Hanmi agrees to $690M deal with U.S. company

Hanmi Pharmaceutical entered an agreement with U.S. pharma giant Eli Lilly to license the Korean company’s drug to fight autoimmune diseases in a deal estimated to be worth $690 million, Hanmi announced Thursday.

It is the largest deal to date between a local drug maker and a foreign company.

The agreement gives Eli Lilly the rights to develop the inhibitor HM71224, which is used to treat autoimmune diseases such as rheumatoid arthritis and other diseases that attack the immune system and destroy healthy tissue.

The U.S. company will be responsible for developing, licensing and commercializing the drug except for in Korea and China. Eli Lilly will pay $50 million up front and will make periodic payments amounting to $640 million based on the successful completion of each stage of clinical testing.

The U.S. drug maker said it has high expectations for the medicine.

“Despite the progress made in the pharmaceutical industry, there are a number of patients who suffer from immunological disorders,” said Thomas Bumol, senior vice president of biotechnology and autoimmunity research at Eli Lilly.

“Lilly is focused on targeting autoimmune diseases and strengthening our business portfolio through partnerships with different companies including Hanmi,” he said in a statement. “So, we will pool our resources to develop HM71224 into a revolutionary treatment for immunological disorders.”

Hanmi Pharmaceutical also said the agreement was a significant milestone.

“We were reassured that HM71224 could open a lot of new possibilities as a novel treatment through a clinical trial in Europe,” Lee Kwan-soon, CEO of Hanmi Pharmaceutical, said in statement. “We are pleased to announce the deal and hope that the drug will be commercialized to treat people with immunological disorders.”

Hanmi Pharmaceutical presented the interim clinical data results of from the first phase of its study at the EULAR conference in Paris in June.

The first stage of the trial was conducted with 58 volunteers from the Netherlands.

HM71224 is considered a breakthrough because it selectively inhibits Bruton’s Tyrosine Kinase (BTK), an enzyme that activates B cells, which create antibodies to protect the immune system. Research has shown that an inhibitor of BTK could be effective in treating autoimmune diseases.

“Different kinds of BTK inhibitors attract attention because drugs with this unique function could play a crucial role in mitigating autoimmune diseases,” a representative from Hanmi said. “We will do our best to enter phase two of the clinical study with HM71224.”

The second trial was scheduled for the second half of last year, but has not yet started.

The contract between Hanmi and Eli Lilly will be finalized once it passes Hart?Scott?Rodino Antitrust Improvements Act in the United States. The act is in place to ensure that major contracts and mergers and acquisitions do not adversely affect U.S. commerce.

Domestic pharmaceutical companies have long been dismissed as small generic drug makers but some major players have recently started exporting their technology.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]