Company of the Week: Abbisko Therapeutics

On 11 November 2026 Abbisko told the Hong Kong exchange that Merck KGaA will pay it $20M on the first American sale of PIMJETMI, the drug it licensed to Merck in 2023. The royalty behind the milestone is double-digit, paid from Germany, and in the first half of 2026 came to RMB 1.1M.

On 10 November 2026 the Food and Drug Administration approved pimicotinib, sold by EMD Serono as PIMJETMI, for adults with symptomatic tenosynovial giant cell tumour for whom surgery may worsen function or cause severe morbidity. At noon the next day in Hong Kong,

Abbisko filed the approval as inside information. The English press release that morning said only that Abbisko would receive an additional milestone payment on the first American sale. The exchange filing gave the amount, $20M, and repeated the double-digit royalty on global net sales.

America is the fourth market for the drug. China approved it in December 2025, Canada in June 2026 and Switzerland in October. Merck KGaA, which holds worldwide commercial rights, began selling in China in March.

Abbisko's interim accounts show what the licence has paid since launch. In the half to 30 June 2026 the company recognised a milestone of RMB 92.0M for the first prescription in China and RMB 1.1M ($0.16M) of royalties. At a royalty rate of at least 10 percent, RMB 1.1M corresponds to net sales of no more than RMB 11M ($1.6M). It also booked a tax charge equal to a tenth of its licence revenue, all of it German withholding tax.

At a Glance

A Note on Scope

The licence is not public. Abbisko has not published its agreement with Merck KGaA, and terms in this profile come from the announcements of both companies, Abbisko's annual report for 2025 and its interim results for 2026. The royalty tiers, the royalty term, the split of the remaining milestones, and any assignment or tax clauses are not public.

The inside information announcement of 11 November is cited through the report of it by AASTOCKS. Renminbi amounts are converted at RMB 6.72 per dollar, close to the People's Bank of China reference rate of 9 November 2026, except where the company gives a dollar figure. Hong Kong dollars are converted at HK$7.80. Calculations are the author's and state their assumptions where they appear.

From an Option to a Worldwide Licence

The $605.5M headline of the Merck KGaA licence, the payments made against it, and the approvals that triggered them

Abbisko was founded in Shanghai in April 2016 and raised $226M in its Hong Kong listing in October 2021, at HK$12.46 a share. Its pipeline is made up of small molecules, most of them in oncology.

The licence with Merck KGaA was announced in December 2023. Merck took an exclusive licence to commercialise pimicotinib in mainland China, Hong Kong, Macau and Taiwan, and an exclusive option on the rest of the world.

Abbisko kept the exclusive right to develop the drug in that territory, and Merck took an option to co-develop it in further indications under conditions the parties did not publish. The upfront was $70M. Upfront, option fee and milestones together could reach $605.5M, plus a double-digit percentage royalty on annual net sales. Merck's own release called the royalties double-digit and tiered.

Abbisko received the $70M in February 2024, and its 2024 accounts carry RMB 504.0M of licence revenue, of which RMB 497.3M came from the European Union, and an income tax charge of RMB 49.7M, which is 10.0 percent of the European figure.

The 2025 annual report also records RMB 29.0M of excess withholding tax from 2024, held as an asset and repaid by the tax bureau in 2025. The two amounts together equal 15.8 percent of the European revenue.

Germany withholds 15 percent on royalties paid abroad, with a solidarity surcharge of 5.5 percent of the tax on top, a combined 15.825 percent. On those figures Merck withheld about $11.1M of the $70M at the domestic rate, and Abbisko recovered about $4.1M a year later.

The Phase 3 trial, MANEUVER, reported in November 2024 an objective response rate at week 25 of 54.0 percent against 3.2 percent on placebo. Merck exercised its worldwide option on 1 April 2025 for $85M, which Abbisko received in May.

The fee was the whole of Abbisko's revenue for 2025, recognised at a point in time as one-time licensing revenue. The tax charge for the year was RMB 61.2M, 10.0 percent of revenue, or $8.5M on the $85M. Abbisko reported a profit of RMB 55.2M for 2025.

China approved pimicotinib in December 2025, and the FDA accepted the American application in January 2026.

The First Royalties

Abbisko's revenue by period, what it consisted of, the German tax charge, and the result for the period

Merck launched in China in March 2026. On 9 June Abbisko said it had received $13.52M from Merck, covering the milestone for the first prescription in China and royalties for the first quarter.

The interim accounts record the milestone as RMB 92.0M and royalty income for the half as RMB 1.1M. Licence revenue was RMB 93.2M, and RMB 4.1M of other revenue is not described. Revenue from the European Union was RMB 95.1M and from mainland China RMB 2.2M.

