HONG KONG – France’s Sanofi SA has informed Hanmi Pharmaceuticals Co. Ltd. of its intention to return all the rights to efpeglenatide, the South Korean company’s diabetes drug candidate.

A Hanmi source told BioWorld, “We got word that Sanofi wanted to return the rights on Wednesday night [in Korea]. We are now in negotiations with Sanofi and have a maximum of 120 calendar days to make a decision.” The source added that, due to the COVID-19 pandemic, the negotiations will be conducted over the phone and email.

Efpeglenatide is a GLP-1 receptor agonist to be administered once a week to treat type 2 diabetes. It is one of three experimental, long-acting diabetes treatments, known as the “Quantum Project.” The other two treatments are a weekly insulin dose medication and a fixed-dosed weekly GLP-1-RA/insulin drug combination.

The other two drugs in the portfolio were not mentioned in Sanofi’s decision.

Hanmi is currently conducting five phase III trials for the drug worldwide, with three of the five trials, involving almost 5,000 patients, currently underway. The company is still recruiting patients for the remaining two trials.

The source said that dependent on the outcome of the negotiations, Hanmi may look for a new partner or work on the drug by itself, but it was too early to comment further.

One of Hanmi’s options is to take legal action, but a second Hanmi source stressed that “no decision has been made yet regarding that.” He said the best-case scenario for Hanmi is for Sanofi to return the rights to the drug once the phase III trials are completed.

Hanmi’s stock (128940.KS) fell 2.97% to close at ₩245,000 (US$199.22), tumbling down to ₩243,000 at market open on May 15. It dropped 7.17% to ₩259,000 the day before when Sanofi’s intention was made public.

Sanofi acquired rights to the drug in November 2015, with Hanmi receiving an up-front payment of €400 million (US$432 million) as well as up to €3.5 billion in development, registration and sales milestones, plus double-digit royalties on net sales.

New CEO Paul Hudson assumed the role in September 2019, and Sanofi announced a change in strategy two months later that now focuses on specialty care, including rare diseases, rare blood diseases and oncology.

The second Hanmi source explained that Sanofi agreed to help the Korean company find a commercial partner to see the drugs developed in the future after announcing the change, but the outcome of negotiations between the two companies would determine which party would find the replacement.

Hanmi is not seeking potential new partners at present.

Sun Mi Park, Sanofi Korea’s head of communications, told BioWorld that Sanofi is considering returning the rights “as part of our ongoing strategic prioritization and transformation” and as the company “[refocuses] its resources to more closely align with our strategic priorities.”

She declined to disclose the financial implications for Sanofi, but the first Hanmi source confirmed that Hanmi will not return its up-front payment.

Park added, “The decision is not the result of any safety concerns in and/or regulatory feedback on the ongoing phase III clinical program.”

It is not the only major collaboration Sanofi has terminated recently. Last year, it ended its $1.7 billion collaboration with Lexicon Pharmaceuticals Inc. for Zynquista (sotagliflozin), sending shares of Lexicon shares falling 70.3% after the termination was announced.

Unfortunately for Hanmi, this is not the first time a partner has terminated a contract. Belgium’s Janssen Pharmaceutical NV, decided to return the rights to HM-12525A in July 2019. The Johnson & Johnson subsidiary returned the rights to Hanmi’s diabetic obesity treatment after phase II results did not meet Janssen’s internal criteria for blood glucose control in obese diabetic patients.

Elsewhere in its pipeline of roughly 30 products is another diabetes candidate, HM-15211, a long-acting glucagon/GIP/GLP-1 triple agonist. Hanmi is currently conducting phase I trials, but a source said that it was hard to tell when the trials will be completed.

Closer to market, Hanmi has Rolontis (eflapegrastim), which could be Korea’s first biologic to treat neutropenia. Hanmi filed a new drug application with the Ministry of Food and Drug Safety earlier in May.

Sanofi is also hard at work on its pipeline, including “six potentially transformative therapies in areas of high unmet patient need, …[including] oncology, hematology, rare diseases, neurology and vaccine,” according to Park.

The Sanofi R&D pipeline consisted of 87 projects, including 35 new molecular entities in clinical development (or already submitted to the regulatory authorities), at the end of April 2020. Of those, 39 projects are currently in phase III trials or have been submitted to regulatory authorities for approval.

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