Chinese pharmaceutical company Hengrui Pharma (SH:600276) (HK:01276) announced on Sunday that it has entered into agreements with UK-based GSK plc (LSE/NYSE:GSK) to develop up to 12 innovative medicines.

Programmes were selected to complement GSK's extensive Respiratory, Immunology & Inflammation (RI&I) and Oncology pipeline, and assessed for their potential best- or first-in-class profiles.

The agreements include an exclusive worldwide licence (excluding mainland China, Hong Kong SAR, Macau SAR and Taiwan region) for a potential best-in-class, PDE3/4 inhibitor (HRS-9821) in clinical development for the treatment of chronic obstructive pulmonary disease (COPD) as an add-on maintenance treatment, irrespective of background therapy.

The agreements also include a pioneering scaled collaboration to generate up to 11 programmes in addition to HRS-9821, each with its own financial structure. Hengrui Pharma will lead the development of these programmes up to completion of phase I trials, including patients outside of China. GSK will have the exclusive option to further develop and commercialise each programme worldwide (excluding mainland China, Hong Kong SAR, Macau SAR and Taiwan region), at the end of phase I or earlier at GSK's election as well as certain programme substitution rights.

This collaboration enables scale and speed to proof-of-concept to develop up to 11 additional innovative medicines. It benefits from GSK's therapy area expertise, deep understanding of disease biology, clinical development capability and global commercial scale with Hengrui Pharma's early discovery engine, platform technologies, extensive pre-clinical pipeline of high-value programmes and speed of clinical evaluation.

GSK will pay USD500m in upfront fees across the agreements including for the licence of the PDE3/4 programme. The potential total value of future success-based development, regulatory and commercial milestone payments to Hengrui Pharma is approximately USD12bn if all programmes are optioned and all milestones are achieved. In addition, Hengrui Pharma will be eligible to receive tiered royalties on global product net sales (excluding mainland China, Hong Kong SAR, Macau SAR and Taiwan region).

The licence to HRS-9821 is subject to customary conditions, including applicable regulatory agency clearances under the Hart-Scott-Rodino Act in the United States.