Merck has signed a licensing agreement worth up to $3.3 billion with Shanghai-based LaNova Medicines to develop, make and sell an experimental cancer drug, the two companies said on Thursday.

MRK in-licenses a bispecific antibody, based on the same mechanism as SMMT's lead drug, which outperformed its blockbuster drug, Keytruda, in a lung cancer study.

As Merck prepares for its blockbuster immunotherapy Keytruda to face generic competition, it’s investing in a new cancer drug from LaNova.

In a move to safeguard the company’s dominant position in cancer, Merck said Thursday it will license a new cancer drug from LaNova Medicines, a Shanghai-based firm, for $588 million upfront and as much as $2.