Herbert Smith Freehills Kewei advises Fosun Pharma on option agreement with AriBio for territories including the US, Europe and Japan

Leading global law firm Herbert Smith Freehills Kramer and its China joint operation partner Kewei have advised China pharmaceutical giant Fosun Pharma on an exclusive option agreement with AriBio, a South Korea-based biopharmaceutical company.

Under the agreement, AriBio will continue to develop AR1001, an innovative drug candidate for the treatment of Alzheimer’s disease, in a global Phase 3 clinical trial. Under the option, Fosun Pharma has the right to secure an exclusive licence covering further development, registration, manufacturing and commercialisation of the drug.

The arrangement expands Fosun Pharma’s existing AR1001 rights from the Chinese mainland, Hong Kong, Macau and 10 ASEAN countries to markets including the US, Europe and Japan.

“We are delighted to have supported Fosun Pharma on this important transaction involving a promising drug candidate for Alzheimer’s disease,” said Gavin Guo, Managing Partner of Herbert Smith Freehills Kewei Joint Operation. 

“This agreement also reflects the increasing use of sophisticated option-based structures in the global life sciences sector.”

“The transaction involved complex option and licensing arrangements across multiple jurisdictions,” said Melanie Bouton, Executive Counsel of Herbert Smith Freehills Kramer. “We worked closely with the client to structure a framework securing exclusive rights to the further development and commercialisation of AR1001.”

The transaction adopts an option fee plus licence payment structure. Fosun Pharma will pay an option fee of US$60 million and, upon exercise of the option, up to US$180 million in upfront and regulatory milestone payments.

The firms advised the client on the full suite of transaction documents, including the option and exclusive licence agreement, and provided advice on New York law aspects.

“Transactions of this type play to our strengths at the intersection of life sciences, cross- border M&A and complex licensing,” said Gavin. “Our integrated China and international platform also enables us to support clients on high-value strategic collaborations across the global marketplace.”

Gavin and Melanie led a cross-office team advising on the transaction, with support from Samuel Gonski and Jessica Whetters in Sydney and Daniel Zimmerman in New York. Angela Zhao and Alvin Zheng in Shanghai, as well as Jeremy Shen and Eric Yeung in Hong Kong also provided assistance.