Eli Lilly is paying $350 million upfront to collaborate with Chinese biotech Innovent Biologics Inc. in developing new treatments for cancer and immune disorders, a further vote of confidence for the innovation capabilities of the country’s drugmakers.

Shares of Eli Lilly rose 1.83% in overnight trading.

Under the agreement, which marks the seventh collaboration between the two firms, Innovent will lead the development of programs from concept through the completion of phase II clinical trials in China. Lilly will have an exclusive license to develop and commercialize the products outside of Greater China.

"This alliance moves beyond traditional licensing to create a seamless, end-to-end innovation ecosystem," Innovent CEO Michael Yu said in a statement on Sunday, adding that it also validates Innovent's research and development capabilities.

Innovent has also partnered with Lilly on projects such as the weight loss drug mazdutide.

In addition to the $8.5 billion in payments tied to developmental, regulatory and commercial milestones, Innovent will also be eligible for royalties on net sales of products outside of Greater China.