The royalty figure sets a ceiling on Chinese sales. If the rate on China sales is 10 percent, the lowest double-digit rate, RMB 1.1M of royalty implies RMB 11M ($1.6M) of net sales in the period. A higher rate implies less. The calculation assumes that the royalty recognised in the half covers sales from launch to 30 June and that no deductions apply.

The half ended with a net loss of RMB 193.5M ($28.8M), against a profit of RMB 328.5M a year earlier, when the option fee was booked. Research and development cost RMB 246.2M ($36.6M). The loss before tax was RMB 184.1M, and the tax charge was RMB 9.3M ($1.4M), described in the accounts as German withholding tax on licence revenue from a Germany-based customer. It equals 10.0 percent of licence revenue.

Canada approved the drug in June and Switzerland in October, and the American, Canadian and Swiss applications all ran under Project Orbis, in which the FDA reviewed the file alongside regulators in Australia, Canada, Israel, Switzerland and the United Kingdom.

The American label sets a dose of 50 mg once daily and carries a warning for hepatotoxicity. Pimicotinib is the third CSF-1R inhibitor approved in America for the disease, after Daiichi Sankyo's Turalio and Ono's Romvimza, which is taken twice a week.

Of the $605.5M headline, the upfront, the option fee and the American first-sale milestone account for $175M. That leaves $430.5M of development, regulatory and sales milestones, from which the China first-prescription milestone has already been paid. How much of the remainder depends on sales thresholds is undisclosed.

What Arrives in Shanghai

What $100 of royalty from a German payer is worth to the licensor and to holders resident elsewhere, at treaty rates

Every payment under the licence so far has come from what Abbisko's accounts call a Germany-based customer. Germany's treaty with China, signed in 2014, limits the tax on royalties to 10 percent of the gross amount.

Abbisko's tax charge has matched that rate in each period since 2025. In 2024 the excess over it was refunded a year after it was withheld.

The tax fell in a loss-making half. The RMB 9.3M charge on RMB 93.2M of licence revenue was booked against a pre-tax loss of RMB 184.1M. The accounts do not say whether Abbisko can use the German tax as a credit in a later profitable year.

German treaty rates on royalties differ by the residence of the recipient. They are 0 percent for Ireland, Switzerland, the United Kingdom and the United States, 5 percent for Luxembourg and Singapore, and 10 percent for China.

A recipient with no treaty, such as a Cayman vehicle, bears the domestic 15.825 percent. On $100 of royalty, Abbisko receives $90. A holder resident in Ireland that obtained treaty relief would receive $100, and a Cayman holder $84.18. The comparison assumes the payer withholds by reference to the holder's residence and that relief is in place before payment. The licence's assignment and tax clauses, which would decide both points, are unpublished.

Merck pays in dollars. Abbisko reports in renminbi, and the yuan moved from 7.03 per dollar on 1 January 2026 to 6.67 on 29 October. In the first half Abbisko recorded a net foreign exchange loss of RMB 22.9M ($3.4M) and a translation loss of RMB 45.7M in other comprehensive income. Interest income on its deposits was RMB 37.5M ($5.6M), and time deposits earned between 3.53 and 4.97 percent.

The company has funded the gap between licence income and research spending with equity and short-term bank debt. In April 2026 it placed 42.9M new shares at HK$12.18, raising $67.0M (HK$522.5M) gross, at a price below its listing price of 2021. Bank borrowings rose from RMB 291.7M at the end of 2025 to RMB 448.3M at 30 June, all due within a year. Cash and time deposits stood at RMB 2,379.4M ($354.1M).

What the Filings Do Not Say

The royalty is described only as double-digit and, by Merck, as tiered, and the thresholds at which the rate steps up, the top rate, and whether the tiers apply to worldwide sales or by region are not disclosed. Nor is the royalty term, whether it runs country by country to patent expiry or for a fixed period, or which reductions apply for generic entry, third-party licences or loss of exclusivity.

The $430.5M of remaining milestones has no published schedule. Abbisko has said it is eligible for "certain future commercial milestone payments". The size of each sales threshold, and whether any regulatory milestone attaches to approval in Europe or Japan, would set the next payments after the $20M.

The licence reserves development in Greater China to Abbisko and gives Merck an option to co-develop new indications. Pimicotinib is also being tested in chronic graft-versus-host disease. Neither the announcements nor the accounts say who pays for development outside the original indication, or whether an approval in a second indication carries its own milestone.

The tax and assignment clauses decide what a third party could buy. The 2024 accounts show that Merck withheld at the German domestic rate until relief was in place, and that the excess took a year to come back. Whether Merck grosses up for any withholding caused by its own acts, and whether Abbisko may assign its payment rights without consent, are not public.

