Blueprint Medicines (NASDAQ: BPMC) announced Tuesday that global biopharma giant Roche Holdings (OTC: RHHBY) is paying up to $1.7 billion in upfront cash and potential milestones, plus royalties, to obtain commercial rights to market pralsetinib outside the U.S., excluding Greater China. The blockbuster deal for pralsetinib, which is under Food and Drug Administration (FDA) review for use in lung cancer and thyroid cancer patients with a specific genetic profile, significantly strengthens Blueprint Medicines' balance sheet.

Designed to inhibit abnormal activity in the RET gene to curb cancer cell growth, pralsetinib's application for FDA approval in RET-altered non-small cell lung cancer and medullary thyroid cancer is under review. An FDA decision in non-small lung cancer is expected November 23.

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In clinical trials, 61% of non-small cell lung cancer patients previously treated with platinum-based chemotherapy and 73% of treatment-naive patients responded to pralsetinib. Separately, 60% of previously treated and 74% of treatment naive RET-mutant medullary thyroid cancer patients responded to pralsetinib.

Roche's licensing pact gives it co-commercialization rights in the U.S. and sole commercialization rights outside the U.S. and Greater China, where CStone Pharmaceuticals has those rights.

The biotech companies will split profits in the U.S. and elsewhere, and Roche will pay tiered royalties based on sales ranging from the high teens to the mid-twenties. Blueprint is also receiving $775 million upfront, including a $100 million equity investment. If development, regulatory, and sales milestones are met, Blueprint Medicines can pocket up to an additional $927 million.

Blueprint Medicines says the pact provides enough financing to last until it's financially self-sustainable. It also improves pralsetinib's commercial prospects by leveraging Roche's existing global footprint. That extra marketing might could come in handy given that, if approved, pralsetinib will compete against Eli Lilly's RET-inhibitor Retevmo, which won FDA-approval in May.

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Todd Campbell owns shares of Blueprint Medicines. His clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.