Shares of Tetraphase Pharmaceuticals Inc. (NASDAQ: TTPH) saw a solid gain early Wednesday after the company announced an exclusive licensing agreement in Asia. Specifically, the firm announced that it has entered into an exclusive licensing agreement with Everest Medicines, a Chinese biopharma company, to develop and commercialize eravacycline in mainland China, Taiwan, Hong Kong, Macau, South Korea and Singapore.

Under the terms of the agreement, Tetraphase will receive an initial upfront payment of $7.0 million and may receive clinical and regulatory milestones of up to $16.5 million, as well as annual sales milestones of up to $20.0 million.

Everest will be solely responsible for the development and commercialization of eravacycline in these countries. Tetraphase and Everest will establish a joint steering committee to review and oversee all of Everest’s development and commercialization plans.

At the same time, Tetraphase also will be eligible to receive double-digit tiered royalties on net sales of eravacycline in these countries.

For some quick background: eravacycline works to treat the complicated intra-abdominal infections (cIAI) and other serious infections, including those caused by multidrug-resistant pathogens.

Guy Macdonald, president and chief executive of Tetraphase, commented:

Our agreement with Everest marks an important step in our plans to bring eravacycline to market on a global level. With positive Phase 3 data evaluating IV eravacycline in cIAI, our NDA under review by the FDA in the U.S. and our Marketing Authorization Application also under review in Europe, both for cIAI, we are expanding our commercialization strategy to China and other Asian territories and countries. With new regulations in place in China to accelerate development and approval, along with high levels of multidrug-resistant infections there, we believe there is a significant opportunity for eravacycline to become an important new treatment in China and other territories.  We are excited to have Everest as a partner and expect their development and commercialization expertise, as well as strategy for leveraging changes in the regulatory environment, will be invaluable in maximizing the value of eravacycline in the Chinese market. We look forward to working with Everest to bring eravacycline to patients and addressing a critical unmet need in a region where viable treatment options are scarce.

Shares of Tetraphase closed most recently at $2.08, with a consensus analyst price target of $6.46 and a 52-week trading range of $2.05 to $7.31. Following the announcement, the stock was up about 10% at $2.28 in early trading on Wednesday.

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