GlaxoSmithKline agreed to offer Merck up to €3.7bn (£3.2bn) to form a partnership to develop an immonutherapy for the treatment of cancer.
The deal involved GSK making an upfront payment to Merck of €300m regarding the treatment, known as M7824.
The German group would also be eligible for potential development milestone payments of up to €500m triggered by data from an M7824 lung cancer programme.
Merck would then be eligible for further payments upon successfully achieving future approval and commercial milestones of up to €2.9bn.
Eight related immuno-oncology clinical development studies were either ongoing or expected to commence in 2019, including studies in non-small cell lung and biliary tract cancers.
'Despite recent medical advances, many patients with difficult-to-treat cancers don't currently benefit from immuno-oncology therapies leaving them with limited treatment options,' GSK chief scientific officer Hal Barron said.
'M7824 brings together two different biological functions in a single molecule and we have observed encouraging clinical results in treating certain cancer patients, particularly those people with non-small cell lung cancer.'
'I'm excited by the potential impact this first-in-class immunotherapy could have on the lives of cancer patients.'
At 1:28pm: (LON:GSK) GlaxoSmithKline PLC share price was +19.9p at 1499.9p