Eli Lilly and Co. is tapping China’s Innovent Biologics Inc. to develop and manufacture a strategic portfolio of potential cancer therapies in one of the largest biotech collaborations between a multinational and a domestic drugmaker in China to date.

The deal’s value could exceed $456 million if an Innovent-contributed preclinical immuno-oncology molecule hits key milestones, while other projects in the collaboration could yield a biosimilar of the blockbuster Rituxan (rituximab, Biogen Idec Inc. and Roche AG), a cMet monoclonal antibody to treat non-small-cell lung cancer (NSCLC) and several bispecific immuno-oncology molecules.

Over the next decade, Innovent will lead the development and manufacturing for the China market while Lilly will be responsible for commercialization of the three potential medicines. Innovent also has co-promotion rights.

Michael Yu, co-founder, president and CEO of Innovent, told BioWorld Asia that the deal is “very meaningful” for China’s biotech sector. “This is the very first innovative biologics out-licensing [from China] to a global company,” he said. “It’s also the very first time for a domestic company working with a global company on biologics, on the full range of business, from development and registration to manufacturing to commercialization.”

While providing Innovent with a $56 million up-front payment, the deal includes development, regulatory and sales milestones for the preclinical immuno-oncology molecule that could exceed $400 million, Lilly said. Sales royalties and other payments are attached to certain products if commercialized, but the partners didn’t disclose specifics.

Under the agreement, the partners will continue to develop the Rituxan biosimilar, for which Innovent has already received investigational new drug (IND) application approval to begin phase I studies in China. They will push ahead with work on the Lilly-contributed cMet molecule for NSCLC – a significant indication in China where rates of the cancer are high – even as Lilly continues development of its cMet program outside of China. Furthermore, they will advance development of the undisclosed preclinical immuno-oncology molecule for China, though Lilly will take on development, manufacturing and commercialization of the molecule outside of China.

Lilly also gains rights to develop and commercialize up to three preclinical bispecific immuno-oncology molecules outside of China.

The agreement cements a relationship first built between the companies through Lilly Asia Ventures, which has backed Innovent alongside Fidelity since first investing in its $25 million series B in November 2012. Not long after, Innovent and Lilly began to discuss the potential for a future partnership and licensing deal, said Yu. On the way to sealing the deal, Lilly upped its bet on the company in January, participating in a series C round valued at almost $100 million and has helped Innovent build what’s billed as the largest biologics production facility in China and advance a pipeline of both new biologic and biosimilars candidates. (See BioWorld Today, Jan. 28, 2015.)

The alliance marks “an important milestone in our longstanding commitment to China,” said Alfonso Zulueta, a senior vice president at Lilly and president of Lilly’s emerging markets unit, “and further reinforces our focus to develop collaborative networks to advance research and clinical development in emerging markets.”

Innovent’s sophisticated manufacturing capacity, relatively prolific pipeline – including 10 antibody products under development, with six IND applications filed – and Yu’s personal track record as the inventor of two class I innovative biologics have made the company a fairly unique entity in a land better known for counterfeit drug scares and scandal. It highlights the potential for China’s fast-growing investment in medical research, global lead in patent-filing and rising ability to better meet FDA manufacturing standards to draw further interest from multinationals. (See BioWorld Today, Jan. 21, 2015, Feb. 25, 2015, and March 4, 2015.)

The deal also signals a relatively new chapter for Chinese biotech companies that typically don’t see revenue until they launch their products because the partnership and licensing market has so far been immature, said Yu. “Now you have a good example to show start-ups, if you’re innovative, you may be able to generate cash before you launch your product.”