Pfizer will pay $850 million for rights to a cancer drug being developed by Merck, in a move that will accelerate the German company's move into oncology treatments in the US.

The agreement also calls for Pfizer to pay as much as $2 billion to Merck if the drug, meets commercial and regulatory goals, Germany-based Merck said in a statement today.

Pfizer lowered its forecast for 2014 earnings to reflect the $850 million upfront payment.

The drug is a so-called immunotherapy that aims to use the body’s immune system to fight tumors. Merck said in September it was seeking a partner for the product, which it’s studying in lung and ovarian cancer.

The two companies will jointly fund research and commercialization costs for the medicine, and also agreed to co-promote Pfizer’s Xalkori medicine in the US and other markets.

Reuters