(Yicai Global) Nov. 26 -- Nhwa Pharmaceutical will pay as much as CNY115 million (USD18 million) to obtain the exclusive rights in China for a new schizophrenia treatment developed by Danish drugmaker Lundbeck.

The deal covers clinical development, production and commercialization of LuAF35700, Jiangsu province-based Nhwa Pharma said in a statement late yesterday.

The Chinese firm will make a CNY13 million (USD2 million) down payment, a phased development milestone payment of CNY64 million, and a commercial milestone payment of up to CNY37.5 million after the product’s annual net sales exceed the agreed threshold.

LuAF35700 is an innovative drug originally developed for the treatment of refractory schizophrenia which is expected to cut the incidence of multiple side effects compared with existing drugs, Nhwa Pharma said.

Clinical trial results, including Phase III pivotal testing, have shown that LuAF35700 has a good safety and tolerability profile. Nhwa Pharma will design and conduct other trials in China to obtain different indications and promote the drug’s early launch, it said.

The cooperation with Lundbeck shows that Nhwa Pharma is accelerating its innovative research and development pipeline for central nervous system drugs, which will help consolidate and develop its competitive advantage in the field, it said.

Following the successful release of the product, Nhwa Pharma will pay Lundbeck a sales commission of up to 10 percent of the net sales in China and will be entitled to receive a certain percentage of the drug’s net sales in other regions, it added.

Shares of Nhwa Pharma [SHE:002262] closed little changed today at CNY15.64 (USD2.47) each.

Editor: Futura Costaglione