U.S. drugmaker Pfizer, which failed last month in a $118 billion bid to buy AstraZeneca, said on Wednesday it had signed a deal with French biotech Cellectis to develop immunotherapy drugs in cancer.
The news sent shares in Cellectis surging 50 percent higher, valuing the company, which was founded in 1999, at around 195 million euros ($264 million).
Boosting the body's immune system to fight tumours is a hot area for drug research and was one of the factors that attracted Pfizer to Britain's AstraZeneca - along with the potential to cut costs and taxes.
The technology used by Cellectis involves reprogramming immune system cells to hunt out cancer and represents a different approach to that used by drugs under development at AstraZeneca.
The French company's research is still at an early stage but it hopes to start clinical trials in 2015, initially with a drug for leukaemia that it has already partnered with unlisted pharmaceuticals group Servier.
Under the new deal, Cellectis will receive an upfront payment from Pfizer of $80 million, as well as funding for research costs.
The French biotech firm will also be eligible to get development, regulatory and commercial milestone payments of up to $185 million per Pfizer product, plus tiered royalties on any eventual sales.
Pfizer has exclusive rights to develop products against 15 biological targets for fighting cancer it selects, while another 12 targets can be selected by Cellectis.
In addition, Pfizer will buy a stake of about 10 percent in Cellectis through newly issued shares at 9.25 euros each.
Cellectis is developing Chimeric Antigen Receptor T-cell, or CAR-T, immunotherapies using engineered cells from a single donor for use in multiple patients.
This so-called allogeneic approach is in contrast to other autologous technologies that rely on engineering a patient's own T-cells and the aim is to make it possible to treat cancer using a standardised, off-the-shelf therapeutic product.
Pfizer's research head Mikael Dolsten said he believed that combining the French group's skills with Pfizer's experience in developing cancer drugs would create "a world-class partnership."
Cellectis said it expected to open a site in the United States to work more closely with scientists at Pfizer.
Novartis currently leads the field in CAR-T drug development, with autologous products in clinical trials for leukaemia, lymphoma, mesothelioma and pancreatic cancer.
The Swiss drugmaker highlighted the potential of such treatments in fighting tumours both in the blood and solid organs in a presentation to investors on Wednesday.
(Reporting by Ben Hirschler; Editing by Pravin Char and Jane Merriman)