BEIJING - British livestock genetics firm Genus agreed on Thursday to license its know-how on virus-resistant pigs to state-owned Beijing Capital Agribusiness Co Ltd (BCA), which will seek regulatory approval for the pigs in the world's top pork market.
Under the deal, BCA will set up a firm called Beijing Shou Nong Future Bio-Tech Co. Ltd that will fund the development of the market and seek regulatory approval, expected to take several years, for the raising of pigs resistant to the Porcine Reproductive and Respiratory Syndrome (PRRS) virus.
Genus shares surged more than 15% after the announcement and were on course for their best day in 17 years.
Genus has a global patent for commercialisation of pigs genetically edited to be resistant PRRS, a virus that causes billion-dollar losses for the global pig industry each year.
Under the deal, Genus will receive upfront and milestone cash payments of $20 million subject to certain conditions being fulfilled.
It will later receive between $120 million and $160 million for the creation with BCA of a joint venture, including Genus's existing pig genetics operations in China, after regulatory approval of PRRS-resistant pigs has been obtained in China.
Genus will also get royalties from the joint venture on sales in China of PRRS-resistant pigs.
PRRS, also known as 'blue-ear disease', often kills piglets and in some cases, also sows. It costs the U.S. and European hog industry about $2.5 billion each year in lost revenue, according to one estimate by the University of Edinburgh.
($1 = 0.7784 pounds)
(Reporting by Dominique Patton; editing by Kenneth Maxwell and Christian Schmollinger) ((firstname.lastname@example.org; +86 10 6627 1027; Reuters Messaging: email@example.com))