• AstraZeneca will pay $1 billion upfront
• Firms' second oncology deal to look into breast and lung cancers
• AZN also gets regulatory backing for two other cancer drugs

Britain's AstraZeneca will pay up to $6 billion to Japan's Daiichi Sankyo under the drugmakers' second multi-billion dollar oncology collaboration to develop and market a niche type of targeted cancer treatment.

London-listed AstraZeneca said on Monday it would pay $1 billion 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, the British company 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.

"We see significant potential in this antibody drug conjugate in lung as well as in breast and other cancers that commonly express TROP2," AstraZeneca Chief Executive Pascal Soriot said, referring to a protein found on some cancer cell surfaces.

JP Morgan analysts said the drug could bring $1 billion 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 U.S. 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.

In a further boost to AstraZeneca's oncology unit, two of its on-market therapies, one for lung cancer and another for blood cancer, won regulatory endorsements for expanded use in Europe.

The company and Daiichi had signed a near $7 billion deal in 2019 for an ADC targeting the HER2 protein. The drug is now sold as Enhertu.

The drugmakers have also been in talks over supply of the British company's coronavirus vaccine in Japan.

AstraZeneca shares were roughly unchanged at 8,644 pence by 0917 GMT.