Hanmi Pharmaceutical’s botched clinical trials on a new drug under a licensing-out deal with Eli Lilly have brought down stock prices of other pharmaceutical companies.
“Our partner firm Lilly has decided to discontinue the phase-2 trials of selective BTK (Bruton's tyrosine kinase) inhibitor (LY3337641/HM71224) in patients with rheumatoid arthritis because interim results showed that the study could fail to demonstrate its target effectiveness,” Hanmi Pharmaceutical said in a regulatory filing on Wednesday.
“Instead, we are in talks to continue developing the drug for other indications. There are no expense obligations such as a chance in the contract or a return of the contract fee,” the Korean drugmaker said.
Hanmi Pharma signed a licensing-out deal with Eli Lilly for the development of the BTK inhibitor in 2015.
The two companies agreed to develop the experimental drug to treat various diseases such as systemic lupus erythematosus, nephritis, and Sjogren’s syndrome. The two have been testing the drug in global phase-2 clinical trials for patients with rheumatoid arthritis.
Even though Lilly’s announcement did not lead to the contract nullification or the return of the contract fee, stock investors lost appetite on Korean pharmaceutical shares.
Hanmi Pharma closed 9.98 percent lower at 487,000 won ($457.7) on Wednesday, compared with 541,000 won on the previous day. Hanmi Science, which holds a majority stake in Hanmi Pharma, also fell 9.95 percent to close at 85,100 won on Wednesday.
The declines of Hanmi shares negatively affected other drugmakers. HanAll Biopharma, which clinched a licensing-out deal with Swiss firm Roivant Sciences in December, went down 2.36 percent to close at 31,000 won on Wednesday. Medytox, which posted its record high earnings on Tuesday, also inched down 1 percent to 603,900 won.
Many other drugmakers such as Sam Chun Dang Pharm, Korea United Pharm, and Samil Pharm fell 1.4 percent, 1.95 percent, and 2.67 percent, respectively. Myungmoon Pharm, GC Pharm, and Green Cross Lab Cell also declined 2.08 percent, 1.72 percent, and 1.32 percent, respectively.
Stock prices of biotech firms in anticipations for technology export also on a downward spiral.
Genexine shares lost 1.78 percent, ViroMed, 1.9 percent, Sillajen, 1.87 percent, LegoChem Biosciences, 2.76 percent, and L&K Biomed, 3.67 percent, on Wednesday.
Only a slight change in the new drug’s indication in Hanmi’s recent filing brought down other pharmaceutical shares because investment sentiment for local drugmakers began to shrink, a financial industry official said.
“At the beginning of the year, the investment sentiment was strong because the J.P. Morgan’s healthcare conference raised the expectations for technology export deals. But now, the sentiment got weaker, and the pharmaceutical shares seem to have entered a period of price adjustments,” he said.
The official added that investors will maintain a wait-and-see stance and that drugmakers’ stock prices will rebound only if they sign large technology export deals.