What happened

Shares of iTeos Therapeutics (ITOS -0.65%) surged 37% on Monday after it reached an agreement with GlaxoSmithKline (GSK -1.04%) to co-develop an experimental cancer treatment known as EOS-448. 

So what

EOS-448 is a monoclonal antibody treatment for patients with cancer. It's currently being evaluated in a phase 1 study in patients with advanced solid tumors. GlaxoSmithKline also intends to begin new combination studies of EOS-448 with some of its other immuno-oncology therapies next year.

Two people are shaking hands.

iTeos Therapeutics and GlaxoSmithKline struck a major new development deal. Image source: Getty Images.

The deal could be worth more than $2 billion to iTeos. Under the terms of the agreement, the biotech would receive an upfront payment of $625 million. It could also receive milestone payments of as much as $1.45 billion, if certain conditions are met. Better still, GlaxoSmithKline and iTeos will equally share EOS-448's potential profits in the U.S., and iTeos will receive royalty payments for sales in international markets.

Now what

The partnership with GlaxoSmithKline will bolster iTeos' research and distribution capabilities, as well as its cash reserves. "This collaboration allows us to accelerate and expand the clinical development of EOS-448," iTeos CEO Michel Detheux said in a press release. "We are more confident than ever in our ability to succeed."