The US Food and Drug Administration approved Luye Pharma's (HKG:2186) investigational new drug application for its LY03020 drug for schizophrenia, according to a Tuesday filing with the Hong Kong Exchange.

The approval means the drug could undergo clinical trials in the US, the filing said.

LY03020 is also undergoing clinical trials in China, Luye said.

Shares of the company declined nearly 2% in recent trade.