Amgen has signed a licensing deal that is potentially worth around $1.2 billion with Japan’s Takeda Pharmaceutical Co.

Under the agreement, Takeda will develop and commercialise up to 13 drug candidates for the Japanese market, and in return will pay the US biotechnology major $200 million in cash upfront. Amgen will also receive up to $340 million in worldwide development costs for these molecules over the next several years, $362 million in success-based milestone payments, and double-digit royalties on sales in Japan.

Additionally, Takeda plans to acquire all the shares of Amgen's Japanese subsidiary, Amgen KK and will become its worldwide partner for the cancer treatment AMG 706 (motesanib diphosphate). Through this, Amgen will get another $100 million upfront, $175 million in success-based milestones for the first two indications, and double-digit royalties from Japanese sales. The firms also noted that Takeda will also pay 60% of ongoing clinical development expenses outside Japan and share potential profits outside Japan 50/50.

"The development programmes included in this collaboration represent the growth engine for Amgen in the next decade," Amgen chief executive Kevin Sharer said. As well as motesanib, the partnership includes his firm’s colorectal cancer treatment Vectibix (panitumumab), and additional molecules, all of which are biologics, in oncology, inflammation and neurology/pain.

Mr Sharer added that "Takeda's confidence in these programmes validates their potential to become innovative therapies for patients in Japan and worldwide”. It is also a very welcome financial boost for Amgen which has recently been forced into a major cost-cutting programme given the sharp decline in sales of its anaemia blockbuster Aranesp (darbepoetin alfa).

It is also an important deal for Takeda which at the end of last week announced a 5.9% increase in net income to 113.4 billion yen ($1.1 billion) for the three months ended December 31. The Tokyo-based firm has been under pressure to expand outside Japan and the Amgen deal fits the bill.