RemeGen shares surged more than 9 percent in Hong Kong trading as of 10 am Tuesday, leading a broader rally among pharmaceutical stocks, after the Chinese biotech firm secured a massive licensing agreement with US drugmaker AbbVie.

In a statement released on Monday, AbbVie said it has agreed to pay $650 million upfront to license an experimental cancer therapy from China's RemeGen, in a deal that could eventually be worth nearly $5.6 billion.

The exclusive licensing agreement gives AbbVie the rights to develop, manufacture and commercialize RemeGen's RC148 outside of China.

RC148 is a novel bispecific antibody that targets both PD-1 and VEGF, two pathways often involved in tumor growth and immune evasion. It is currently being developed for multiple advanced solid tumors.

AbbVie plans to use the asset to bolster its oncology pipeline, specifically looking to combine it with antibody-drug conjugates. The company noted that the drug could be paired with its own investigational ADC, telisotuzumab adizutecan, to treat conditions such as non-small cell lung cancer and colorectal cancer.

"By combining the immune checkpoint inhibition and anti-angiogenic activity of RC148 together with the targeted cytotoxic activity of ADCs, we have the potential to identify meaningful options for patients across a range of solid tumors," said Daejin Abidoye, AbbVie's vice-president.

Under the terms of the deal, RemeGen is eligible to receive up to $4.95 billion in additional payments tied to development, regulatory and commercial milestones, plus double-digit tiered royalties on net sales outside China.

Fang Jianmin, CEO of RemeGen, said the partnership highlights the potential of RC148 to address unmet medical needs and demonstrates the company's commitment to bringing therapies to patients globally.

RemeGen, dual-listed on the Hong Kong and Shanghai stock exchanges, specializes in autoimmune, oncology and ophthalmic diseases, and currently has two approved products in China: telitacicept and disitamab vedotin.