(Yicai) July 14 -- Shares of Dizal Pharmaceutical surged by their daily trading limit after the Chinese drugmaker granted AstraZeneca the exclusive global rights to its first-in-class lung cancer treatment in a deal worth as much as USD1.5 billion.

Dizal Pharma [SHA: 688192] surged 20 percent to close at CNY56.33 (USD8.31) a share today. Shanghai's tech-heavy Star Market Composite Index rose 0.8 percent.

Under the deal, AstraZeneca will make an upfront payment of USD600 million for the global rights to develop and commercialize Zegfrovy, an innovative non-small cell lung cancer drug, Dizal Pharma said in a stock exchange filing at noon today. The UK-Swedish company will also make milestone payments of up to USD400 million tied to development and up to USD500 million tied to sales.

In addition, Dizal Pharma is entitled to tiered royalties based on annual net sales that could reach low double-digit percentages.

The deal was negotiated between Dizal Pharma and AstraZeneca after a comprehensive evaluation of Zegfrovy's development stage and its market potential, AstraZeneca's global development and commercialization capabilities, and market benchmarks from comparable licensing deals for innovative cancer drugs, the Chinese firm noted.

The transaction is expected to be completed in the second half of this year, subject to customary closing conditions and necessary approvals from antitrust regulators and other relevant authorities in overseas jurisdictions, Dizal Pharma pointed out.

Zegfrovy is an oral, irreversible, highly selective epidermal growth factor receptor tyrosine kinase inhibitor targeting multiple EGFR mutant subtypes. It has been approved in China and the United States for locally advanced or metastatic non-small cell lung cancer with EGFR exon 20 insertion mutations in patients who have progressed on or cannot tolerate platinum-based chemotherapy, Dizal Pharma pointed out.

Dizal Pharma has submitted applications for Zegfrovy as first-line therapy for EGFR exon20ins non-small cell lung cancer to Chinese and US regulators. China's Center for Drug Evaluation and the US Food and Drug Administration previously granted Breakthrough Therapy Designation to the drug for this indication.

The deal will accelerate the global development and commercialization of Zegfrovy, optimize Dizal Pharma's cash flow profile, speed up the recovery of upfront research and development investment, provide steady financial support for sustained development of subsequent pipeline assets, and foster long-term sustainable growth, the company noted.

Established in 2017 as an innovative drug joint venture between AstraZeneca and China Investment Corporation's unit China National Investment Innovation Capital Management, Dizal Pharma went public in December 2021. AstraZeneca's affiliate AstraZeneca AB and an investment fund under China National Investment each hold a 23.4 percent stake in the firm, making them its largest shareholders, with the new deal constituting a related-party transaction.

Editor: Martin Kadiev