HONG KONG – A Chinese pharmaceutical company that went public last month in Hong Kong is expanding its pipeline through a $20 million deal that will bring a novel cancer drug from South Korea to China.

Luye Pharma Group Ltd. said it inked a license agreement with Korean pharmaceutical company Hanmi Pharm Co. Ltd. to co-develop Hanmi's cancer drug, poziotinib.

Poziotinib is a small-molecule pan-HER inhibitor that blocks epidermal growth factor receptor (EGFR), which is associated with various cancers, including breast cancer, gastric cancer and non-small-cell lung cancer (NSCLC). Hanmi is conducting phase II studies of poziotinib for indications such as EGFR-mutant NSCLC, gastric cancer, head and neck cancer and HER2-positive breast cancer.

Under the terms of the agreement, Shandong-based Luye will be given exclusive rights to develop, manufacture and commercialize poziotinib within China, while Hanmi keeps the rights in all other territories. In return, Hanmi will receive an up-front payment, development and regulatory approval milestone payments up to $20 million, plus future royalties based on the sales after the drug is launched. Luye will seek Chinese authorities' approval for the drug.

"It will take a while before we disclose further information on the deal," Su Wenting, public relations manager at Luye, told BioWorld Today. "We're in the silent period now."

Information provider IMS Health said China's cancer drug market in 2013 was about $4.91 billion and grew at a pace of 18 percent from 2011 to 2013. CFDA's China Pharmaceutical Information Center said oncology comprised almost 19 percent of China's pharmaceutical market in 2013.

"Luye is always dedicated to carrying out global collaboraion – so far we have established several successful partnerships with a number of multinational pharmaceutical companies," said Liu Dianbo, chairman of Luye. "Poziotinib will further enrich Luye's oncology drug pipeline in China, consolidate Luye's advantageous position in oncology therapeutic areas and could offer more help to cancer patients."

Hanmi chairman Sung Ki Lim said the partnership with Luye was a good fit for his company. "We believe that Luye, with its strong R&D capability specialized in oncology, will develop poziotinib as a differentiated targeted therapy to its full potential in China market," Sung said. "In parallel with Luye, Hanmi will also do its best to contribute to the treatment of cancers by developing poziotinib with a well-planned global development strategy."

Luye is a specialty pharmaceutical company based in Yantai, Shandong Province. It focuses on research and development, manufacture and commercialization of natural drugs, new formulations and biotechnology products. Founded in 1994, the company has R&D centers in Yantai, Beijing, Nanjing and Chengdu. On July 9, Luye began trading on the main board of the Hong Kong Stock Exchange, raising $764 through its initial public offering (IPO). Luye said it would use the proceeds of the IPO for mergers and acquisitions, part of a more ambitious plan to be one of the 100 largest pharmaceutical companies in the world by 2020. (See BioWorld Today, June 25, 2014.)

Luye reported first-half 2014 sales of $251 million, a 30 percent increase, with its net profit growing 116 percent to $46 million. The company focuses on therapeutic areas of oncology, cardiovascular diseases and digestive and metabolic diseases, with first-half 2014 sales of $114 million. Luye is the fifth-largest anti-cancer drug manufacturer in China, it has launched six oncology drugs and is developing eight more.

Its shares (HKEX:02186) closed Monday at HK7.28 (US94 cents), up HK0.03.

Hanmi is a leading pharmaceutical company based in Seoul's Songpa district. It focuses on developing novel biologics and new chemical entities. Hanmi has six long-acting protein (LAP) drug candidates under development, including three diabetes treatments, LAPS insulin 115 and LAPS CA-Exendin-4 and a combination product. The LAP drugs mainly target obesity, growth hormone disorder and neutropenia. The most advanced candidate is undergoing phase II trials.

Poziotinib is one of the seven Hanmi's new chemical entities. The others are HM 61713, HM71224, HM95573, KX2-391, Oraxol, and Oratecan targeting the treatment of NSCLC, rheumatoid arthritis and solid tumors.

Shares of Hanmi (KRX:128940) closed Monday at KRW90,200 (US$88.42), up KRW8,600, or 10.5 percent.