US drugmaker Bristol-Myers Squibb has struck a deal worth $3.6 billion with biotech Nektar Therapeutics to jointly develop and commercialize the latter’s lead anticancer molecule – NKTR-214. The companies expect to complete the transaction during the second quarter, subject to antitrust and other customary closing conditions.

Said to be the largest biotech licensing fee ever, the collaboration will see Bristol-Myers Squibb’s Opdivo and Opdivo plus Yervoy being developed with Nektar’s NKTR-214 in more than 20 indications across nine tumor types, as well as potential combinations with other anti-cancer agents. Pivotal studies in renal cell carcinoma and melanoma are expected to start in mid-2018.

The agreement follows the success of a previous clinical trials pact in September 2016 to evaluate Opdivo, designed to overcome immune suppression, with NKTR-14, which stimulates cancer-killing immune cells.

Commenting on the latest collaboration, Giovanni Caforio, chairman and CEO of Bristol-Myers Squibb, said the company now has a third validated immuno-oncology mechanism that has significant potential for benefitting cancer patients.

“NKTR-214’s ability to grow tumor infiltrating lymphocytes (TILs) in vivo and replenish the immune system is critically important as many patients battling cancer lack sufficient TIL populations to benefit from approved checkpoint inhibitor therapies,” said Nektar’s president and CEO, Howard Robin.

Under the terms of the deal, Bristol-Myers Squibb will pay $1.85 billion upfront, comprising $1 billion in cash and an equity investment of $850 million. It has also agreed to certain lock-up standstill and voting provisions on its share ownership for five years, subject to certain specified exceptions.

In addition, Nektar is eligible to receive an additional $1.78 billion in milestone payments and will take the lion’s share (65%) of the profits, with Bristol-Myers Squibb taking 35%.

Bristol-Myers Squibb will pay between 67.5% and 78% of development costs, depending on whether the trials include just Opdivo, or Opdivo and Yervoy. The New-York headquartered pharma will lead global commercialization efforts on NKTR-214 combinations with its own drugs, but Nektar will assist in the US, major EU markets and Japan.

Both companies have agreed, for a specified period of time, not to develop combinations with overlapping mechanisms of action in the same indications as those included in their joint clinical development plan.