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 $2.7 billion in potential milestone payments.

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. The deal allows Merck to take over development of LaNova's LM-299,

Merck & Co. licensed an experimental cancer antibody from a closely held Chinese company in a deal worth $588 million upfront, plus as much as $2.7 billion in milestone payments.

Merck (NYSE:MRK) and LaNova Medicines announced Thursday an agreement under which the U.S. pharmaceutical giant is expected to obtain licensing rights to a cancer candidate known as LM-299 from the Chinese biotech in a deal worth up to $3.