The Associated Press

NEW YORK (AP) — Pfizer says it will partner with German drug and chemical maker Merck in developing potential cancer drugs in a hot new medication class that harnesses the body’s immune system to fight cancer.

Under their agreement, New York-based Pfizer will pay Merck KGaA $850 million initially and up to $2 billion total, based on how many drugs are approved and future revenue.

Pfizer says the $850 million payment will cut profit this year, so it’s lowered its 2014 earnings forecast range by a dime, to $1.40 to $1.49 per share.

The two companies plan to develop drugs to fight multiple cancer types, either alone or in combination with their other cancer treatments. They say they expect next year to start up to 20 patient testing programs of such immuno-oncology drugs.