Dong-A ST has agreed to make an equity investment with Nasdaq-listed NeuroBo Pharmaceuticals and transfer its treatment candidate for nonalcoholic steatohepatitis (NASH), obesity and type 2 diabetes, the Korean company announced on Thursday.

The deal could make the Korean pharmaceutical company the largest shareholder of the Boston-based biotech firm, a clinical-stage biotechnology company historically focused on therapies for neurodegenerative, infectious, and cardiometabolic diseases, that is expected to play a role of the Korean company’s research and development center for medicines targeting the global market.

Under the license agreement, NeuroBo will have exclusive global rights to develop and commercialize Dong-A ST’s DA-1241 and DA-1726, which are being evaluated for the treatment of nonalcoholic steatohepatitis (NASH), obesity and type 2 diabetes.

Dong-A ST will manufacture clinical supplies and initial commercial supplies of the product at its manufacturing facility in Korea, while NeuroBo will be responsible for global development, regulatory and commercial activities other than for certain Asian-Pacific geographies.

Dong-A ST will receive an upfront payment of $22 million in Series A convertible preferred stock, which will automatically convert into common shares of NeuroBo, and will be eligible to receive commercial- and regulatory-based milestone payments worth up to $316 million, dependent upon the achievement of specific regulatory and commercial developments. Dong-A ST will also be entitled to single digit royalties on net sales of the two assets.

Dong-A ST will also commit $15 million toward financing the assets, subject to NeuroBo`s ability to obtain additional financing worth $30 million under the terms of the license agreement. NeuroBo plans to raise the money from the capital market next month. Upon the completion of the financing, Dong-A ST will invest some 50 billion won ($35.8 million) to secure a 50.8 percent stake in NeuroBo.

Dong-A ST shares edged down 0.18 percent to 55,800 won in early trading on Friday.

By Chung Seul-gi and Minu Kim

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]