Innovent Biologics announced a sweeping partnership with Takeda Pharmaceutical, with a total potential transaction value of up to $11.4 billion, marking the largest business development deal ever recorded in China's pharmaceutical sector.

In a filing to the Hong Kong stock exchange early Wednesday, Innovent said the two companies have entered into a global strategic collaboration aimed at accelerating the development of Innovent's next-generation immuno-oncology (IO) and antibody-drug conjugate (ADC) therapies.

The partnership covers two late-stage investigational drugs, IBI363 and IBI343, as along with an early-stage program, IBI3001, for which Takeda holds an exclusive option.

Under the agreement, the partners will jointly develop IBI363 worldwide and co-commercialize it in the United States, with Takeda leading the development plan. Innovent will grant Takeda the commercialization rights to IBI363 outside the United States and Greater China. Takeda will also receive exclusive rights to IBI343 and an exclusive option for IBI3001 in regions outside Greater China.

The financial terms underscore the scale of the collaboration. Innovent will receive a $1.2 billion up front payment, which includes a $100 million strategic equity investment from Takeda. The Chinese biotech firm is also eligible for up to $10.2 billion in milestone payments, bringing the total potential deal value to $11.4 billion.

Innovent will also earn sales-based royalties for each candidate in markets outside Greater China — except for IBI363 in the United States, where both companies will share profits and losses.

In its statement, Innovent said the partnership aims to "accelerate the global development of next-generation IO and ADC therapies", describing it as a major step in the company's efforts to expand its international footprint.