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Heidelberg and Huadong Enter Strategic Partnership, Including Equity Investment

February 28, 2022

German biotech Heidelberg Pharma and Chinese pharmaceutical Huadong Medicine entered a strategic partnership valued at up to $930 million (€828 million) with the signing of an exclusive licensing and investment agreement with a wholly owned Huadong subsidiary, with a focus on oncology and ADC research, development and commercialization.

As part of their partnership, Heidelberg Pharma granted Huadong an exclusive license to develop and commercialize HDP-101 and HDP-103 in Asia (excluding Japan), plus exclusive opt-in rights for two more pipeline candidates. HDP-101, the company’s lead candidate, is a BCMA antibody-Amanitin conjugate (ATAC) in clinical development for the treatment of multiple myeloma, a rare cancer but the most common type of bone and bone marrow cancer. HDP-103 is in preclinical development as a PSMA ATAC for metastatic castration-resistant prostate cancer.

“Through this strategic collaboration, we will gain another valuable and reliable long-term investor who fully supports our strategy to become a global ADC player, and we will be able to speed up our product development and broaden our pipeline,” said Jan Schmidt-Brand, CEO and chief financial officer of Heidelberg Pharma. “We are convinced that our partner’s strong development and commercialization expertise and knowledge of Asia will both shorten the time to market and maximize the commercial opportunity for our ATAC products in this important territory.”

The deal gives Heidelberg access to a large patient population in China and strengthens Huadong’s ADC portfolio and expands our ADC R&D capabilities. Huadong will contribute Asian patients to global clinical trials to help accelerate products development.

Under their strategic partnership agreement in which Huadong receives exclusive development and commercialization rights for HDP-101 (BCMA-ATAC) and HDP-103 (PSMA-ATAC) for Asia, Heidelberg Pharma is eligible to receive an upfront payment of $20 million (€17.5 million) and milestone payments of up to $449 million (€400 million), as well as tiered royalties ranging from single to low double digit percentages for each candidate.

Heidelberg Pharma also granted Huadong an exclusive option for the pre-IND research candidates HDP-102 (CD37-ATAC) and HDP-104 (undisclosed target) in Asia with a total deal value of up to $461 million (€410 million), plus tiered royalties ranging from single to low double digit percentages for each candidate. Huadong also has right of first negotiation to license the next two ATAC candidates for Asia becomes the strategic partner in Asia for Heidelberg Pharma’s product development.

The partnership also includes an equity investment in Heidelberg Pharma by Huadong totaling $118 million (EUR 105 million), representing 35 percent of total shares outstanding after the transaction, consisting of a rights issue and a share transfer as outlined below, has taken place.

Heidelberg Pharma is planning a capital increase in the form of a rights issue of up to $90 million (€80 million), issuing up to 12,408,649 shares at $7.22 (€6.44) per share, the price of the last funding round in April 2021. The rights issue will be based on a prospectus and use authorized capital.

Huadong plans to acquire up to 26 percent of Heidelberg Pharma shares outstanding in the context of the rights issue. To achieve this percentage, the main shareholder dievini and related entities have agreed to transfer their subscription rights to Huadong, and Huadong will assume any unsubscribed shares in the rights issue. Huadong will purchase the necessary number of existing shares from dievini to reach 35 percent of total shares outstanding following the capital increase.

The acquisition of shares by Huadong is subject to certain closing conditions and expected to close at the end of August.

Photo: Jan Schmidt-Brand, CEO and chief financial officer of Heidelberg Pharma

Author: Rare Daily Staff

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