TYK Medicines' HK$400M Share Subscription with Qilu Pharma Lapses as Stock Halves

Following a legal dispute with Huiyu Pharmaceutical, Tynkang Pharmaceutical’s partnership with Qilu Pharmaceutical has encountered new complications. On September 20, Tynkang announced that the subscription agreement previously reached with Qilu had officially lapsed, as certain conditions precedent were neither fulfilled nor waived.

Equity Subscription Falls Through

The subscription was a key component of the collaboration on TY-9591 (Deutertinib Mesylate tablets). Under the original terms, in addition to a RMB 300 million upfront cash payment, Qilu Pharmaceutical had agreed to subscribe for 63.22 million new H-shares of Tynkang at HKD 7.30 per share, representing a total consideration of approximately RMB 400 million.

However, due to market conditions and recent fluctuations in share price, the equity subscription ultimately failed. As of the close of trading on September 20, Tynkang’s share price stood at HKD 3.255.

Tynkang stated in its announcement that, after careful consideration of current market conditions and recent share price movements, the company and Qilu had mutually agreed not to further extend the revised final deadline. The subscription agreement will therefore lapse in accordance with its terms on September 20, 2026.

The company emphasized that the board believes the lapse will not have any material adverse impact on its business operations or financial condition. Both parties remain willing to pursue a share issuance subscription, with specific details still under negotiation.

Background of the Qilu Partnership

The H-share subscription arrangement dates back to July this year, when Tynkang announced a licensing and cooperation agreement, as well as a supply and commercialization agreement, with Qilu Pharmaceutical or its designated affiliates. The agreements cover the development, production, and commercialization of TY-9591 active pharmaceutical ingredient (API) in mainland China.

Under the licensing agreement, Tynkang is entitled to:

• A RMB 300 million cash upfront payment
• Milestone payments of up to RMB 2.06 billion for regulatory approvals and indication expansions

One month later, the parties extended the final deadline for the subscription agreement from August 20 to September 20, citing the need for additional time to fulfill certain conditions for issuing the subscription shares.

Despite the termination of the equity subscription, Tynkang confirmed that both it and Qilu will continue to fulfill their respective obligations under the licensing, supply, and commercialization agreements.

Beijing Business Today reporters sent interview requests to both Tynkang and Qilu Pharmaceutical but had not received responses by the time of publication.

Legal Dispute Over Agency Rights Adds Uncertainty

The collapse of the equity subscription is not the only challenge Tynkang faces regarding TY-9591.

The day after signing the cooperation agreement with Qilu, Tynkang became embroiled in a legal dispute. In late August 2025, Huiyu Pharmaceutical announced that its wholly-owned subsidiary, Huichenxin, planned to sign a national general agency agreement with Tynkang. Under the proposed agreement, Tynkang would grant Huichenxin an irrevocable exclusive right to act as the national general agent for TY-9591 in mainland China (excluding Hong Kong, Macau, Taiwan, and overseas markets), with a milestone upfront payment of RMB 150 million. The agreement was formally signed in February this year.

However, on July 21, Tynkang announced it had granted the commercialization rights for TY-9591 in mainland China to Qilu Pharmaceutical. The following day, Huiyu disclosed that it had received a summons from Changxing County People’s Court, where Tynkang had filed a lawsuit seeking a court declaration that the product cooperation agreement and national general agency agreement between the two companies were not established.

Prior to this, Huiyu and its subsidiary Huichenxin had already filed a confirmation lawsuit with the Neijiang City Shizhong District People’s Court, seeking a ruling that the relevant agreements were legally valid.

Expert Commentary on Legal Risks

Professor Deng Yong, a doctoral supervisor and health law expert at Beijing University of Chinese Medicine, told Beijing Business Today that while the equity subscription termination announcement did not mention the Huiyu lawsuit as an obstacle, and the product commercialization agreement remains in effect—suggesting Qilu has conducted a risk assessment—the dispute over core product agency rights has become a significant source of uncertainty.

“If the court ultimately rules that the agency agreement between Tynkang and Huiyu is valid, it would directly impact the exclusive commercialization rights obtained by Qilu,” Deng said.

He further noted that in the BD cooperation market, pharmaceutical companies focus heavily on the stability of intellectual property and authorization chains. In future negotiations over out-licensing or pipeline collaborations, Tynkang may face increased contract risk clauses, lower transaction prices, and greater difficulty in business negotiations, while market confidence in the company’s asset certainty may also decline.

TY-9591 Approved but Commercialization Faces Multiple Hurdles

The two-month-long collaboration saga, which remains unresolved, has once again put Tynkang and its core product TY-9591 in the spotlight.

Tynkang is an innovative pharmaceutical company approaching the commercialization stage, focusing on cancer therapeutics. Its pipeline includes 10 drug candidates. TY-9591 is an orally administered, irreversible third-generation epidermal growth factor receptor (EGFR) inhibitor (third-generation EGFR-TKI) independently developed by Tynkang. As a deuterated form of osimertinib, the deuteration modification is intended to improve drug metabolism, including prolonging half-life, reducing toxicity, or minimizing adverse reactions.

In late August, TY-9591 tablets received conditional marketing approval from China’s National Medical Products Administration (NMPA) for first-line treatment of adult patients with locally advanced or metastatic non-small cell lung cancer (NSCLC) harboring EGFR exon 19 deletions (19DEL) or exon 21 (L858R) substitution mutations, accompanied by central nervous system (CNS) metastases.

Competitive Landscape and Financial Pressures

Despite the approval, significant challenges remain on the path to successful commercialization. TY-9591 enters a highly competitive market where multiple similar products have already been approved in China, including:

• AstraZeneca’s osimertinib
• Hansoh Pharma’s almonertinib
• Allist’s furmonertinib

Several companies also have fourth-generation EGFR-TKIs in clinical development.

“The domestic EGFR-TKI market is already crowded. While the brain metastasis indication represents a blue ocean, the patient population is limited. Whether Qilu’s channel capabilities can translate into actual sales volume remains to be seen,” said industry analyst Zhu Mingjun.

TY-9591 is Tynkang’s first product to reach the market. The company has had no revenue from commercialized products and has been operating at a loss. In 2025, the company reported a loss of RMB 300 million. In the first half of this year, it recorded an additional loss of RMB 26.88 million.

Professor Deng Yong noted that Tynkang’s biggest challenges include:

• Sustained lack of main business revenue and years of losses
• Heavy reliance on TY-9591 as its core asset
• Tight cash flow
• Asset uncertainty arising from the agency rights lawsuit

“This product can bring Tynkang licensing and sales revenue, easing financial pressure, but it is unlikely to fundamentally reverse the company’s situation in one go. Commercialization revenue will take time to materialize, and both litigation risks and intense market competition will limit earnings potential,” Deng said.

Beijing Business Today | Reporters: Wang Yinhao, Song Yuying