Merck & Co. Inc. agreed to collaborate with Japan's Taiho Pharmaceutical Co., Ltd. and Otsuka Pharmaceutical Co. Ltd. to develop several cancer therapies, especially ones targeting the KRAS gene mutation.

Kenilworth, N.J.-based Merck said it will pay $50 million up front to receive an exclusive global license to therapies developed as a result of the program, and that it will be responsible for funding the research and development and global commercialization of the said therapies.

Taiho and Otsuka can also net up to a further $2.5 billion if the products meet certain preclinical, clinical, regulatory and sales milestones, and are eligible to receive royalties on the sales of therapies that are commercialized.

Taiho will keep co-commercialization rights for the products in Japan. The Tokyo-based pharmaceutical will also have an option to promote the products in specific areas of South East Asia.

The companies plan to pool together their selected preclinical candidates as well as data from their respective cancer research programs to identify therapies that can be advanced.

KRAS is a type of gene that when mutated, has the potential to cause cancer. KRAS mutations occur in about 90% of pancreatic cancers and 20% of non-small cell lung cancer.