(Yicai) June 6 -- Zelgen Biopharmaceuticals has granted Ares Trading, a Swiss unit of Merck Group, the exclusive rights to market its new biologic cancer drug in the Chinese mainland.

Under an agreement signed on June 5, Zelgen gave Ares Trading the exclusive rights to market its recombinant human thyroid-stimulating hormone injection in China for 15 years, the Suzhou-based firm announced late yesterday.

Ares Trading will pay as much as CNY250 million (USD35 million) in licensing fees, including a CNY50 million (USD7 million) upfront payment, with the rest payable once the drug is approved for its first medical use. After the drug is launched, Zelgen will pay Ares Trading a double-digit percentage of the product's net sales as marketing service fees.

Zelgen’s shares [SHA: 688266] closed 0.3 percent higher at CNY114.92 (USD16) each today, extending the stock’s gain to 83 percent so far this year. The benchmark Shanghai Composite Index finished little changed.

The drug, which was developed through genetic recombination technology, will be used mainly for auxiliary diagnosis as well as testing and treatment of thyroid cancer-related conditions. It is still awaiting regulatory approval.

Thyrogen, a similar product developed by US biotech firm Genzyme, is widely used in the post-operative diagnosis and treatment of thyroid cancer, but is not yet available in the Chinese market.

Zelgen said the tie-up with Ares Trading aims to hasten the drug’s commercialisation after regulators give it the go-ahead, and expand the treatment options.

The partnership brings together Merck’s strong commercialization capabilities with local innovation in treating thyroid diseases in China, said Zhang Wei, managing director of Merck China Healthcare, adding that the drug will help address the lack of effective treatment options for managing thyroid cancer after surgery.

Editor: Tom Litting