Abbisko's other licences are less disclosed still. The 2026 agreement with Lilly pays an upfront of undisclosed size, milestones of up to about $1.9B and tiered royalties. The licence of ABK3376 to Allist, signed in March 2023, carries up to $187.9M in payments and tiered royalties, and its upfront is also undisclosed.

Financial Profile

Blue Team

• PIMJETMI is approved in four markets, and Merck KGaA sells it worldwide
• The FDA reports a response rate of 56 percent against 3.2 percent on placebo, and 77 percent of responders had a response lasting at least 12 months
• $20M is due on the first American sale, and the royalty is double-digit on global net sales
• Abbisko had $354.1M of cash and time deposits at 30 June 2026, against $66.7M of bank debt
• Since 2025 the German tax charge has equalled the treaty rate of 10 percent
• The licence has paid $155M in upfront and option money and a China milestone before material royalties began
• Lavengratinib, wholly owned, received orphan designation from the European Medicines Agency in achondroplasia in October 2026

Red Team

• Royalty income in the first half of 2026 was RMB 1.1M, and the rate, tiers and term are unpublished
• Two CSF-1R inhibitors were already approved in America for the same disease
• The label carries a hepatotoxicity warning
• Abbisko lost RMB 193.5M in the half, and its bank borrowings are all due within a year
• Merck withheld German tax at 15.825 percent on the 2024 upfront, and the excess took a year to be refunded
• Licence income is paid in dollars, and the company booked a foreign exchange loss of RMB 22.9M in the half as the yuan rose
• The April placing priced below the listing price of 2021

Implications for the Pharmaceutical Royalty and Biotech Capital Markets

Chinese licensors have reported a run of milestone payments from licences signed abroad. One tally counts 11 disclosed payments worth about $1.01B since the second half of 2025, and includes Abbisko's $13.52M among the few tied to sales. Royalties from those licences are at an earlier stage. Hengrui had received none from abroad at the end of September. Abbisko reported royalty income from Merck KGaA in its interim accounts, on sales that began in March.

The withholding record makes the royalty's value depend on who holds it. Abbisko receives 90 percent of each payment and records the tax as an expense while it makes losses. A holder resident in a country whose treaty with Germany sets a rate of zero would receive the whole payment, if the licence lets the payment right move and relief is in place. On the same stream the difference is about 11 percent of what Abbisko receives.

A buyer pricing the stream on 11 November has an American approval one day old and a royalty described only as double-digit. The royalty line puts Chinese sales in the first four months at no more than RMB 11M. The milestones are better described: the $20M first-sale payment is a fixed amount, and $430.5M of the headline remains, less the China milestone already paid.

Recent Developments

• Abbisko files the American approval as inside information and discloses the $20M first-sale milestone on 11 November 2026
• The FDA approves PIMJETMI in tenosynovial giant cell tumour on 10 November 2026
• Lavengratinib receives orphan designation from the European Medicines Agency in achondroplasia, announced on 21 October 2026
• Swissmedic approves PIMJETMI in October 2026
• Abbisko Cayman becomes Abbisko Medicine Co., Ltd., after an extraordinary general meeting on 17 September 2026
• Interim results report RMB 1.1M of royalties and a net loss of RMB 193.5M on 24 August 2026
• Abbisko and AstraZeneca agree to test lumipodlin with osimertinib in lung cancer, with no financial terms disclosed, on 1 July 2026
• Abbisko and Lilly sign a research collaboration and licence with milestones of up to about $1.9B on 24 June 2026
• Merck pays $13.52M for the China first-prescription milestone and first-quarter royalties, announced on 9 June 2026
• No sale, purchase or financing of Abbisko's royalty on PIMJETMI has been identified

Financial History

Conclusion

Abbisko's licence with Merck KGaA paid an upfront in 2024 and an option fee in 2025. In 2026 it paid a milestone and the first royalties. Each payment came from Germany. The upfront was taxed at the German domestic rate until part was refunded a year later, and each payment since has lost a tenth.

The filing of 11 November added a figure, $20M, to a milestone the English release left unquantified. The terms that would value the royalty itself, its rates and the clauses on tax and assignment, have not been published. The first half of 2026 produced RMB 1.1M of royalty from China. The first American sales, which will trigger the $20M, will also be the first sales in the largest of the four approved markets.

All information in this report was accurate as of the research date and is derived from publicly available sources including court opinions, regulatory guidance, academic literature, SEC filings, and financial news reporting. Information may have changed since publication. This content is for informational purposes only and does not constitute investment, legal, or financial advice. The author is not a lawyer or financial adviser.