JW Pharmaceutical said last Friday it had received notification from LEO Pharma of its intention to return the rights for LEO 152020, a substance aimed at treating atopic dermatitis. LEO 152020 is also known as JW 1601 in Korea. 

LEO Pharma, a multinational pharma based in Denmark, returned the rights of LEO152020 due to the candidate's lack of efficacy.

LEO Pharma decided to return the rights of LEO152020 after an interim analysis of a global phase 2a and 2b trial showed that the candidate failed to meet the primary endpoint.

JW Pharmaceutical transferred LEO 152020 to LEO Pharma in 2018, with an upfront payment of $17 million, with a total contract value of $420 million.

However, as a result, the licensing agreement between the two companies is expected to be terminated. JW Pharmaceutical has no obligation to refund the upfront payment received from LEO Pharma.

Despite LEO Pharma returning the candidate, JW Pharmaceutical stated that drug toleration for LEO152020 was identified in all drug-administered groups, and no new safety concerns or issues were identified.

JW Pharmaceutical said the drug's cardiac safety was also confirmed in separate clinical trials.

"Based on the drug's characteristics of selectively acting on the histamine H4 receptor, and the safety profile confirmed in clinical trials, we plan to review the future development direction, including the possibility for new indications, based on the intermediary research data we have accumulated over time," JW Pharmaceutical said.

Last week, JW Pharmaceutical was also hit with a record-high fine of 29.8 billion won ($21.9 million) from the Fair Trade Commission (FTC) for illegal rebates for providing widespread illegal rebates to over 1,500 hospitals and clinics nationwide.

The company emphasized its intent to challenge the fine, arguing that the FTC's actions were unfair when compared to similar cases and legally disputable.

JW Pharmaceutical's shares continued to plummet on Monday.

As of 11:00 a.m, Monday, the company's stock price stood at 26,500 won, down 8.78 percent from Friday.