April 20, 2024

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[THE INVESTOR] Shares of Hanmi Pharmaceutical dropped sharply on Feb. 19 after Eli Lilly decided to stop clinical trials of an autoimmune treatment licensed from the Korean firm in patients with rheumatoid arthritis.

On Feb. 14, Hanmi announced that Eli Lilly will discontinue the clinical study for HM71224, an experimental Bruton’s tyrosine kinase inhibitor for the treatment of rheumatoid arthritis because it is “unlikely to meet the primary efficacy endpoint in the ongoing phase 2 trials.”

Hanmi shares fell 8.5 percent to 495,000 won (US$464), wiping away 523 billion won market value.

In March 2015, Hanmi signed an exclusive license agreement with the US-based drug maker to grant rights to HM71224 in a deal that could generate up to US$640 million.

According to Hanmi, the two companies are in discussion to develop the drug candidate for the treatment of other autoimmune diseases. Lilly has worldwide rights to the molecule for all indications excluding China, Hong Kong, Taiwan and Korea.

Hanmi said that the company has no financial obligations to return payments it has received from Eli Lilly so far, including the 50 million won upfront fee. The suspension of clinical trials and the development for new indications will not lead to any contract changes, it added.

Although the two companies have not yet proposed new indications for HM71224, they had planned to investigate the drug for the potential treatment of rheumatoid arthritis, lupus, lupus nephritis, and Sjögren’s syndrome when they signed the license deal three years ago.

“Other indications such as lupus or Sjögren’s syndrome are being discussed, but there is a possibility of contract termination if they fail to determine which disease the drug will target,” Hi Investment & Securities analyst Hur Hye-min said.

Eli Lilly could have lost enthusiasm for HM71224 as its other rheumatoid arthritis treatment Olumiant has achieved regulatory milestones last year. The med was approved in Japan and EU and is being reviewed by the US Food and Drug Administration.

“I assume that Eli Lilly had no need to push the clinical study for HM71224 further as Olumiant has started to yield results,” Hur said.

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