Biotech company Sutro Biopharma announced in a press release that it will be collaborating with Celgene (NASDAQ:CELG) on a deal  to develop antibody drug conjugates (ADCs) and bispecific antibodies for undisclosed targets. The agreement, which could be worth up to $500 million if the program succeeds, will also have the two companies working on manufacturing a proprietary antibody for Celgene.

Sutro will pick up an upfront payment of a "substantial" sum, according to the release, as well as equity investment in the company and payouts for hitting program milestones. Sutro could also receive royalties on any drug sales from Celgene if the program is a success.

Sutro CEO William Newell added his take on the agreement, saying in the release:

The scope of this partnership showcases our novel, cell-free approach to designing, developing and manufacturing next-generation ADCs and bispecific antibodies.

Sutro will handle product design and will produce pre-clinical material as part of the program. Celgene and Sutro's deal comes after several other companies  have looked into producing ADCs, including a partnership between Abbot Labs (NYSE:ABT) and Seattle Genetics. Menarini and Oxford BioTherapeutics recently also signed a deal to develop ADCs that could be worth more than $1 billion.

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