China-based Jiangsu Hengrui Medicine Co., Ltd (SHA: 600276) is currently entangled in legal challenges involving two partner companies. The firm has initiated a lawsuit against US-based biotech BeyondSpring Inc. (NASDAQ: BYSI) over a failed partnership deal, while also facing potential disbandment of its subsidiary, Reistone Biopharma (Hong Kong) Ltd, amid an internal dispute.
Hengrui vs. BeyondSpring: A Legal Battle Unfolds
On September 11, 2023, a civil ruling surfaced online indicating that Hengrui has requested a Beijing court to freeze assets belonging to BeyondSpring’s Dalian unit, with a value not exceeding RMB 200 million (approximately USD 27.4 million). The Beijing Second Intermediate People’s Court has approved this request, although the case remains ongoing. Specific details regarding the allegations justifying the asset seizure have yet to be disclosed.
Hengrui and BeyondSpring first entered into a partnership in August 2021 to develop and commercialize BeyondSpring’s plinabulin in Greater China. The agreement included upfront fees, an equity investment of RMB 100 million, and a total licensing deal valued at RMB 1.3 billion. Plinabulin, an immune and stem cell modulator, aims to prevent chemotherapy-induced bone marrow neutrophil damage and neutropenia. Originally developed by Nereus Pharmaceuticals for non-small cell lung cancer, BeyondSpring acquired the asset in 2012 and received breakthrough therapy designation in both China and the US.
BeyondSpring’s initial filing for plinabulin with the US FDA resulted in a complete response letter (CRL) in December 2021, citing insufficient clinical benefit from the Phase III study. Hengrui reported in December 2021 that it had paid BeyondSpring RMB 200 million upfront, while the RMB 100 million equity investment was still pending. The court case remains unresolved.
Hengrui vs. Reistone: Internal Disputes
On September 14, rumors circulated on local social media that Hengrui had dissolved its subsidiary, Reistone, by “taking away its official seal, freezing accounts, and providing N+1 compensation to employees.” Following this, multiple domestic media outlets confirmed the news through a service provider associated with Reistone, though official confirmation is still awaited.
The dispute centers on control of Reistone’s investigational drug SHR0302, which is nearing market approval. SHR0302 is a selective JAK1 inhibitor aimed at treating various conditions, including atopic dermatitis (AD) and ulcerative colitis. Reistone was established in 2018 to support the drug’s development in AD, while Hengrui retained rights for ankylosing spondylitis (AS).
In June 2023, Reistone’s market approval filing for SHR0302 in moderate to severe AD was accepted for review by the Center for Drug Evaluation (CDE). However, two months later, Hengrui announced that Reistone had revoked the filing due to a strategic adjustment. Insiders claim this withdrawal did not go through Reistone’s shareholders’ meeting, infringing on the rights of minority shareholders. Hengrui’s 2022 annual report indicates that it holds an indirect stake of 81.63% in Reistone.-Fineline Info & Tech
