-6-K
As previously reported on a Form 6-K filed by BeyondSpring Inc. (the “Company”), Dalian Wanchunbulin Pharmaceuticals Ltd. (“Wanchunbulin”), the Company’s 58%-owned subsidiary in China, is party to a commercialization and co-development agreement (the “Agreement”), dated August 25, 2021, with Jiangsu Hengrui Pharmaceuticals Co., Ltd. (“Hengrui”). The Agreement pertains to the grant by Wanchunbulin to Hengrui of exclusive rights in the Greater China markets to commercialize and co-develop plinabulin, the new drug application of which for the prevention of CIN was then under review by the Food and Drug Administration (the “FDA”) in the U.S. and the National Medical Products Administration in China. Pursuant to the Agreement, Hengrui made an upfront payment to Wanchunbulin in the amount of 200M RMB (est. $27.5M)(the “Upfront Payment”).
The Company and Hengrui have been in dispute with respect to Hengrui’s request to unilaterally terminate the Agreement and request for full refund of the Upfront Payment. Hengrui has initiated an arbitration proceeding with China International Economic and Trade Arbitration Committee (“CIETAC”), which alleges breach of the Agreement by Wanchunbulin, citing the Complete Response Letter received from the FDA in November 2021 and the failure to obtain regulatory approval in China yet. Hengrui seeks full refund of the Upfront Payment and a breaching penalty at 0.05% per day for the amount of such Upfront Payment that remains unpaid, as well as payment of all fees and costs relating to the arbitration. As an interim and conservatory measure for the arbitration, approximately 70M RMB (est. $9.6M) of Wanchunbulin’s assets have been seized and frozen on a temporary basis, pending a decision on the merits by the arbitral tribunal.
The Company believes the claims made by Hengrui are not supported by the terms of the Agreement, and are without merit and inconsistent with industry practice. The Company intends to defend itself vigorously.
