Bridge Biotherapeutics shares tanked on Wednesday, as the company did not rule out the possibility of Boehringer Ingelheim’s return of its rights for BBT-877, idiopathic pulmonary fibrosis (IPF) treatment candidate.

As of 12:30 p.m., the company’s shares stood at 30,300 won ($25), down 17.44 percent from the previous trading day.

Bridge Biotherapeutics licensed out the candidate in July last year. The company announced that it would receive 45 million euros as an upfront fee and short-term milestone and up to 1.1 billion euros as rewards for clinical development, licensing, and sales milestone payment.

Boehringer Ingelheim agreed to also provide additional royalties if they managed to commercialize the treatment candidate.

The clinical trial for BBT-877 was expected to begin in July this year as the accord outlined that tests for the candidate would start within 12 months of the agreement. However, the company deleted the clinical trial guidance contents that specified the timing of the second phase clinical trial in June after Boehringer Ingelheim announced that BBT-877 needed additional testing, making it difficult for the drug to enter phase 2 clinical trial in July.

“We had predicted that the phase 2 clinical start would start in July, but due to various factors, it has become difficult to initiate the phase 2 clinical trial on schedule, while a new start schedule cannot be proposed,” the company said. “Still, the change in the clinical trial guidance does not mean the cancellation of our license-out agreement with Boehringer Ingelheim."

Nevertheless, the company acknowledged the possibility of Boehringer Ingelheim’s return ofits rights for the candidate drug, during its investor relations (IR) conference call on Tuesday.

"During the last IR conference call, we said that we did not know when the phase 2 clinical trial would start," a company spokesperson told Korea Biomedical Review. "This time around, however, we discussed the development plan with Boehringer Ingelheim on why the phase 2 clinical trial was postponed and what would happen in the future."

The official stressed that while the preclinical trial for the candidate is over, Boehringer Ingelheim said that it wanted to conduct additional tests to check the candidate's toxicity.

"The toxicity test will be done in two parts -- main and preliminary test -- and currently we plan to enter the preliminary test stage," the official said. "The results of the additional toxicity test will likely determine whether Boehringer Ingelheim will continue to develop it or return the right."

Based on discussion with Boehringer Ingelheim, the company said it sees two future options for the drug.

"If the candidate passes the preliminary test, Boehringer Ingelheim will likely continue to develop the candidate and proceed to the main test," she said. "After the main test is over, the company expects that phase 2 clinical trials start by 2023."

If the preliminary test results do not satisfy Boehringer Ingelheim, however, there is a possibility that the company will return the rights to Bridge Biotherapeutics, she added.

In case Boehringer Ingelheim returns the rights for the substance, Bridge Bio plans to develop the drug independently.

"We may also look for another license partner for phase 2b clinical trials, and the research needs to go on for its commercialization," she said. "Whether Boehringer will continue to develop or return the rights of the drug will be decided after the preliminary examination results come out, probably in December."

Also, even if Boehringer returns the drug's rights to Bridge Bio, there is no obligation for the latter to return 45 million euros that it received as a down payment and milestone paid according to the success of phase 1 clinical trials and related research, the official added.