RegeneRx intends to partner strategically with companies with clinical development and commercialization interests in desired pharmaceutical therapeutic fields. We are actively seeking partnerships with suitable infrastructure, expertise and a long-term initiative in our focus disease areas. We have continued with our leveraging strategy to out-license development and commercialization rights to some of our product candidates to partners that have the expertise and capital to develop our drug candidates. Currently, RegeneRx has active partnerships in four major territories: the U.S., Greater China, Pan Asia, and the EU. In each case, the cost of development is being borne by our partners with no financial obligation for RegeneRx. We have also retained certain territorial rights to our drug candidates under development in order to maximize their potential value after success is achieved, primarily RGN-352 (injectable formulation of Tß4 for systemic indications) in the U.S., most of Asia, and Europe and RGN-259 in the EU.
In August 2017 we amended the RGN-137 License Agreement with HLBT (formerly GtreeBNT), expanding the territory to include Europe, Canada, South Korea, Australia and Japan. Regarding RGN-259, our goal is to wait until satisfactory results are obtained from the current ophthalmic clinical program in the U.S. before moving into the EU. This should allow us to obtain a higher value for the asset at that time. In the future we intend to continue to seek strategic partners for RGN-352 with the resources and capabilities to develop it as we have with RGN-259.
In 2012, RegeneRx 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 will be responsible for product development in the licensed territory and each party will share clinical and other data related to these product candidates. Lee’s recently completed a new ophthalmic manufacturing facility in China and has accelerated its development of RGN-259.
In 2014, RegeneRx entered into a strategic partnership agreement with HLBT, a Korean biotech company for development and marketing of RGN-259 in 28 Asian countries including Korea, Japan, and Australia. HLBT will also develop RGN-137 in the U.S. for dermal wound healing.HLBT initiallyreceived an IND for a Phase 2/3 clinical trial with RGN-259 in South Korea. In late 2016, HLBT informed us that it believes marketing approval in the U.S. will allow expedited marketing approval in Korea, possibly without the need for a clinical trial. If successful, this should facilitate the commercialization of RGN-259 in other countries in Asia and the Pacific Rim, excluding Japan, that are covered by our partnership.
In 2015, RegeneRx 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 joint venture agreement (ReGenTree LLC) between the parties, HLBT is responsible for conducting and funding all clinical trials and product development through approval of a Biologics License Application (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% and 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 between 38.5% and 25%, with 25% being the final equity ownership upon FDA approval of an NDA for Dry Eye Syndrome 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.
RegeneRx 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.
In February 2017, our licensee for RGN-137, HLBT received permission from the U.S. FDA to sponsor a Phase 3 clinical trial using RGN-137 to treat patients with epidermolysis bullosa (EB), a genetic disease that causes severe blistering of the skin and internal organs. In August 2017, the Company amended the License Agreement for RGN-137 held by HLBT. Under the amendment the Territory was expanded to include Europe, Canada, South Korea, Australia and Japan. In December 2018, HLBT initiated a small Phase 2 open trial in patients with EB to evaluate RGN-137 in such patients prior to sponsoring a larger Phase 3 trial.