Ablynx has signed an oncology pact with Merck & Co which could be worth up to 1.7 billion euros to the Belbium-based biotech.

The companies, which signed a neuroscience deal in 2012, are linking up again to direct Ablynx-discovered nanobodies (a novel class of therapeutic proteins) towards "immune checkpoint modulators," proteins which are believed to provide potential targets for the development of cancer immunotherapies. Under the terms of the deal, Merck is paying 20 million euros upfront and up to 10.7 million euros in research funding during the first three years of the collaboration.

Ablynx is also eligible to receive as much as 1.7 billion euros if it hits certain development, regulatory and commercial milestones, plus royalties. Merck will be responsible for the development, manufacture and commercialisation of any products resulting from the pact.

Edwin Moses, Ablynx chief executive, said this second partnership "demonstrates the potential of our nanobody platform and how it can be used to discover and develop therapeutics in important areas of unmet medical need". He added that the collaboration will benefit from "the world-class resources and expertise that Merck has in the immuno-oncology field".