Drugmaker Baxalta Inc has signed a deal with privately held Symphogen under which the companies will develop immuno-oncology drugs to treat rare cancers.

The agreement holds a total potential value up to €1.4 billion in option fees and milestones over the long term, in addition to royalties on worldwide sales, Baxalta said. The deal with Symphogen comes as Baxalta approaches the final stages of negotiating a potential sale to rare diseases drugmaker Shire Pharmaceuticals.

That deal is expected to value Baxalta around $47 per share, according to sources. It would include a cash component of about $20 per share, with the rest paid in Shire stock, said the sources.

Baxalta and Symphogen said on Monday they expect to conduct the first early-stage study in 2017.