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Chi-Med amends cancer drug agreement with Eli Lilly to garner more sales royalty

Hutchison China MediTech Ltd. amended its license agreement on cancer drug fruquintinib with Eli Lilly and Co. to garner more sales royalty.

The Hong Kong-based company, backed by billionaire Li Ka-shing, will receive 15% to 29% royalty payment on fruquintinib's sales in China, instead of the 15% to 20% range set in 2013.

The amendment also shifts the planning, execution and decision making responsibility of drug indication development in China to Chi-Med. Eli Lilly, which took the main responsibility for the development according to the 2013 agreement, will pay $20 million for each fruquintinib indication approved in China, up to three indications, as Chi-Med will pay for all of the development costs in the country.

Fruquintinib, approved by Chinese regulator as a treatment for colorectal cancer in September, is an oral inhibitor that targets vascular endothelial growth factor receptors, or VEGFR, to fight disease. The drug is marketed under the Elunate name in China.

The drug in November, however, failed a late-stage study as a treatment for lung cancer and is still under trial as a therapy for gastric cancer. The Hong Kong-based company has then been exploring combo cancer treatments for the drug, including combinations with Innovent Biologics Inc.'s sintilimab, Genor BioPharma Co. Ltd.'s genolimzumab, Shanghai Junshi Biosciences Co. Ltd.'s toripalimab and Taizhou Hanzhong Pharmaceuticals Inc's monoclonal antibody HX008.

Sintilimab, genolimzumab, toripalimab and HX008 are all PD-1 class of checkpoint inhibitors that work by blocking the interaction between certain proteins on the surface of immune cells and cancer cells to enable the immune system to target the disease.