HanAll Biopharma's new drug pipeline has emerged as the biggest variable for Daewoong Pharmaceutical's mid- to long-term corporate value. That is because, despite having completed phase 3 for "batoclimab," its global partner is putting more weight on developing a follow-up candidate.
Some suggest that, as in the past case of Hanmi Pharmaceutical, HanAll could get batoclimab back in the future and move to develop it on its own.
Even if a candidate has finished phase 3, the authorization application and commercialization stages require significant additional expense. This is why there is speculation that the financial burden could grow if HanAll pursues development itself. HanAll swung to a loss last year, recording an operating loss of 900 million won.
Daewoong Pharmaceutical is the largest shareholder with a 31.74% equity stake in HanAll Biopharma. Although the equity ratio falls short of a majority, the company said it exerts influence over key decisions. HanAll also has a notable presence in Daewoong Pharmaceutical's consolidation results. As of the cumulative third quarter last year, HanAll's revenue was 117.6 billion won out of Daewoong Pharmaceutical's consolidated 1.1738 trillion won, accounting for about 10%. Its share on an asset basis reaches 8.9%.
◇ Batoclimab, once HanAll's "cash cow," slipping in development priority?
Batoclimab is a potential autoimmune disease therapy in the FcRn inhibitor class. It lowers pathogenic antibodies in the body and was licensed out to Swiss biotech corporations Roivant Sciences in 2017. Roivant Sciences' U.S. subsidiary Immunovant later assumed the rights and has been developing it with rare autoimmune diseases such as myasthenia gravis (MG) and thyroid eye disease (TED) as the main indications.
At the time of the technology transfer, HanAll received $30 million as an upfront payment, $10 million each in 2019 and 2022 depending on clinical progress, and in 2023 received $7.5 million and $5 million in milestones tied to phase 3 progress for additional indications. As of the third quarter last year, the cumulative amount received is $62.5 million.
Additional milestones that could be received upon successful authorization and commercialization total up to $452.5 million (about 65.5 billion won).
The problem is that when Immunovant released the phase 3 results for myasthenia gravis in March last year, it did not present a specific authorization timeline. At the time, the company said it would decide its final strategy after confirming the results of the concurrent phase 3 trial for thyroid eye disease.
Uncertainty grew further after the company delayed even the topline announcement for one of the two phase 3 thyroid eye disease studies from late last year to the first half of this year. Immunovant plans to release the results of both studies together in the first half of this year.
Immunovant's moves are seen as a gambit to focus resources on "improvebat" (IMVT-1402), the follow-up candidate to batoclimab. The company also secured additional development funds by conducting a $550 million (about 810 billion won) paid-in capital increase recently.
Improvebat is a next-generation candidate that addresses batoclimab's limitations observed during clinical trials, such as increases in LDL cholesterol. Developed in an autoinjector format, it is expected to be more convenient than the existing subcutaneous (SC) formulation. However, as a follower, its development is naturally behind batoclimab.
This is a burden from HanAll's perspective. If the commercialization timeline is pushed back, cash inflows are delayed. Currently, improvebat is in trials across six indications, including Graves' disease (GD), rheumatoid arthritis (RA), myasthenia gravis, and chronic inflammatory demyelinating polyneuropathy (CIDP).
If Immunovant applies for a biologics license application (BLA) with the U.S. Food and Drug Administration (FDA) based on the phase 3 results for myasthenia gravis and wins approval, milestone inflows tied to authorization stages were expected this year or next year for batoclimab.
◇ Daewoong on edge over "return of rights"… burden of direct commercialization could grow
In materials submitted to the U.S. Securities and Exchange Commission (SEC) in December last year, Immunovant said it was "in discussions with partner HanAll over the return of certain rights," adding that it "holds final decision-making authority on development and regulatory matters under the contract and has fulfilled its obligations." It added that "if HanAll does not agree, the matter could proceed to arbitration or litigation."
The specific scope of the "certain rights" mentioned by Immunovant was not disclosed. However, if the rights to batoclimab are fully returned, Daewoong Pharmaceutical's financial pressure could increase. Since HanAll has turned to a loss, it becomes more likely that the parent company would shoulder the authorization and commercialization process.
Daewoong Pharmaceutical is already investing substantial funds in its own new drug pipeline. It invested a total of 106.6 billion won in just the first half of last year. However, as most candidates remain in early clinical stages, expense is expected to rise as they enter late-stage trials.
A HanAll official said, "We are continuing discussions with Immunovant," and noted, "There is a possibility a conclusion will be reached in the first half of this year, when the phase 3 results for thyroid eye disease come out."
Regarding whether compensation would be made for delayed milestone payments, the person said, "If that situation arises, discussion would be necessary, but it is not yet the stage to talk specifics." On the possibility of a dispute, the person drew a line, saying, "As it has been nearly 10 years since the two companies formed a partnership, trust has been built."
HanAll's position is that it would not be difficult to launch the product itself if the rights to batoclimab are returned. A company official said, "BLA expense is not large, and we can fully consider options such as finding a sales partner."