The Anglo-Swedish pharmaceutical giant said it would pay one billion dollars (£800 million) up front to its new partner Daiichi Sankyo.
It has also promised to pay up to one billion dollars if the new treatment gets approval from regulators, and up to four billion (£3.1 billion) more if it sells as hoped.
The treatment, DS-1062, targets the Trop2 protein which is overproduced by most breast and lung cancers.
We now have six potential blockbusters in oncology with more to come in our early and late pipelines
Honing in on the cells that produce too much of the protein allows the treatment to deliver selective chemotherapy to certain areas, rather than subjecting the whole body to the treatment.
The medicine has not yet been approved for use in any country, and its safety and efficacy have not been established.
“We see significant potential in this antibody drug conjugate in lung as well as in breast and other cancers that commonly express Trop2,” said AstraZeneca chief executive Pascal Soriot.
The deal will give AstraZeneca a slice of the global sales of the treatment, as the two companies have agreed to partner up to develop and then commercialise DS-1062.
However, Daiichi Sankyo will keep the exclusive rights to the Japanese market.
It is not the first time the two drug giants have collaborated.
In March last year, they started a similar partnership to develop and commercialise breast cancer treatment Enhertu.
“We are delighted to enter this new collaboration with Daiichi Sankyo and to build on the successful launch of Enhertu to further expand our pipeline and leadership in oncology,” Mr Soriot said.
He added: “We now have six potential blockbusters in oncology with more to come in our early and late pipelines.”
Daiichi Sankyo chief executive Sunao Manabe said the new treatment could become “best-in-class” for targeting and treating multiple tumours, including breast and lung cancers.
He said: “This new strategic collaboration with AstraZeneca, a company with extensive experience and significant expertise in the global oncology business, will enable us to deliver DS-1062 to more patients around the world as quickly as possible.”
