Japan's Astellas Pharma has clinched a deal to pay around $1.3 billion to US drug developer Aveo Pharmaceuticals for jointly developing an experimental cancer treatment, the companies said in a statement.
Japan's second-largest drug maker by sales and Aveo, which went public about a year ago, said the agreement was to develop and market tivozanib, a potential cancer treatment outside Asia.
Under the accord, Astellas will pay Aveo an initial $125 million up front, consisting of a $75 million licence fee and $50 million in research and development funding, the statement released Wednesday said.
Aveo said it was also eligible to receive approximately $1.3 billion depending on the drug's success in terms of clinical and regulatory achievement as well as meeting sales targets.
Aveo will lead commercialisation of tivozanib in North America, while Astellas will take the lead in the European Union. They plan to share equally all North American and EU development and commercialisation costs and profits.
Tivozanib is currently in a late-stage trial for treating kidney cancer, as well as studies for other types of cancer. Aveo expects to release top-line data on the kidney-cancer study in mid-2011.
Astellas last year bought US firm OSI Pharmaceuticals for $4 billion, as Japanese makers seek to enter new markets to offset the impact of the increasing use of generic drugs in the domestic market.
Astellas shares closed 1.53 percent higher in Tokyo trade Thursday.