BEIJING (Reuters) – British livestock genetics firm Genus agreed on Thursday to license its know-how on virus-resistant pigs to Beijing Capital Agribusiness Co Ltd, which will seek regulatory approval for the pigs in the world’s biggest pork market.

Genus has a global patent for commercialisation of pigs genetically edited to resist Porcine Reproductive and Respiratory Syndrome (PRRS), also known as blue-ear disease, which causes billion-dollar losses for the global pig industry each year.

Under the deal, BCA will set up Beijing Shou Nong Future Bio-Tech Co. Ltd that will fund the development of the market and seek approval for commercial production of pigs resistant to the virus. This is expected to take several years and cost tens of millions of dollars, said Genus in a statement.

Genus shares surged more than 15% after the announcement and were on course for their best day in 17 years.

The deal with BCA is a first step towards getting the technology into China, which does not allow foreign firms to research and develop biotechnology in its market.

China has no regulatory framework on the use of gene-edited animals in the country which means BCA will need to lobby the government to create a regulatory framework to cover them.

BCA is owned by the Beijing Capital Agribusiness and Food Group, GLP-Youshan Fund and CITIC Agriculture, part of state-owned conglomerate CITIC.

Genus is also currently seeking approval from the U.S. Food and Drug Administration to commercialize the virus-resistant pigs in the United States.

Gene editing is a type of genetic engineering in which DNA is deleted, modified or replaced in the genome of a living organism.

It differs from genetic modification technology because it does not require introduction of genes from other species, a method that has caused controversy among consumers and regulators.

Beijing has not approved any commercial production of GMO food crops because of consumer fears around the technology.

Genus, worth 1.65 billion pounds ($2.12 billion) by market value, already produces and sells breeding stock in China to some of the country’s top hog farmers.

Under the deal, Genus will receive upfront and milestone cash payments of $20 million subject to certain conditions being fulfilled.

After getting regulatory approval for the PRRS-resistant pigs in China, it will receive between $120 million and $160 million for the creation with BCA of a joint venture to include Genus’s existing pig genetics operations in China.

Genus will also get royalties from the joint venture on sales in China of PRRS-resistant pigs.

PRRS 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.

The companies also plan to work together on research into pigs resistant to African swine fever, an incurable virus that has spread rapidly in China since last year, and is set to reduce the herd by an estimated 200 million pigs.

(Reporting by Dominique Patton; editing by Kenneth Maxwell/Christian Schmollinger/Jane Merriman)