[Edaily Reporter KIM SUNG-JIN ] SK BIOPHARMACEUTICALS(326030)has drawn attention by repeatedly emphasizing that the deal to acquire “Opacalym” (BHV-7000), a new drug candidate for epilepsy, from the U.S. biotech company Biohaven is “pending closing.” This statement came during the company’s explanation following the U.S. Food and Drug Administration’s (FDA) decision to partially hold up some of Opacalym’s clinical trials. SK BIOPHARMACEUTICALS had made a bold move by agreeing to pay $400 million (approximately 537.5 billion won)—the largest upfront payment in the history of the domestic pharmaceutical and biotech industry—for the acquisition of Opacalym. It is interpreted that the company intended to highlight the fact that this amount has not yet been disbursed due to the emergence of clinical variables.

$400 million in

advance payment alone… A bet made with confidence

, but On the 26th of last month, SK BIOPHARMACEUTICALS announced it would acquire Biohaven’s new epilepsy drug, Opacalym, for up to 1.1 trillion won. This was a high-stakes bet that could determine the company’s fate, aimed at cultivating a next-generation cash cow to succeed its own new drug “cenobamate” (U.S. brand name: Xcopri), which was developed in-house from candidate discovery through distribution in the U.S. market.

This acquisition drew industry attention not only for its sheer scale but also because the upfront payment alone amounted to roughly half of the total contract value. An industry insider stated, “While the upfront payment ratio for licensing in a candidate drug varies depending on the development stage, it is generally around 20–30% for Phase 2 and 3 clinical trials.” Consequently, industry observers have speculated that SK BIOPHARMACEUTICALS’s decision to pay Biohaven a large upfront payment “suggests a high degree of confidence.”

In particular, SK BIOPHARMACEUTICALS indirectly demonstrated its confidence in Opakalim by agreeing to pay milestones and royalties based on post-commercialization sales to the original developer, Knopp BIOSCIENCE. Typically, milestones and royalties owed to the original developer are paid by the company that initially acquired the asset, but SK BIOPHARMACEUTICALS agreed to assume these obligations as well.

Given this context, when the FDA issued a partial hold on the Opacalym clinical trial, SK BIOPHARMACEUTICALS is believed to have repeatedly emphasized that the deal was “not yet closed” in order to reduce misunderstandings and manage risk. SK BIOPHARMACEUTICALS held an online briefing on the morning of the 11th and stated, “Although the contract has been signed, the transaction has not yet closed, so we have not paid the $400 million upfront payment,” adding, “We are in discussions to close the transaction after first resolving the issue of the partial hold on the clinical trials.”

The FDA requested additional data after toxicological findings related to a specific metabolite were observed in mice administered Opakalim. Two late-stage clinical trials (RISE 2 and 3) for approval are currently underway, and as a result, the enrollment of new patients in the Phase 2 and 3 trials has been temporarily suspended. SK BIOPHARMACEUTICALS was already aware of this issue prior to signing the agreement with Biohaven and, following a thorough due diligence review, assessed that the likelihood of the same problem occurring in humans is low. The company anticipates that the clinical hold issue will be resolved around October or November and maintains that there will be no changes to the schedule for announcing topline results in the second half of this year.

Opacalym is an epilepsy treatment candidate that selectively activates Kv7.2 and Kv7.3 potassium channels. It is being developed as a once-daily oral medication; since its mechanism of action differs from that of Excorpri—which selectively inhibits persistent sodium currents that trigger seizures to block excessive electrical signals—synergistic effects are expected if both drugs are successfully commercialized.

Conditions for Contract Termination… The Key Issue Is ‘MAE’

As risks related to the partial suspension of Opakalim’s clinical trials have emerged, attention is turning to the deal closing and contract termination

conditions

between SK BIOPHARMACEUTICALS and Biohaven. This is because, as SK BIOPHARMACEUTICALS has repeatedly emphasized that the deal is “prior to closing,” it is crucial to understand under what specific circumstances the contract can be finalized or terminated.

According to Section 2.3, “Conditions Precedent to Closing,” in the original text of the license agreement between SK BIOPHARMACEUTICALS and Biohaven—filed on EDGAR, the electronic disclosure system operated by the U.S. Securities and Exchange Commission (SEC)—a total of four conditions are specified. These include: △ obtaining antitrust approval; △ the absence of any injunction from the relevant government authorities; △ no expectation of a material adverse effect (MAE) either individually or in the aggregate; and △ the submission of performance documents by both companies. The agreement can be finalized only when these four conditions are met.

Regarding this suspension of the phase clinical trial, the MAE condition could become a point of contention. Section 1.97 of the agreement defines MAE in three categories: △ A material adverse event (MAE) is defined as any event that has a material adverse effect on the overall business related to the licensed substance or product; △ any event expected to have a material adverse effect on the product’s value (including safety, efficacy, and expected price); and △ any event that has a material adverse effect on the ability to develop, manufacture, commercialize, or obtain and maintain regulatory approval. The second item specifically mentions safety and efficacy. If SK Biopharm fails to sufficiently demonstrate to the FDA that the toxicity of Opakalim observed in mice is unlikely to cause the same issues in humans—and the clinical hold is not lifted—the contract completion date is highly likely to be delayed.

The issue is that exceptions not classified as MAEs are also separately specified. Among the 11 exceptions, the key provision is Clause K. Clause K states that “matters disclosed to SK BIOPHARMACEUTICALS prior to the contract execution date, as well as matters, events, or circumstances of which SK BIOPHARMACEUTICALS was previously aware,” do not constitute MAEs. Simply put, while the contract can be terminated if there are issues with the product’s safety or efficacy, this does not apply to matters that were previously disclosed.

In fact, both companies stated that they were aware of the toxicology findings in question prior to signing the contract. SK BIOPHARMACEUTICALS shared that it was aware of the details before the contract was signed, stating, “We reviewed these findings during the due diligence process prior to signing the contract and also took into account the opinions of external experts with backgrounds in toxicology and FDA pharmacology and toxicology reviews.” Biohaven also announced in a disclosure on the 9th (local time) that “all clinical and preclinical data, including materials related to the characterization of metabolites, were fully disclosed to SK BIOPHARMACEUTICALS prior to the signing of the license agreement.” If this clinical hold is not lifted, it could lead to a disagreement between the two companies regarding the requirements for “deal closing.”

Under the terms of the agreement, grounds for termination prior to closing are limited to two scenarios: failure to complete the transaction by the “Outside Date” (closing deadline) and the issuance of a final injunction under antitrust law. However, the specific closing deadline is kept confidential on the grounds of trade secret, and it may be extended once at the sole discretion of SK BIOPHARMACEUTICALS.