Akebia Therapeutics Inc said it signed a co-development and marketing deal worth up to $1 billion for its experimental anemia drug with Japan's Otsuka Holdings Co Ltd.
Akebia's shares rose as much as 28 percent to a near year-high of $10.70 on Tuesday.
The deal will provide funds needed to develop vadadustat, which is being tested in late-stage trials, the company said.
Vadadustat, the most-developed drug in Akebia's pipeline, treats patients with anemia associated with chronic kidney disease.
Akebia will get $265 million in upfront payments and will be eligible for milestone payments that could raise the deal value to more than $1 billion.
The companies will share the cost of selling the drug if and when it gets approved in the United States, Akebia said.
The deal comes a year after Akebia signed an agreement with another Japanese company, Mitsubishi Tanabe Pharma Corp, for sales of the drug in Asia including Japan, Taiwan, South Korea, Indonesia and India.
And the company is looking for an European partner.
"We want to find a partner in Europe who has the right experience with renal there and now we have the ability to do that in a way that we are not feeling financial pressures," Akebia's Chief Executive Officer John Butler said on a conference call with analysts.
About 30 million people in the United States have chronic kidney disease, with an estimated 1.8 million of such patients suffering from anemia, Akebia said.
Vadadustat is likely to compete against Keryx Biopharmaceuticals Inc's already approved drug, which the company is looking to expand to treat iron deficiency anemia in chronic kidney disease in patients not requiring dialysis.
The drug, Auryxia, was approved in 2014 in the United States to treat abnormally high phosphate level in the blood of end-stage renal disease patients.
Akebia is also testing an experimental compound, AKB-6899, in early-stage studies for potential use in oncology and ophthalmology.
The company's shares pared some gains in afternoon trading and were up 22.7 percent at $10.25. The stock had lost more than a third of its value this year through Monday's close.
(Reporting by Vidya L Nathan and Divya Grover in Bengaluru; Editing by Ted Kerr and Sriraj Kalluvila)