Chinese biotech innovator Jacobio Pharma has struck a global out-licensing deal with pharmaceutical giant AstraZeneca for a promising cancer drug, marking one of the largest cross-border transactions for a Chinese small-molecule oncology candidate currently in clinical trials.

The deal, announced on Monday, centers on a potential $2 billion partnership to tackle KRAS-mutated cancers, long considered one of the most elusive targets in oncology.

Under the terms of the agreement, Hong Kong-listed Jacobio will receive an upfront payment of $100 million. Depending on future development, regulatory, and commercial achievements, the company is eligible to receive up to $1.915 billion in milestone payments, alongside tiered royalties on net sales.

AstraZeneca will obtain exclusive global rights to research, develop, and commercialize the pan-KRAS inhibitor, known as JAB-23E73, outside the Chinese mainland. In the mainland market, the two companies will conduct joint development and commercialization, sharing both costs and potential profits.

The partnership comes as multinational pharmaceutical companies aggressively scout for next-generation assets.

Matt Hellmann, vice-president of early oncology development at AstraZeneca, highlighted the significance of the target. "KRAS-mutated cancers represent one of the most challenging areas in oncology," Hellmann said in a company statement, adding that advancing JAB-23E73 alongside AstraZeneca's broader oncology portfolio could accelerate the development of improved patient outcomes.

For Jacobio, the alliance is a strategic maneuver to secure a foothold in a fiercely competitive global market. During an online briefing on Monday, Wang Yinxiang, Jacobio chairman and co-CEO, emphasized that future competition in the pan-KRAS field will hinge on "global development capabilities and commercialization".

Wang said that Jacobio selected AstraZeneca over smaller US biotech firms specifically for its "global resources and investment scale". He pointed out that the true commercial potential for pan-KRAS inhibitors lies in first-line treatment, the initial standard of care, rather than second-line therapies used after initial treatments fail. However, first-line application requires combination therapies with other drugs, such as antibody-drug conjugates or immuno-oncology agents.

"We understand that this product needs to be partnered with a large pharmaceutical company that has a rich internal pipeline to conduct combination therapy studies," Wang explained.

AstraZeneca is a dominant player in oncology, with its cancer portfolio revenue growing 21 percent year-on-year in 2024, accounting for 41 percent of its total revenue.

JAB-23E73 is designed to target KRAS mutations, which act as an "on-off switch" for cell growth. When mutated, the gene remains stuck in the "on" position, driving tumor growth. While the industry saw its first breakthrough with the US Food and Drug Administration approval of a specific KRAS G12C inhibitor in 2021, JAB-23E73 is a "pan-KRAS" inhibitor capable of targeting a broader range of mutations.

The drug is currently undergoing Phase I clinical trials in China and the United States, where early signs of anti-tumor activity have been observed, according to both companies.

KRAS mutations are among the most common cancer drivers. The companies estimate that KRAS mutations occur in about 23 percent of all cancer patients, with particularly high prevalence in pancreatic at 88 percent, colorectal at 50 percent, and lung cancers at 32 percent.

In the race to develop pan-KRAS inhibitors, Jacobio faces competition from US-based Revolution Medicines, which utilizes a "molecular glue" technology.

However, Wang expressed confidence in Jacobio's small molecule approach. Citing disclosed data, he said that small molecule inhibitors appear to carry a lower incidence of skin toxicity and significantly reduced manufacturing costs, estimated at "one-twentieth" the cost of molecular glue production.

Despite the deal's magnitude, Jacobio's shares faced pressure following the announcement, dropping more than 13 percent on Monday. Some market observers questioned whether the $100 million upfront payment met expectations.

Wang defended the valuation, noting that upfront payments typically range from 3 to 8 percent of the total deal value. "Our 5 percent ratio is essentially in the upper-middle range," he said.

Regarding the stock volatility, Wang said the company remains focused on "technological progress" rather than short-term market swings.

lijing2009@chinadaily.com.cn