German chemicals and pharmaceuticals producer Merck KGaA has announced a global alliance with US drugmaker Pfizer to jointly develop and commercialize Merck's anti-PD-L1, an investigational antibody.

The drug is currently being developed by the Merck as a potential treatment for multiple tumor types. The efforts are aimed at enhancing both partners' presence in immune-oncology.

The Darmstadt-based company said the asset will be developed as a single agent as well as in various combinations with the two drugmakers' portfolio of approved and investigational pipeline candidates.

Also part of the agreement will be the combination of resources and expertise to advance's Pfizer's anti-PD1 antibody into Phase 1 trials. Additionally, Merck will co-promote its US partner's XALKORI, a treatment for non-small cell lung cancer in the US and in several other key markets,

After strengthening its chemical market presence with the acquisition of AZ Electronic Materials and the proposal to acquire Sigma Aldrich, Merck CEO Karl-Ludwig Kley said the company has now turned its attention to healthcare.

"The agreement with Pfizer is a very important milestone in taking our pharma pipeline forward," Kley said.

Under the terms of the arrangement, Merck will receive an upfront payment of $850 million and will be eligible to receive regulatory and commercial milestone payments of up to $2 billlion.

The two companies will jointly fund all development and commercialization costs, and all revenues obtained from selling any anti-PD-L1 or anti-PD-1 products generated through the collaboration are to be shared.

"Combining Merck's "promising anti-PD-L1 antibody with Pfizer's extensive portfolio of small molecules and antibodies provides an opportunity to potentially broaden the use of immunotherapy to patients with cancer and rapidly expand our oncology business," said Albert Bourla, group vice president of Pfizer's vaccines, oncology and consumer healthcare business.