Several years ago, RegeneRx made the decision to become a virtual biomedical company and acquire partners to continue development of its product candidates. To that end, the Company entered partnerships around the world to develop some of its product candidates as briefly described below.
RegeneRx previously entered into a licensing agreement with Lee’s Pharmaceuticals, Inc. for development and marketing of Tβ4-related products in the countries of China, Macau, Hong Kong and Taiwan. Lee’s, through its subsidiary, Zhaoke Ophthalmology, is responsible for product development in the licensed territory and each party will share clinical and other data related to these product candidates. We believe the Zhaoke is awaiting results from U.S. clinical studies prior to initiating clinical trials in China with RGN-259.
RegeneRx also has a strategic partnership agreement with G-treeBNT (now HLB Therapeutics), a Korea biopharmaceutical company for development and marketing of RGN-259 in 28 Asian countries including Korea and Japan. HLBT also has a license to develop RGN-137 in the U.S. for dermal wound healing.
RegeneRx subsequently entered into agreements with HLBT to develop RGN-259 for dry eye syndrome and neurotrophic keratitis (an orphan indication) in the United States. Under the terms of a U.S. joint venture agreement between the parties (ReGenTree LLC), HLBT is responsible for conducting and funding all clinical trials and product development through approval of a biological license (BLA). Pursuant to the terms of a license agreement between RegeneRx and the joint venture entity, RegeneRx granted the JV an exclusive, royalty-bearing license to market and sell RGN-259 in the U.S. RegeneRx also contributed all of its non-clinical and clinical data generated to date.
Our ownership interest in ReGenTree is 38.5%. Based on when, and if, ReGenTree achieves certain additional development milestones in the U.S. with RGN-259, our equity ownership may be incrementally reduced to 25%, with 25% being the final equity ownership upon FDA approval of a BLA for dry eye syndrome or neurotrophic keratitis in the U.S. In addition to our equity ownership, RegeneRx retains a royalty on net sales that varies between single and low double digits, depending on whether commercial sales are made by ReGenTree or a licensee. In the event the ReGenTree entity is acquired or there is a change of control that occurs following achievement of an NDA, RegeneRx shall be entitled to 40% of all change of control proceeds paid or payable and will forgo any future royalties.
Under the terms of the ReGenTree license agreement, RegeneRx will receive commercial royalties ranging from high single digits to low double digits, depending on medical indications approved and if ReGenTree’s ophthalmic product candidates are commercialized internally or through a third party. RegeneRx is not required to provide any funding for the venture and has the right to participate in all key development and commercialization decisions under the agreements, including the right to approve key commercial relationships and transactions, such as product licensing, mergers or acquisitions.
Our primary goal is to maximize our stockholders’ equity in the Company and the JV upon success of the phase 3 NK clinical trials. Such success, we believe, would create significant value to RegeneRx and its stockholders and provide several options to us including the sale of RGN-259, a sale of the Company, or new financing alternatives that are not currently available. Our focus will be to identify an appropriate liquidity event as early as practicable and distribute any proceeds to our stockholders.