Drugmaker Merck (MRK) agreed to pay Daiichi Sankyo $5.5 billion for the rights to jointly develop and commercialize three of the Japanese company's candidate cancer drugs.

Merck said it will pay Daiichi Sankyo $4 billion upfront, plus $1.5 billion over the next 24 months, an🦩d depending on how successfully th꧅e treatments achieve certain milestones, Merck could pay up to $22 billion to Daiichi Sankyo.

While there is no guarantee the drugs will receive the required regulatory approvals orღ be commercially successful, the companies said they expect the drugs to have multi-billion dollar revenue potential by the mid-2030s.

If the drugs are approved, they will be sold by Merck anywhere in the world except Japan, where Daiich꧑i Sankyo will have sole rights for manufacturing and supply. One of the drugs will apply for approval by March 2024.

The transaction is expected to lead to a pre-tax charge of about $1.70 per share for Merck, and reducing earnings per share by about 25 cents per share in the first 12 months after the deal i💛s finalized.

For Merck, the deal could help add new and promising treatment candidates to its oncology portfolio. Daiichi Sankyo is also collaborating with AstraZeneca for other cancer treatments. One such collaboration is over ADC Enhertu, which is expected to generate over $10 billion in revenue annually.

Merck shares were up 1% in early trading as of 9:45 a.m. ET on Friday following the news. They've lost close to 10% of their value year-to-date.