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Shares of the biotech company plummeted after the Chinese pharmaceutical firm sold the global marketing rights for three innovative drugs to a U.S.-based biopharmaceutical firm.
The company’s stock dropped 6.3% to CNY26.71 (about $3.75) in Shanghai trading by mid-afternoon, after an opening surge of 10.2%. Its Hong Kong-listed shares also followed the downward trend, initially opening 2.8% higher before falling 11.4% to HKD16.66 (approximately $2.14) by the same time.
The U.S. biopharmaceutical company has gained exclusive worldwide rights to market Orelabrutinib for multiple sclerosis and regional rights for other non-MS, non-oncology uses. Additionally, it has exclusive global or regional rights to two other experimental drugs still in pre-clinical stages. Regional rights exclude China and Southeast Asia.
In return, the U.S. firm will make an upfront payment and milestone payments totaling $100 million, along with issuing seven million shares of its common stock to the Chinese company. The overall milestone payments, covering R&D, registration, and commercialization, are projected to surpass $2 billion.
Once the three new drugs are available on the market, the Chinese firm will also earn tiered royalties exceeding 10% of annual net sales from the licensed products.
The agreement is expected to speed up the global development and commercialization of Orelabrutinib and other products.
Orelabrutinib is an oral small-molecule inhibitor of Bruton’s Tyrosine Kinase. Earlier this month, the company launched Phase III trials for primary progressive MS, with protocols approved and aligned with both the U.S. Food and Drug Administration and the European Medicines Agency. Details about the other two drugs remain undisclosed.
Orelabrutinib, marketed as Yinokai, is already used to treat certain blood cancers. It has been approved for sale in China and was added to the nation’s National Reimbursement Drug List in 2022, marking the first BTK inhibitor approved for this purpose in China.
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