Glaxosmithkline has agreed to pay a US biotech firm as much as $2.1bn (£1.5bn) to team up on an experimental new cancer treatment.

The British pharma giant will pay iTeos Therapeutics $625m upfront to co-develop and co-commercialise an immuno-oncology drug known as EOS-448.

iTeos will be entitled to receive up to a further $1.5bn if certain development and commercial milestones are met.

Under the terms of the deal, the companies will share responsibility and costs for developing the drug and bringing it to market, and will split royalties in the US.

Outside the US, GSK will be granted an exclusive licence and iTeos will receive tiered royalty payments.

The partnership is the latest in a frenzy of dealmaking for the FTSE 100 company, which has invested heavily to improve its drug pipeline.

GSK is under pressure after it emerged that activist investor Elliott Management had built up a significant stake in the company. 

It is also preparing to outline plans to split its consumer products business from its drug operations.

Dr Hal Barron, chief scientific officer and president of R&D at GSK, said immo-oncology had “ transformed cancer care” but said less than 30 per cent of patients responded to treatment with the current leading immune checkpoint inhibitors.