(Reuters) -Merck ( MRK ) said on Tuesday that it has entered into an agreement to receive funds managed by Blackstone Life Sciences for $700 million to develop an experimental cancer therapy.

Under the terms of the agreement, Blackstone's drug development unit will fund a portion of the development costs to test sac-TMT, an experimental antibody-drug conjugate.

Antibody-drug conjugates are designed to deliver an anti-cancer drug more precisely to malignant cells, causing less damage to healthy cells than chemotherapy.

Merck ( MRK ) is currently evaluating sac-TMT in 15 global late-stage trials spanning six tumor types, including breast, endometrial and lung cancers.

The company is working on adding new drugs to its pipeline as its blockbuster cancer drug Keytruda faces competition from cheaper biosimilars later this decade.

"We are making important investments...to sustain our business for the future, while remaining disciplined towards maintaining an appropriate financial profile," said Caroline Litchfield, chief financial officer, Merck ( MRK ).

The payment is expected to be made throughout 2026, the companies said. Blackstone is eligible to receive low-to-mid single-digit royalties on net sales of sac-TMT, contingent upon receipt of regulatory approval in the U.S.

Sac-TMT targets a protein called trophoblast cell-surface antigen 2, found on the surface of various cancer cells. Antibody-drug conjugates that target this protein have shown encouraging anti-tumor activity in clinical studies, Merck ( MRK ) said.

The company added that it will retain control over the development, manufacturing and commercialization of sac-TMT, and Blackstone will not receive any rights to the cancer therapy.

Sac-TMT is being developed as part of an exclusive license and collaboration agreement with Sichuan Kelun-Biotech Biopharmaceutical.