SK Biopharmaceuticals has transferred the commercialization rights for the Middle East and North Africa (MENA) region for the epilepsy drug cenobamate (brand name in the U.S.: Xcopri) for just 4 billion won ($2.98 million).

The amount is unusually small for a licensing-out of a U.S. FDA-approved new drug.

However, the company believes there is plenty of room for additional revenue.

SK Biopharmaceuticals said Friday that it has signed a technology export agreement with Hikma MENA FZE, a Middle Eastern pharmaceutical company, for cenobamate’s rights in MENA. Accordingly, Hikma will sell cenobamate in 16 countries in the region, including Saudi Arabia, the UAE, and Egypt.

The agreement is about $3 million, and SK Biopharmaceuticals will receive royalties from Hikma in proportion to net sales.

SK Biopharmaceuticals has also signed a strategic alliance agreement with Hikma. The agreement gives the Korean company a right of first refusal to negotiate with Hikma for future technology exports of products other than cenobamate to the MENA region. The total payment for the strategic alliance is $23 million (30 billion won), which SK Biopharmaceuticals will receive in one lump sum.

Notably, the technology export and strategic alliance agreement will deduct not just tech export payment but ordinary technology fees from the strategic alliance payment.

In other words, until SK Biopharmaceuticals reaches the $23 million strategic alliance payment, minus the $3 million technology export advance, it will pretend to receive a royalty based on sales of cenobamate. Furthermore, SK Biopharmaceuticals agreed not to receive royalties for three years from the first local launch year.

This is an unusually small amount of money for a technology export for a new drug approved by the FDA, and the agreement could be seen as unfavorable to SK Biopharmaceuticals, market watchers pointed out.

However, SK Biopharmaceuticals said that Hikma wanted to strengthen cooperation by recognizing the value of SK Biopharmaceuticals, and there is plenty of room for additional revenue beyond the down payment in the future. SK Biopharmaceuticals estimates the MENA epilepsy market worth $442 million (591 billion won).

The Korean company also said the agreement had increased its market presence in the MENA market, a major “pharmerging” market, and will offer new treatment options to patients with epilepsy in the MENA region. According to SK Biopharmaceuticals, Hikma is one of the leading pharmaceutical companies in the Middle East, with a strong market presence and extensive sales network in the MENA region.

SK Biopharmaceuticals said it would use the money to further its research, development, and inorganic investments.

"This strategic partnership with Hikma provides us with a bridgehead to strengthen our long-term market dominance in the MENA region," SK Biopharmaceuticals CEO Lee Dong-hoon said. "Based on the established value of cenobamate, we look forward to expanding to the MENA epilepsy market.