Eli Lilly has signed an agreement to acquire all shares in Canada-based cancer drug developing company AurKa Pharma for an upfront payment of $110m.

AurKa was founded by TVM Capital Life Science to develop an oncology compound called AK-01, an inhibitor of Aurora kinase A. It is being assessed in Phase I trials for the treatment of various solid tumours.

Under the deal, Lilly will pay up to $465m in regulatory and sales-based milestones if AK-01 gets regulatory approvals in certain markets and upon reaching select sales targets.

Eli Lilly corporate business development senior vice-president Darren Carroll said: “The acquisition of AurKa Pharma supports Lilly’s external innovation strategy, in which we seek to partner with leading life science venture capital firms in order to identify, support and access promising innovation in areas of unmet medical need.”

AK-01 was originally discovered by Lilly, which then sold the compound to TVM Capital Life Science following a review of its clinical pipeline priorities in 2016.

“The acquisition of AurKa Pharma expands our pipeline with a promising oncology compound targeting a distinct cell cycle pathway.”

The compound demonstrated high selectivity for Aurora A, along with potential clinical benefit, in Phase I trials.

Additional studies will be conducted to validate the capability of AK-01’s selectivity profile to improve efficacy and limit toxicity risks.

Lilly Oncology global development and medical affairs senior vice-president Levi Garraway said: “The acquisition of AurKa Pharma expands our pipeline with a promising oncology compound targeting a distinct cell cycle pathway.

“The work done by AurKa will allow Lilly to leverage emerging data about cancers in which this molecule might be effective, and determine if it can be beneficial to people living with various forms of cancer.”

The latest deal follows a proposal made by Lilly earlier this month to acquire immuno-oncology company ARMO Biosciences for around $1.6bn.