Hanmi gives up development of cancer drug

Hanmi Pharmaceutical will stop developing its lung cancer drug Olita Tab, citing low demand and competitiveness in the market, the company said Friday.

The drug, named after its main ingredient olmutinib, was made for patients who developed a tolerance to existing drugs. It was Hanmi’s first novel, or previously unapproved, drug to earn the green light for local sale.

According to the Ministry of Food and Drug Safety, the company submitted a plan to halt sales and development of the 200-milligram and 400-milligram tabs on Thursday. Hanmi said the reasons were not related to safety. The company said it wanted to focus resources on other drugs after pharmaceutical companies canceled their licensing deals with Hanmi.

The ministry plans to set a timeline for phasing out the drug by the end of this month. Since hundreds of patients in Korea are already on the treatment, the ministry and company have to agree on a plan to safely wean them off Olita Tab.

After completing first- and second-phase clinical trials for the drug, Hanmi earned the ministry’s approval to sell Olita Tab in May 2016 under the condition that the company deliver results from the third-phase trial later.

Drugs in Korea typically go on sale after the third phase is complete, so Hanmi’s case was an exception. The fourth and final phase is done while the drug is already on the market to see if there are any unexpected side effects.

Concerns about Olita Tab started surfacing in September 2016 after two patients died in clinical trials from side effects. The German pharmaceutical company Boehringer Ingelheim bought the rights to develop and commercialize the drug in July 2015 for a record $680 million plus royalties, then pulled out from the deal. Hanmi only received $65 million, including the basic contract fee.

On Wednesday, Zai Lab in China returned its country-exclusive sales license, citing reprioritization of its business. The cancellation dealt a huge blow for Hanmi, which was hoping to enter the largest lung cancer drug market in the world.

While Hanmi is struggling, rival AstraZeneca has been making strides with osimertinib, a drug with similar effects as Hanmi’s olmutinib. Sold as Tagrisso, the drug went through worldwide phase-three trials last year and has earned approval for sale in over 40 countries.

Hanmi has had trouble finding Korean patients who are willing to undergo phase-three trials because AstraZeneca’s Tagrisso is covered by local health insurance, cutting patients’ burden from 10 million won ($9,350) a month to 340,000 won.

“Considering all these factors, we figured Olita Tab’s value as a novel drug would be much deteriorated even if we manage to commercialize the product,” Hanmi said Friday.

The company added it was clear the cost incurred in research and development of the drug would be much larger than the future economic value of the pill. Rather, it would focus its research on about 20 other candidate ingredients for new drugs.

“It could be a tragedy for Hanmi that it had to stop the development of a novel drug for lung cancer,” said Seo Keun-hee, an analyst at KB Securities. “But the risks related to Olita Tab were already reflected in the company’s shares after losing market competitiveness to Tagrisso and ending contracts with global partners.”

Hanmi’s share price dipped by 0.18 percent to 540,000 won on the Korean market after the announcement on Friday.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]