This article first appeared on GuruFocus.
Eli Lilly (NYSE:LLY) has agreed to pay $350 million upfront to partner with Innovent Biologics on the joint development of new therapies targeting cancer and immune disorders, underscoring continued multinational interest in China’s biotech innovation engine. Under the collaboration, Innovent could be eligible for up to $8.5 billion in milestone payments, although the companies did not disclose how many programs are included. Following the announcement, Innovent’s Hong Konglisted shares rose as much as 8.6% on Monday, reflecting investor optimism around the scale and structure of the agreement.
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Management commentary suggests this deal represents a departure from traditional asset-specific licensing. Rather than acquiring rights to an existing pipeline drug, the two companies will work together to create entirely new compounds, with Innovent responsible for development from concept through completion of Phase 2 clinical trials in China. Lilly will hold exclusive rights to develop and commercialize these drugs outside China, while Innovent retains rights in its domestic market. Innovent’s chief business officer described the structure as placing a global strategic partner alongside the company before compounds are created, which could streamline future global development.
The partnership builds on six previous collaborations between Innovent and Lilly across cancer, diabetes, and obesity, and follows Innovent’s more recent licensing agreements with Roche (RHHBF) and Takeda. The timing also aligns with a broader surge in cross-border biotech deals, as out-licensing agreements from China to overseas partners reached record levels in 2025, with at least $6 billion in upfront payments and potential deal values of $120 billion, according to JP Morgan. Momentum appears to have carried into the new year, highlighted by AstraZeneca’s (NASDAQ:AZN) obesity deal with CSPC Pharmaceutical Group worth up to $18.5 billion, suggesting global pharmaceutical interest in Chinese innovation platforms could remain active.