HONG KONG – South Korean pharmaceutical company Yuhan Corp. is banking $15 million up front in a potential $785 million deal with U.S. biotech Gilead Sciences Inc. to develop novel therapeutic candidates that treat patients with advanced fibrosis due to nonalcoholic steatohepatitis (NASH).

Under the terms, Yuhan out-licensed to Gilead the rights to develop and commercialize small molecules against two undisclosed targets in all countries except South Korea, where it will retain certain commercialization rights. In addition to the potential milestone payments tied to certain development and commercial milestones, Yuhan is eligible for royalties on future net sales.

Both compounds are in the lead stage, said Yun-Kyoung Kang, executive officer of corporate planning at Yuhan. "They have the potential to be first-in-class drugs as they are against novel targets. Currently, treatment options for patients with NASH are limited," she told BioWorld Asia.

Yuhan and Gilead will work together to carry out preclinical research, while Gilead will be in charge of global clinical development and worldwide commercialization, except in South Korea.

"We hope to start the clinical trials in two to three years, but it depends on the development progress," Kang said.

She added that the company is not disclosing any milestones under the deal at the moment.

News of the collaboration between the two pharma companies sent Yuhan's share price (KRX:000100) up nearly 20 percent on Monday morning. The stock closed Tuesday at KRW230,000 (US$204.28), up 0.9 percent from Monday's close.

"Gilead's expertise in liver disease will accelerate the development of our novel agents," said Jung-hee Lee, Yuhan's CEO. "As a company, we are committed to investigating new therapeutics to improve the lives of patients with NASH."

Indeed, one of the areas Gilead focuses on is liver diseases, in which it has built a pipeline consisting of six drug candidates. Three are targeting NASH, namely ASK-1 inhibitor selonsertib, FXR agonist GS-9674 and ACC inhibitor GS-0976. Selonsertib is in phase III trials, while GS-9674 and GS-0976 are in phase II studies.

Selonsertib is competing with three other candidates also in phase III stage, including Intercept Pharmaceuticals Inc.'s Ocaliva (obeticholic acid), Allergan plc's cenicriviroc and Genfit SA's elafibranor.

On Monday, Intercept said it will announce the data from the interim analysis of the phase III trial of Ocaliva in the first half of this year.

In Asia, Taiwanese biotech startup Sinew Pharma Inc. is also developing a potentially first-in-class drug to treat NASH with an undisclosed target. It said the primary efficacy finding showed that its candidate SNP-6 was better than cenicriviroc, selonsertib and elafibranor. (See BioWorld, Dec. 31, 2018.)

Besides the NASH space, Yuhan and Gilead are already collaborating in other areas.

Yuhan is helping to launch Gilead's hepatitis B drugs, Viread (tenofovir) and Vemlidy (tenofovir alafenamide), as well as its hepatitis C drugs, Sovaldi (sofosbuvir) and Harvoni (ledipasvir/sofosbuvir) in South Korea.

"This collaboration builds on our long-term partnership with Yuhan, with a new focus on the investigation of novel approaches to treat patients with advanced fibrosis due to NASH that complement our ongoing research programs," John McHutchison, chief scientific officer and head of research and development at Gilead.

Among the top five

The $785 million deal between Yuhan and Gilead is the fifth biggest involving a South Korean pharmaceutical company out-licensing its assets to a foreign player. It is also the largest deal ever made for preclinical-stage drug candidates in South Korea.

In November, Yuhan licensed out its lung cancer drug candidate, lazertinib, to Janssen Pharmaceutica NV for $1.25 billion, in what was the second biggest deal involving sending Korean pharmaceutical assets overseas. (See BioWorld, Nov. 14, 2018.)

Developed by Yuhan, lazertinib is an oral, mutant-selective and irreversible drug aiming to treat non-small-cell lung cancer with EGFR mutations and the T790M mutation.

The biggest such deal in this regard is a 2015 agreement in which Seoul-based Hanmi Pharmaceutical Co. Ltd. licensed out a portfolio of long-acting diabetes treatments to pharma giant Sanofi SA for up to $4.2 billion. (See BioWorld Today, Nov. 6, 2015, and Nov. 9, 2015.)

In two other deals, Hanmi licensed out oxyntomodulin-based therapies to Janssen Pharmaceuticals Inc. for $915 million and its pan-RAF inhibitor, HM-95573, for treating cancer to Roche Holding AG unit Genentech Inc. for $910 million. (See BioWorld, Nov. 9, 2015, and Oct. 5, 2016.)

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