$8.5 billion deal frames co-development and commercialization of Lynparza to treat multiple cancer types.

AstraZeneca and Merck & Co. have entered into a strategic, global agreement to co-develop and commercialize Lynparza (olaparib), Astrazeneca’s first-in-class oral cancer treatment for multiple cancers. Intended to increase the number of treatment options available to patients, the collaboration will cover the joint development Lynparza as a monotherapy and in combination with the companies’ respective treatments Imfinzi (durvalumab) and Keytruda (pembrolizumab).

Under the terms of the agreement, disclosed to the public at the end of July, Merck is to pay AstraZeneca “up to” $8.5 billion in total consideration—$1.6 billion upfront, $750 million for license options, and as much as $6.15 billion after that—contingent upon successfully reaching future regulatory and sales milestones. AstraZeneca said it anticipates approximately $1 billion to be recorded under Externalization Revenue in 2017.

The strategic oncology collaboration, said the announcement, will support the development and commercialization of AstraZeneca’s oral poly ADP ribose polymerase (PARP) inhibitor, approved by the FDA for BRCA-mutated ovarian cancer. The companies have also agreed to co-develop and commercialize AstraZeneca’s selective MEK inhibitor selumetinib, part of the company’s mitogen-activated protein kinase (MAPK) pathway currently under development to treat a variety of indications including thyroid cancer.

“Our strategic collaboration builds on scientific evidence that PARP and MEK inhibitors can be combined with PD-L1/PD-1 inhibitors for a range of tumors,” explained Pascal Soriot, AstraZeneca’s CEO. “By bringing together the expertise of two leading oncology innovators, we will accelerate Lynparza’s potential to become the preferred backbone of many immuno-oncology combination therapies as the world’s first and leading PARP inhibitor.”

Merck’s CEO Kenneth C. Frazier pointed out the proposed benefits to patients the deal represents. “This global collaboration between AstraZeneca and Merck…will increase the possibilities for patients to have more treatment options for more cancers.” Noting Merck’s immuno-oncology experience with Keytruda as “foundational in monotherapy and combination therapy,” Frazier said “this collaboration expands our oncology leadership into the growing targeted therapies of PARP and MEK inhibitors. We look forward to working with AstraZeneca to create greater value for patients and shareholders than if both companies worked independently.”