ABVC Biopharma, Inc. announced the signing of a legally binding term sheet with Xinnovation Therapeutics Co. Ltd. that, subject to definitive agreements, is for the exclusive licensing of ABV-1504 for Major Depressive Disorder (MDD) and ABV-1505 for Attention-Deficit/Hyperactivity Disorder in mainland China. Under this landmark agreement, Xinnovation Therapeutics Company Ltd. will hold exclusive rights to develop, manufacture, market, and distribute innovative drugs for MDD and ADHD in the Chinese market and shall bear the costs for clinical trials and product registration in China.

The licensing deal carries a possible aggregate income of $20 million for ABVC. The term sheet outlines the key terms and conditions of the licensing agreement. The final agreement, expected to be formally signed within one year, will specify the precise licensing terms, including the schedule for milestone payments and other financial arrangements.

As per the term sheet, ABVC expects to receive royalty payments ranging from 5% to 12% based on the projected annual net sales of licensed drugs in China, which believe would bring ABVC's revenue $50 million annually and $1 billion during the patent life of these products, if achieve the expected amount of sales. The final agreement is subject to the satisfaction of closing conditions, and the transaction will not occur if they are not satisfied or waived within one year. Since neurology products, ABV-1504 and ABV-1505, are new botanical drugs of the extract from Polygala tenuifolia (Yuanzhi), a traditional Chinese medicine, Xinnovation will cooperate with other major pharmaceutical companies in China to grow raw materials in compliance with GAP (Good Agricultural Practices) and to manufacture the drug substance in compliance with GMP (Good Manufacturing Practices).

By utilizing the vast agricultural resources and expertise available in China, can expedite the refinement and advancement of these new drugs, paving the way for faster and more efficient global dissemination.