The share price of Dong-A ST, a pharmaceutical company, has been surging after the company announced its deal to transfer technology of DA-9801, a diabetic neuropathy treatment, to NeuroBo Pharmaceuticals, Thursday.

The pharmaceutical company’s stock price surpassed 129,500 won ($121) around 9:00 a.m., a 4.02 percent increase from the previous day.

Under the agreement, Dong-A ST will receive $2 million and a 5 percent stake in NeuroBo, with milestones of up to $178 million, followed by commercialization royalties. NeuroBo will be responsible for the global clinical development, licensing and sales of DA-9801.

DA-9801 is a treatment for diabetic neuropathy. In 2011, the drug received support from the Ministry of Health and Welfare's healthcare research and development project. During that time, the drug also obtained funds from the Ministry of Trade, Industry and Energy’s bio-medical device original fusion technology development business.

Currently, the drug is awaiting phase 3 clinical trials in the U.S. after completing phase 2 clinical trials.

“Although NeuroBo is not well known as it is a fairly new company, it is familiar with DA-9801 as one of its founders was a clinical consultant for the drug,” said Lee Dal-mi, an analyst at SK Securities. “It is expected that the U.S. phase 3 clinical trial of DA-9801 will take place soon.”

Despite R&D expenses, the company’s operating profit is also expected to rise, Lee added.

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