ABVC Biopharma's shares suffered a 15% decline, falling to $3.07, following the company's recent agreement with Xinnovation Therapeutics. The two companies signed a legally binding term sheet for the exclusive licensing of ABV-1504, a drug for major depressive disorder, and ABV-1505, a drug for attention-deficit/hyperactivity disorder (ADHD) in mainland China.

Impressive Growth Followed by Recent Setback

Despite the recent downturn, ABVC Biopharma's stock closed Tuesday's session with a notable 45% increase. However, shares have still experienced a significant decrease of 53% within the past year.

Landmark Licensing Agreement

The agreement grants Xinnovation Therapeutics exclusive rights to develop, manufacture, market, and distribute ABVC's drugs for major depressive disorder and ADHD in the Chinese market. Additionally, Xinnovation Therapeutics will bear the expenses for conducting clinical trials and obtaining product registration in China.

Potential Revenue of $20 Million

As part of this licensing deal, ABVC Biopharma stands to earn up to $20 million in income. The recently signed term sheet outlines the crucial terms and conditions of the agreement.

Final Agreement to be Formalized

The final agreement is expected to be formally signed within the next year. This comprehensive contract will specify the exact licensing terms, including the schedule for milestone payments and other financial arrangements.

Anticipated Royalty Payments

ABVC Biopharma anticipates receiving royalty payments ranging from 5% to 12%, based on the projected annual net sales of its licensed drugs in China. With this revenue stream, ABVC believes it could generate approximately $50 million annually and reach a remarkable $1 billion throughout the patent life of these products if sales meet expectations.

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