April 24, 2024

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[THE INVESTOR] Kolon Life Science is facing more headwinds on its gene therapy for degenerative arthritis as a Japanese partner seeks to cancel a license deal signed last year due to negligent reporting on issues related to the late-stage drug candidate.

Mitsubishi Tanabe Pharma has started negotiations with Kolon, which holds the Asia license of the drug Invossa-K Inj. developed by its US-based affiliate TissueGene, to terminate the agreement, according to the Korean firm on Dec. 20. 

The Japanese firm has asked Kolon to return US$24 million of upfront payment, saying the Korean company failed to report that its phase 3 study has been placed on clinical hold by the US Food and Drug Administration. The Osaka-headquartered drug maker also blamed Kolon for not sharing information after it changed the manufacturer of samples being used for its clinical program initiated in the US.

Shares of Kolon inched up 0.72 percent on Dec. 21 after plunging over 15 percent on Dec. 20.

Having spent 19 years for development, Kolon has been banking on the drug Invossa-K Inj. to become the world’s first disease-modifying osteoarthritis drug that treats knee disorders through a single intra-articular injection.

The Korean company refuted the Japanese partner’s claim and said it fully shared all details regarding the cited issues. “It does not fall within the grounds for canceling the license deal,” a company official said.

Kolon plans take the case to the Korean Commercial Arbitration Board if the negotiations fail within the stipulated 40 days.

The company said that the FDA approved clinical trials, but it was “a procedural step” in order to receive confirmation from the authorities for samples produced by new manufacturer and it has nothing to do with safety and efficacy issues of the drug.

“Mitsubishi Tanabe’s decision to terminate the contract won’t affect the phase 3 US clinical trials,” a TissueGene official said.

In July, the company had made shareholders nervous about future prospects of Invossa-K Inj. when Korea’s medicine regulator questioned its effectiveness.

Invossa-K Inj. was granted approval by the Ministry of Food and Drug Safety for domestic sales but only got approval for use in pain relief and function improvement although it was largely expected to offer breakthrough improvements in joint structure.

Back then, Kolon pledged that the arthritis treatment will demonstrate its efficacy in joint improvement through clinical trials in the US.

TissueGene expects that the new therapy has the potential to become a blockbuster drug that could rake in around US$5.4 billion per year when it becomes available in 2023.

By Park Han-na (hnpark@heraldcorp.com)