South Korea’s Daewoong Pharmaceutical signed an agreement to license out its gastroesophageal reflux treatment Fexuprazan to US biotech firm Neurogastrx, the company announced Tuesday.

Under the contract worth $430 million in total, Daewoong will receive milestone payments of undisclosed amounts when stages are completed in the drug’s development process in the US, in addition to royalties based on its future sales in the US and Canada.

Daewoong has also received a 5 percent equity stake in Neurogastrx as part of the deal and will obtain an additional 8.5 percent share when the firm proceeds with an initial public offering in the future.

Neurogastrx, in return, will be in charge of clinical studies, the approvals process and distribution and marketing of the drug in North America.

“Daewoong anticipates Neurogastrx to be authorized in the US market in the near future,“ Daewoong CEO Jeon Seng-ho said.

Daewoong said the company and Neurogastrx aim to start a phase 3 clinical study for Fexuprazan by next year, to receive approval from the US Food and Drug Administration.

Daewoong completed a phase 3 clinical trial in Korea in 2019 and is waiting for the South Korean government’s approval.

With the latest deal, Daewoong has licensed out Fexuprazan in four different foreign countries -- US, China, Brazil and Mexico. Together, these countries account for around 40 percent share of the global gastroesophageal reflux treatment market, the company said.

The global gastroesophageal reflux treatment market is estimated at 20 trillion won ($18 billion). The North American market for the treatment ranks first with an estimated size of 4.2 trillion won, followed by the Chinese market.

Fexuprazan, a next-generation, novel potassium-competitive acid blocker developed by Daewoong.

To date, Daewoong has earned around 1 trillion won from licensing out Fexuprazan in foreign countries, including the latest deal with the US biotech firm.

Daewoong added that its foreign partners will apply for marketing authorizations in Brazil and Mexico based on the clinical study conducted in South Korea. 

By Shim Woo-hyun (ws@heraldcorp.com)