with competitive pipelines can expedite their novel drug research and development through such partnerships, the company noted.

GI Innovation, for one, has licensed out its immuno-oncology drug GI-101 to Chinese pharma Simcere for 900 billion won since partnering in development with Samsung BioLogics.

The Samsung Group subsidiary said it is strengthening its end-to-end service for clients, covering every step of novel drug research and development so that biotech can better focus on discovering potential drug materials.

By Lim Jeong-yeo (kaylalim@heraldcorp.com)