The authors are analysts of Shinhan Investment Corp. They can be reached at shawn1225@shinhan.com and jhwon@shinhan.com, respectively. – Ed.

2Q22 preview: Decent growth in both toxin and filler sales

Medytox is expected to register consolidated sales of KRW45.1bn (+2.7% YoY) and operating profit of KRW6bn (+34.8% YoY) for 2Q22, up 13.5% and 9.2% QoQ, respectively. Botulinum toxin sales should have increased 11.3% YoY to KRW21.8bn. Medytox has begun mass production of Coretox, a high-margin botulinum toxin which has eliminated non-toxin protein to lower the risk of resistance. With Coretox adding to strong sales of its main product Meditoxin, the company likely recorded double-digit growth in sales on both QoQ and YoY basis. Dermal filler sales are projected to have jumped 16.1% YoY to KRW17.2bn. The steep growth should continue backed by increasing demand for aesthetics enhancements and expansion into the European market expected to pick up steam in 2H22. Operating margin likely came in at 13.2% for 2Q22, slightly down from 13.8% in 1Q22, due to a seemingly larger portion of the relatively low-margin Meditoxin and a slight increase in SG&A expenses including labor costs.

European release of fillers and steady growth of toxin sales in 2H

For full-year 2022, sales are forecast at KRW176.6bn (-4.5% YoY) and operating profit at KRW26.7bn (-22.7% YoY, operating margin of 15.1%). A YoY drop is inevitable given the high base created by the recognition of about KRW35bn in upfront and milestone payments received from AbbVie for MT10109L (liquid-type botulinum toxin pipeline) in 2021. We need to place our focus on forecasts for over 20% growth in sales of botulinum toxin and dermal filler products. We see ample growth potential for Medytox’s mainstay business in view of: 1) expansion into the European market expected to pickup steam in 2H22 with the CE mark clearance for a new filler product; and 2) product line-up set to grow following the license application for the fourth botulinum toxin Newlux (MBA-P01) submitted to the Ministry of Food and Drug Safety at end-May. Profitability should also improve on increasing royalty gains from the agreement with Evolus.

TP unchanged at KRW160,000, focus on future improvements

Medytox will continue to see strong sales from its mainstay businesses in 2H22. The company plans to submit biologics license application (BLA) for MT10109L to the US FDA in 1H23, and release the product in the US market in 2024 after receiving the license approval. In addition, it seeks to diversify its product portfolio and reduce risks regarding lawsuits through the release of new botulinum toxins. We believe now is the time to focus on future improvements in store for Medytox.