Prometic Life Sciences has signed a memorandum of terms with Shenzhen Royal Asset Management (SRAM) to establish a joint venture (JV) for the development, manufacture and commercialisation of three drug candidates, PBI-4050, PBI-4547 and PBI-4425, in China.

The agreement excludes Hong Kong, Taiwan and Macau.

Under the agreement, the development, manufacturing and commercialisation rights for the three drug candidates will be licenced to a newly formed joint venture (JV), named Prometic ChinaCo.

The JV will initially focus on treatment of diabetic kidney disease, lung and liver fibrosis for the Chinese market.

Prometic CEO Pierre Laurin said: “China is the second largest pharmaceutical market in the world after the USA.

"China is the second largest pharmaceutical market in the world after the USA."

“For instance, recent studies suggest that more than 113 million Chinese people suffer from diabetes and more than 24 million from diabetic kidney disease.”

In order to obtain an initial 17% ownership of Prometic ChinaCo, investment group SRAM will provide $23m this year, $13m upfront and $10m in the first half of this year.

The company may have a right to increase its ownership to up to 25%, with a further $10m investment related to milestones expected next year.

Prometic will use the funds provided by SRAM to support and further the clinical development of the drugs outside China.

Prometic ChinaCo is expected to enter into additional partnering and licensing transactions to further leverage the value of the product portfolio in China and provide additional funding. 

As part of the agreement, the company will control the manufacturing of the bulk API of the three drug candidates in China to supply to sub-licensees.