US drugmaker Merck has signed a partnership agreement with UK biotech F-star to develop and commercialize five of the Cambridge-headquartered company’s novel bispecific immuno-oncology antibodies.

The deal includes F-star’s preclinical lead asset FS118, which is designed to block LAG-3 (Lymphocyte-Activation Gene 3) and PD-L1 (Programed Death-Ligand 1), two pathways commonly used by cancer cells to evade the immune system. F-star said a preclinical model shows that FS118 could improve efficacy compared to monotherapy combinations, supporting the potential to initiate a clinical development program. The other four antibodies target specific pathways to increase the anti-tumor immune response.

Under the agreement, Merck will spend up to €115 million in upfront, R&D and milestone payments in the first two years. The New Jersey-based company will make further payments upon exercising its option to acquire the antibodies, with the total value of the deal potentially reaching above €1 billion.

Commenting on the partnership, Luciano Rossetti, executive vice president and global head of R&D at Merck’s biopharma business, said: “Our collaboration with F-star will help us to rapidly enhance our pipeline and grow our portfolio of bispecific immunotherapies. This deal complements our internal capabilities in immuno-oncology and positions us as a potential leader in this important area of research.”

F-star’s CEO, John Haurum, added that the collaboration is a further validation of its bispecific antibody platform and underscores the attractiveness of its asset-centric business model. “This approach also provides us with additional non-dilutive cash to support our investment in the development of our own pipeline of bispecific antibodies, with a strong focus on immuno-oncology,” he said.