(Yicai) Jan. 22 -- Shares in Lepu Biopharma soared as much as 14.2 percent today before receding as investors cashed in after the Chinese drug developer said that it will grant US biopharmaceutical firm ArriVent BioPharma the exclusive license to a pre-clinical experimental antibody-drug conjugate therapy targeting gastrointestinal cancer in all markets excluding China in a deal worth up to USD1.2 billion.

Lepu’s share price [HKG:2157] closed up 1.6 percent at HKD2.43 (USD0.31) today. Earlier in the day it surged to HKD2.73. The Hong Kong bourse's benchmark Hang Seng Index closed down 1.7 percent at 19,759.

In return for these rights, ArriVent will pay Lepu a one-time down payment and near-term milestone payments amounting to USD47 million, Shanghai-based Lepu said today. There will also be other milestone payments of up to USD1.16 billion at various stages of the new drug’s development, including registration, production and sales as well commissions on sales outside of China once it hits the market.

The new drug, given the code name MRG007, demonstrated strong anti-tumor activity in preclinical models for the treatment of gastrointestinal cancer, Lepu said. The company plans to submit a clinical trial application in the first half of this year with a focus on the treatment of colorectal cancer, pancreatic cancer and other malignant gastrointestinal tumors.

Antibody-drug conjugates are a new type of targeted medicine formed by linking bioactive small molecule drugs to monoclonal antibodies through linkers. They can target and transport small molecule cytotoxic drugs to target tumor cells using specific antibodies as carriers, thereby improving the efficacy of the drugs and reducing toxicity to normal tissues.

This is the second ADC drug development deal that ArriVent has penned with a Chinese drug developer in the past year. Last June, the Philadelphia-based company linked arms with Alphamab Oncology, also listed in Hong Kong, to use the latter's proprietary new drug development platform for the discovery and development of ADC therapies. As part of this tie-up, it obtained exclusive market rights for these medicines outside of China. Total payments during the development process, including upfront fees and milestone payments, are expected to reach as much as USD616 million.

Editors: Tang Shihua, Kim Taylor