(Yicai) Sept. 24 -- China's InnoCare Pharma has signed a research collaboration and licensing agreement with American pharma giant Eli Lilly and Co. to discover innovative drugs, with the Chinese drug developer eligible for payments of up to USD3.35 billion.

Under the agreement, InnoCare is eligible to receive up to USD100 million in upfront and near-term milestone payments and about USD3.25 billion in potential development and commercial milestone payments, the Beijing-based company said in a statement today.

Founded in 2015, InnoCare is a commercial-stage biopharmaceutical company focused on developing innovative treatments for cancer and autoimmune diseases. Its key product is orelabrutinib, a Bruton’s tyrosine kinase inhibitor approved in China and Singapore for certain blood cancers.

InnoCare said the latest agreement marks an important milestone in its internationalization strategy and is expected to enhance its global competitiveness and influence, and have a positive impact on its future performance.

Based on the deal, InnoCare will use its proprietary drug discovery platform and research and development expertise to discover and advance compounds against up to five novel targets to address major unmet medical needs. The firm will also be entitled to tiered royalties at single-digit percentages based on annual net sales of licensed products following their commercialization.

The Lilly agreement follows another major overseas licensing deal by InnoCare. In October last year, the company granted Nasdaq-listed Zenas BioPharma global rights to orelabrutinib for multiple sclerosis and rights outside China and Southeast Asia for other non-oncology indications, along with rights to two preclinical autoimmune drug candidates.

The Zenas partnership had a smaller potential value than the Lilly deal. InnoCare was eligible for up to USD100 million in upfront and near-term payments, up to seven million Zenas shares, and additional milestone payments and royalties. Potential payments across the three programs exceeded USD2 billion.

The new licensing deal failed to lift InnoCare's shares amid a broader market selloff. InnoCare [SHA: 688428; HK: 09969] closed 10.6 percent lower at CNY29.86 (USD4.50) in Shanghai today and slipped 7.9 percent to HKD14.50 (USD1.90) in Hong Kong.

Chinese stocks came under selling pressure after the 10-year US Treasury yield hit a 19-year high yesterday, with the benchmark Shanghai Composite Index closing 1.2 percent lower today.

Editor: Emmi Laine