The momentum behind Proxygen continues on as the molecular glue degraders development company inked a multi-year research collaboration and license agreement worth up to $2.55 billion with Merck Wednesday.

Per terms of the deal, Proxygen will receive an upfront payment from Merck and is eligible for future milestone payments based on research, development and commercial goals across all programs. 

The Vienna-headquartered company, founded in 2020, is also eligible for royalties on net sales of any such products.

“We are very excited to announce this collaboration with MSD and look forward to combining our innovative platform technology and unique expertise in identifying novel molecular glue degraders with MSD’s world class research and development capabilities,” Proxygen CEO Bernd Boidol, PhD said in a statement. “This partnership provides us with the framework and resources to further leverage our platform for the discovery of new drugs against challenging targets.”

The agreement to jointly identify and develop molecular glue degrader treatments for several therapeutic targets marks an evolution in the relationship between the two companies.

Last June, Proxygen announced a $554 million strategic collaboration with Merck to develop molecular glue graders up to a clinical candidate stage.

The companies stated that molecular glue graders have the promise of unlocking “a large proportion of the undruggable target space” and deliver innovative therapies for diseases with high medical need. However, this technology has been hampered by a lack of scalable discovery strategies, which Proxygen and Merck seek to overcome by this collaboration.

“Advances in our understanding of molecular glue degraders are opening exciting new avenues in the pursuit of novel therapeutic mechanisms,” said Robert M. Garbaccio PhD, VP and head of discovery chemistry at MSD, in a statement. “We look forward to working with the Proxygen team to advance this promising area of research and evaluate new opportunities to treat disease.”

This isn’t Proxygen’s first rodeo with an established pharmaceutical company either.

Before Merck, Proxygen entered into a collaboration and license agreement with Boehringer Ingelheim in December 2020 to identify molecular glue degraders against various oncologic targets.

As part of the deal, Proxygen was entitled to upfront payments, R&D support and milestone gated development payments in addition to tiered royalties related to future commercial sales of products.

The announcement also comes weeks after Proxygen unveiled the formation of a board of directors.