A promising new Australian cancer drug has been licensed to a US pharmaceutical company in the hope that it might contribute to a reduction in the cancer mortality rate.

The drug, developed by the Cancer Therapeutics CRC (CTx) in Australia, has the potential to limit and restrict the effectiveness of a protein found in lung cancer, breast cancer and colorectal cancer, and was sold to US pharmaceutical giant Merck US for $514 million.

Merck US has indicated it will now further develop the drug, with an aim to take it to clinical trials in the near future.

According to the Commonwealth Scientific and Industrial Research Organisation's (CSIRO) Dr Tom Peat, the protein, PRMT5, is linked with high cancer mortality rates, and the revolutionary drug limits its influence in cancer cells, meaning a better chance of survival for cancer sufferers.

"Patients who have these types of cancers often have high levels of this protein, which is unfortunately also linked to poor survival rates," Peat said in a statement on Monday.

"The CTx consortium was able to develop a drug that binds to this protein, allowing it to target the cancerous cells."

Peat said the CSIRO, in association with the CTx, contributed live protein cells for testing the drug for its effectiveness to incapacitate the protein.

"Access to high quality protein is absolutely critical in structural biology approaches to drug discovery, and CSIRO is pleased to be able to contribute this key capability," Peat said.

"We're thrilled to be part of this development, which has the potential to make a real difference for patients here in Australia and around the globe."

CTx chief executive, Dr Wawrick Tong described it as "a great result for Australian science," saying it further demonstrates what can be achieved when science and commercialization capabilities unite."

Merck US hopes the drug will be viable for commercial use following extensive clinical trials.