Daewoong Pharmaceutical Co. has licensed out its gastroesophageal reflux drug Fexuprazan to U.S.-based Neurogastrx, a deal that would bring in up to $430 million to the South Korean pharmaceutical company.

Daewoong Pharmaceutical said in a regulatory filing on Tuesday that under the agreement, Neurogastrx will be responsible for clinical trials, development and regulatory submissions for Fexuprazan in the U.S. and Canada.

Daewoong Pharm will receive up to $430 million which include an upfront payment, development and commercial milestones, plus tiered royalties after the drug makes it to market. In addition, Daewoong Pharm is eligible to receive 5 percent of Neurogastrx`s shares as an upfront payment and up to 13.5 percent when the U.S. partner goes public successfully.

Neurogastrx, a private biopharmaceutical company dedicated to transformative therapies for gastrointestinal disorders, is preparing for an initial public offering (IPO) while conducting clinical trials of Fexuprazan. It aims to enter a phase 3 study in the U.S. next year.

Fexuprazan is Daewoon’s novel P-CAB (potassium-competitive acid blocker) drug to treat gastroesophageal reflux by blocking proton pumps that secrete gastric acid from the stomach wall. Fexuprazan is expected to get approval soon in Korea, according to the company.

The company has succeeded in licensing out the drug to top local pharmaceutical companies in China, Brazil, and Mexico. The latest U.S. deal represents the drug’s potential entry into 40 percent of global markets, with the contract value amounting to about $900 million, the company said.

By Minu Kim

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