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Bukwang Pharmaceutical Co., Ltd. entered into a license transfer agreement of Rivoceranib for 40 bil

On August 14, 2018, the two companies signed a contract to transfer all rights of Rivoceranib held by Bukwang Pharmaceutical to HLB LifeScience for 40 billion KRW.

After this agreement, HLB LifeScience secured all development and future rights of Rivoceranib except China. From Bukwang’s investment in 2009 to Rivoceranib, company was able to not only benefit from accumulating experiences in drug development, but also returning maximum outcome at early exit would enable Bukwang to concentrate on currently developing pipelines.

Although the details of the contract were not disclosed, Bukwang transfers all rights of Rivoceranib to HLB LifeScience. Out of the total amount of 40 billion KRW, an upfront of 10 billion KRW is paid immediately, and the remaining balance will be paid in installments for several years regardless of the clinical result.

Considering the average operating profit margin of 5 ~ 10% for pharmaceutical industry, the deal value of 40 billion KRW is the amount that can be obtained from pharmaceutical company which raise sales of about 4-800 billion KRW. The deal size itself could be considered as top-ranked deal among the number of technology transfer agreements led by domestic biotechnology companies in the recent years. When considering the value is generated only some parts of regions, this agreement can be evaluated as comparable to that of big size deals between global pharma companies.

This agreement is a success case that drug development capability came back with actual profit. In 2009, Bukwang Pharmaceutical signed a licensing agreement with LSKB, a US drug development company, to co-develop Rivoceranib from preclinical to global phase 1-2 clinical trials.

Both companies are highly evaluating the value of Rivoceranib as a new drug. Through this agreement that formed in accordance with the strategic interests of the core businesses of each company is pursuing, HLB LifeScience focuses on Rivoceranib to enhance its value, and Bukwang is expected to concentrate more on the success of various pipelines currently in clinical trials and to discover future business.

Bukwang representative said “We prioritize to pursue a successful new drug development through open innovation and a management strategy that matches with shareholder’s interest. We believe that focusing on what we could do best would be beneficial to company in mid to long term growth strategy, and with this agreement, we are making one step forward close to goal that becoming a global drug development company.”

HLB said “This agreement allows us to complete the full integration of the HLB group from the discovery and development of new drug candidates to the registration, manufacturing, and sale of pharmaceuticals. We will complete the global phase 3 trial for gastric cancer in a timely manner, and accelerate the addition of indications to other solid tumors such as colorectal cancer and liver cancer in addition to the two combination studies with the immune system inhibitor that is progressing smoothly in the United States.”

This contract is a form of agreement between a domestic pharmaceuticals and an emerging biotechnology company, and is expected to be a good precedent for Korean pharmaceuticals and biotechnology companies.

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