HLB Co. and its affiliates experienced a sharp decline on Friday following the news that the US Food and Drug Administration (FDA) did not approve the company’s new cancer treatment, Rivoceranib, during the first screening. The stock of HLB, listed on Korea’s secondary Kosdaq market, plummeted by the daily limit of 30% to 67,100 won ($49.41). Similarly, shares of all seven of its Kosdaq-listed subsidiaries also nosedived by 30%.
The market reaction resulted in a significant loss for HLB, erasing more than 3 trillion won in market capitalization, which amounts to about a quarter of its previous value. Including the seven other HLB companies, the total market cap loss exceeded 5 trillion won in a single day. This sell-off impacted the broader Kosdaq market, which closed down 1.7%.
The downturn followed an announcement from HLB Chairman Jin Yang-gon on the company’s YouTube channel, revealing that the FDA had issued a complete response letter (CRL) for the new drug application (NDA) of Rivoceranib combined with Camrelizumab. A CRL indicates disapproval of a drug in its current form but allows for resubmission after addressing the identified issues.
Rivoceranib, developed by HLB, is intended for liver cancer treatment, while Camrelizumab is an anti-cancer drug from HLB’s Chinese partner, Jiangsu Hengrui. Jin attributed the FDA’s disapproval mainly to issues with Camrelizumab’s manufacturing and quality control, not Rivoceranib.
Jin noted that the FDA’s inability to conduct thorough medical due diligence on clinical trials in Russia and Ukraine due to the ongoing conflict also contributed to the decision. The FDA was unable to visit hospitals in these regions, which have a significant number of Caucasian patients, to confirm the efficacy of the drugs.
Despite the setback, Jin remains optimistic, expecting Jiangsu Hengrui to quickly address the problems. The Chinese firm has a strong track record with 17 globally approved medicines. HLB plans to resubmit the NDA promptly in collaboration with Jiangsu Hengrui.
In a similar case, Korean biosimilar giant Celltrion Inc. received a CRL from the FDA for its breast cancer treatment Herzuma in 2018 but successfully gained approval within the same year after addressing the issues. HLB aims for a similar outcome but must resubmit within a year to avoid permanent rejection of its liver cancer treatment.
