UK’s AstraZeneca will pay up to $6bn (£4.6bn, €5bn) to Japan’s Daiichi Sankyo making it the drugmakers’ second multi-billion dollar oncology collaboration, to develop and market a niche cancer treatment.

London-listed AstraZeneca said it would pay $1bn upfront to Daiichi in staggered payments for an experimental drug called DS-1062, which belongs to a promising class of therapies called antibody drug conjugates (ADC).

Further payments would depend on regulatory and sales milestones being achieved. The deal will not affect its 2020 earnings forecast, AstraZeneca said.

AstraZeneca has been bolstering its portfolio of cancer therapies, particularly ADCs, a major area of focus for the company as it also ploughs on with its coronavirus vaccine candidate.

JP Morgan analysts said the drug could bring $1bn or more in annual sales, adding that since AstraZeneca’s upfront commitments are spread over three years, it could still keep previous dividend cover commitments.

DS-1062, which targets the TROP2 protein, belongs to the ADC category of drugs, which link powerful cell toxins to antibodies that cling to cancer cells and spare healthy cells that are damaged during conventional chemotherapy treatments.

An anti-TROP2 ADC called Trodelvy developed by Immunomedics won US regulatory approval in April to treat an aggressive type of breast cancer, while Chinese firms Kelun Group and Bio-Thera Solutions are also working on TROP2-based biotech drugs.

The company and Daiichi had signed a near $7bn deal in 2019 for an ADC targeting the HER2 protein. The drug is now sold as Enhertu, an antibody used to treat adult patients with un resectable or metastatic HER2-positive breast cancer who have received two or more prior anti-HER2-based regimens in the metastatic setting.

AstraZeneca shares were roughly unchanged at 8,644 pence in early London trade.

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